Canadian Corruption: Lobbyists Influenced CTA Decision, Allowing Airlines To Deny Billions In Refunds?

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A Canadian MP has just charged that the Canadian Transportation Agency (CTA) might have based their decision allowing airlines to deny customers Billions of dollars in refunds on the advise of a lobbyist.

While Canada maintains a rather clean bill of health on the Corruption Perception Index a lot of this dirty business takes place through lobbying and backdoor deals between government figures and certain benefactors.

If this turns out to be true – and I have no doubt that this will eventually be confirmed – it’d eventually confirm what I said for years, namely that the Canadian Transportation Agency is in no way an independent regulator that acts in the interest of the consumers and citizens of Canada.

This matter is mainly about the CTA’s decision to allow airlines to issue vouchers rather than cash refunds for flights they cancelled during the early months of the pandemic.

The Toronto Star reported about this yesterday among other sources incl TV news.

A member of Ottawa’s transportation committee has filed a complaint with the lobbying commissioner over a meeting held between federal transportation agencies and an unnamed individual in March 2020, just days before Ottawa told airlines they would not have to refund passengers for cancelled flights.

Xavier Barsalou-Duval, a Bloc-Quebecois MP, says he recently obtained emails showing that high-ranking members of the Canadian Transportation Agency and Transport Canada met days before issuing a public statement on March 30, 2020, saying that airlines should provide affected passengers with vouchers or credits rather than refunds.

That meeting included an individual whose name was redacted in the emails Barsalou-Duval obtained, though the government’s lobbyist registry has no public record of that meeting taking place.

The redaction suggests the individual who attended the meeting does not work for the government, given that government officials cannot have their names redacted from government documents, Barsalou-Duval said.

The revelations raise concerns that outside lobbyists helped dictate Ottawa’s approach to protecting airline passengers in the early months of the COVID-19 pandemic without disclosing those meetings to the public, said Barsalou-Duval.

“The Canadian Transportation Agency is supposed to be independent in its decisions, but this suggests there’s a good chance that someone from the private sector was involved,” he said.

“If it was someone from the private sector, like an airline lobbyist or a group representing airlines, this meeting would be completely inappropriate.”

Canada’s airlines withheld thousands of refunds in the early months of the pandemic, offering vouchers and credits in lieu of cancelled flights. The controversy inundated the Canadian Transport Agency with an unprecedented number of complaints regarding airlines in 2020, more than half of them relating to refunds and vouchers.

Initially, Ottawa permitted airlines to withhold refunds from passengers, stating that companies facing huge drops in passenger volumes and revenue should not be expected to take steps that would threaten their economic viability.

But as pressure mounted, the government changed positions, demanding that airlines including Air Canada repay customers in exchange for a long-sought-after federal aid package for the sector. In April 2021, the government agreed to a $5.9 billion aid package for Air Canada, including a $1.4 billion line of credit the company could use to reimburse passengers.

The company has been handing out refunds over the past two months.

Canada’s lobbyist registry shows no record of a meeting between the transportation agencies and a lobbyist in the days prior to its March 2020 statement. But the emails obtained by Barsalou-Duval confirm a meeting took place.

Barsalou-Duval now wants the commissioner to investigate whether or not the transportation agencies breached ethical standards, according to the letter he filed with the lobbying commissioner. …

Meetings between lobbyists and government officials have to be officially recorded in Canada which is one of the reasons the country is perceived to be run in a relatively clean manner but the reality is often far from this. Backdoor corruption is actually thriving in Canada just like in many other countries.

In this case not only was a crucial meeting days ahead of a milestone decision not recorded but in communication made public a name of a private individual believed to be a lobbyist for the airline industry (or maybe even a representative of an airline itself, we can all imagine which one) has been redacted. If this isn’t cause for concern then I don’t know what is.

It becomes a problem when a government agency is actively misleading the consumers it is mandated to protect. Not unexpected though as the CTA is pretty much known an an industry lapdog, way too comfortable with the entities it’s there to regulate.

The CTA has in the meanwhile also stopped any dispute resolutions:

… Please note, however, that the CTA has temporarily paused all dispute resolution activities involving air carriers until June 30, 2020, to permit them to focus on immediate and urgent operational demands. While you can continue to file air passenger complaints with us and all complaints will be processed in due course, we may not be able to respond quickly. On or before June 30, 2020, the Agency will determine if the pause should end on that date or be extended to a later date. …

The consumer advocacy group Air Passenger Rights Canada has sent a Cease and Desist Letter to the CTA to take down this statement from their website. Let’s see if they will do it or it this will end up in court.

Canadian Transportation Agency Forced To Clarify Their “Statement On Vouchers” Following Legal Action By Advocacy Group

It didn’t result in any immediate benefit for the consumers though. Air Canada and other carriers still withheld refunds, issuing worthless vouchers while many Canadians were in financial distress and just recently bowed to pressure as the Canadian government made financial assistance for the airlines contingent upon them refunding passengers their money.

The U.S. DOT is in the process of slapping Air Canada with a record fine for refusing to provide refunds and ignoring the agency’s orders.

U.S. Department Of Transportation Proposes $25.5M Fine Against Air Canada Due To Delayed & Denied Refunds

At least the U.S. Department of Transportation is a “real” regulator in the strict sense of the word and not just a lapdog of the industry it is mandated to regulate.

The DOT is very useful for consumers to file a direct complaint and even though they don’t have direct enforcement powers in individual cases, all of these complaints are compiled into a monthly report. If complaints about a certain carrier mount then the agency takes enforcement action and levies fines on the carrier just like in this case.

Conclusion

The Canadian Transportation Agency continues to muddy the waters here, trying to provide grounds to airlines to refuse cash refunds likely with the involvement of an individual close to the airline industry in Canada. It’s insane how such a biased agency can be tasked with regulating an industry in an obviously corrupt manner.

Having dealt frequently with the CTA as well as many other national enforcement bodies over the last two decades it’s not too much to compare them to a toothless tiger at best and a boot licker at worst. Both the U.S. DOT and the EU Commission have consistently reprimanded and fined their airlines for violating the law yet Canada has apparently no desire to do so.

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