Justice: DOT Fining Air Canada $25.5 Million For Refund Shenanigans

I have a feeling that a lot of consumers are going to be happy to see this…

Air Canada was terrible with pandemic flight refunds

The United States Department of Transportation (DOT) requires airlines to offer passengers cash refunds in the event that their flights are canceled. As you might expect, during the pandemic we saw virtually all airlines cancel flights, both domestically and internationally, due to travel restrictions and lack of demand.

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Some airlines were good about following the law and offering passengers cash refunds, while other airlines weren’t. Arguably Air Canada was among the worst — the airline defied DOT regulations (which applied for flights to & from the United States) and refused to offer passengers cash refunds. That was despite repeated warnings from the DOT.

Now, I think it’s worth acknowledging that of course airlines were in a liquidity bind during the pandemic. That being said, so were many consumers (who could have used the cash from refunds), and ultimately the law is the law. You can’t steal just because you’re in a tough financial spot.

Air Canada only recently started retroactively issuing cash refunds, as a condition of receiving aid from the Canadian government.

The DOT is now fining Air Canada over refunds

The DOT is pursuing a $25.5 million civil penalty against Air Canada for failing to provide consumers prompt refunds after canceling or significantly changing flights between the United States and Canada. The amount of the fine considers consumer harm, the scale of the violations, Air Canada’s knowledge and intent, and deterrent effect.

As the DOT describes the situation in the filing:

• Between March 1, 2020, and the present, over 6,000 complaints were received by consumers regarding Air Canada refunds, and it’s believed that 5,110 of these represent violations
• In answers to these complaints, Air Canada has argued that it isn’t required to provide refunds for flights due to the coronavirus pandemic
• Air Canada was notified multiple times throughout 2020 and 2021 that the carrier’s position lacks merit, yet the airline refused to change its policy until April 2021 (when the airline received aid from the Canadian government)

I love how this is described in the filing:

Air Canada’s new refund policy does not change the fact that Air Canada committed thousands of violations of US law prior to that time. Moreover, in the absence of an order directing Air Canada to cease and desist from future similar violations, there remains the possibility that Air Canada could revive its no-refund policy in the future.

Bottom line

Air Canada was terrible with refunds during the pandemic. I get that it has been a really tough time for airlines, but it has also been a really tough time for everyday people, who have had their money held hostage by airlines.

Air Canada was warned repeatedly that it was violating the laws of the United States by refusing to offer refunds for canceled flights, but the airline didn’t change course. It wasn’t until Air Canada received a huge government bailout (with a condition being retroactive refunds) that the airline finally did the right thing.

Now Air Canada will likely have to pay the price. I’m curious to see how this plays out, and how much of this fine the airline ends up having to pay.

Well done, Secretary Pete & Co!

What do you make of the DOT going after Air Canada over refunds? How do you think this will play out?