Canada No Longer Requires Airlines To Provide Refunds For Flight Cancellations

Filed Under: Air Canada, WestJet

Canada improved protection for air passengers back in 2019. In light of the current situation, though, the Canadian Transportation Agency is giving airlines a lot of leeway.

Airlines no longer have to provide passengers with refunds

The Canadian Transportation Agency decided yesterday that airlines no longer have to provide passengers with cash refunds if flights are cancelled.

In light of the current situation threatening the economic viability of airlines, the CTA has decided that it’s appropriate for airlines to instead provide vouchers for future travel in lieu of refunds, assuming they don’t “expire in an unreasonably short period of time,” which is considered to be 24 months.

Here’s the explanation from the CTA (the bolding is mine):

The COVID-19 pandemic has caused major disruptions in domestic and international air travel.

For flight disruptions that are outside an airline’s control, the Canada Transportation Act and Air Passenger Protection Regulations only require that the airline ensure passengers can complete their itineraries. Some airlines’ tariffs provide for refunds in certain cases, but may have clauses that airlines believe relieve them of such obligations in force majeure situations.

The legislation, regulations, and tariffs were developed in anticipation of relatively localized and short-term disruptions. None contemplated the sorts of worldwide mass flight cancellations that have taken place over recent weeks as a result of the pandemic. It’s important to consider how to strike a fair and sensible balance between passenger protection and airlines’ operational realities in these extraordinary and unprecedented circumstances.

On the one hand, passengers who have no prospect of completing their planned itineraries with an airline’s assistance should not simply be out-of-pocket for the cost of cancelled flights. On the other hand, airlines facing huge drops in passenger volumes and revenues should not be expected to take steps that could threaten their economic viability.

While any specific situation brought before the CTA will be examined on its merits, the CTA believes that, generally speaking, an appropriate approach in the current context could be for airlines to provide affected passengers with vouchers or credits for future travel, as long as these vouchers or credits do not expire in an unreasonably short period of time (24 months would be considered reasonable in most cases).

The CTA will continue to provide information, guidance, and services to passengers and airlines as we make our way through this challenging period.

Both Air Canada and WestJet policies are now exclusively allowing for future flight credits valid for 24 months when a flight is cancelled.

Air Canada no longer has to provide refunds

This is obviously all very complicated

Here in the US we’ve seen airlines try to get away with not providing refunds for cancellations (hey, United!), even though that violates Department of Transportation regulations. As consumers, government regulations are only so useful when frontline airline employees aren’t empowered to follow them:

  • You can file a complaint with the DOT, but that’s not going to get you a resolution within minutes (or hours, or days, or probably even weeks)
  • Airlines may at some point in the future be fined for violations, but that’s not something that really benefits consumers directly

This current situation does raise some interesting questions — DOT regulations apply for flights to or from the USA, while CTA regulations similarly apply for Canadian flights.

If you booked a flight from Canada to the US, which rule applies? Well, the truth is that it probably doesn’t matter, because you’re not going to convince a frontline employee to give you a refund if that’s not the company’s policy.

WestJet no longer has to provide refunds

Bottom line

Many airlines have been trying to skirt government regulations to avoid giving passengers refunds. In the case of Canada, the CTA has now decided that airlines don’t actually need to refund passengers if they cancel flights, but rather only have to provide a future flight voucher.

It’ll be interesting to see if other governments follow similar policies…

Comments
  1. So essentially they are getting two bailouts. One from taxpayers and the other from stealing consumers money. Unbelievable.

  2. I have an Air Canada flight booked for April. If I accept the voucher, can I use it to book a United flight later? We live in California, so a voucher only for Air Canada flights have limited use.

  3. There will be many, many people without any income right now who can use the cash from a refund rather than a future promise from a voucher. Who is bailing them out?

  4. The world is so goddamned broken right now.

    I own a small business and we employ multiple veterans. As far as I understand, we will get $0 aid. Because to help a normal human being like me would be *gasp* socialism.

    But hey, are you an airline who is laying off your staff and stealing customer money? Hell yeah bro, heres $10B. It’s not socialism if we’re spending the money on billionaire corporations! Wheeeeee!

    “You people want guaranteed healthcare?!?!?! we cant afford that!! Sure, every other developed country can, but we have to bail out inefficient businesses every year and make sure people don’t leave the confines of their 50+ hour/week office job if they want any sort of medical care.

    Cool, so anyone who works hard or has ambitions is basically fucked and anyone who is the billionaire son of someone who inherited a cushy role at an airline? Bailout time baby!!!

  5. For Air Canada, I get this. The government knows they are gonna have to bail it out. This just transfers the bailout to unwitting customers. Not fair but it will reduce the amount of money Canadian government has to bring to table. For the other smaller Canadian airlines, I hope Canada plans to bail them out. Because if not, this will make little difference to them but cost a lot of flyers a bunch of money.

  6. While I’d prefer a refund – a 24 month voucher would be acceptable. United is trying to make me travel by May 6 of this year . . . ridiculous.

  7. I had applied for a refund before the CTA’s decision and was supposed to have it processed in the ensuing few days.
    Then this happens and now the airline has backtracked on the refund and wants to give me credit instead (minus 100 CAD in “administrative fee”).
    Talk about theft.

  8. This is a force majeure situation. It is not business as usual, so the usual rules should not have to apply. I don’t see what folks are so up in arms about. You will have two full years to use your credit! The airlines are more desperate than you are right now, so people need to cut them some slack. Agents are so overwhelmed right now that the manual processes involved in issuing refunds to credit cards would take time away from helping customers who actually need to travel within the next 72 hours. The DOT will likely follow suit here in the US.

  9. @Ben

    This is an In-Accurate twist of the facts.

    1) The quoted is an unsigned, unattributed statement on the CTA’s website, which has no legal effect:

    2) CTA has not made it a legally binding decision or directive. Legally binding decisions are available here – https://www.otc-cta.gc.ca/eng/decisions

    3) CTA cannot supersede provincial or federal laws and they clearly state that Airline or travel provider should provide refund in the original form of payment in-case the flight is canceled unilaterally.

  10. Presumably credit card chargebacks still apply here? If so, can you update article to recommend that?

    but I learned recently these are time limited (60 days in US for most cards I have), so you need to act quick and might be out of luck if you booked in advance.

  11. Wow who did they pay off to get a policy like this? And I’m surprised some would justify it. Our own government should make it mandatory that if the carriers get the bail out, they must refund these tickets for cancelled flights. There is far to much power given to corporations and I think we need to fundamentally change the structure and power dynamic in society aka Bernie Sanders. I’m surprised Canada would do this, I thought they had more consumer friendly policies than the U S of A.

  12. The structural issue here is that airlines, and hotels to a lesser extent, have become enormous unregulated deposit taking institutions. They use cash from prepaid ticket sales to fund their operating expenses, and even losses, and when profits do accumulate they fund share buy-backs because passengers are funding their capitalization.

    The solution is simple. Prepaid ticket cash should be held in trust by an independent, and preferably regulated, third party trustee or by the credit card companies. Cash would be released either to the airline or hotel only on completion of each journey or stay, otherwise it I would be returned to the passenger.

    That might have to be phased in as the immediate capital raising requirement would be enormous.

  13. So the Canadian govt is telling airlines they don’t have to provide a refund and Lufthansa/Swiss says you can refund but isn’t processing them…
    and you’re still most angry with United?
    Hmm…

  14. I have longhaul flights on Air Canada on April 8th that are cancelled. I don’t want a refund or a voucher as they are return flights (one-way may end up being more expensive esp. the fare classes I have booked). I am going to ask Air Canada to simply postpone my ticket to a date in the future (say May or June).

  15. Idea: If airlines can’t afford to give a refund, why not offer customers a pro-rata share of stock instead? Customers are creditors at this point.

  16. All this stuff is irrelevant to UK consumers using UK credit cards; under our law, the credit card company is on the line for the delivery of the service (or goods) that has been paid for. Therefore, if there’s no service, it’s the credit card company that is legally obliged to refund the consumer.

    The credit card companies can look after themselves: many of them will have access to the bank accounts of the company.

    I’m intrigued to see some other commenters arguing these poor multi-billion dollar companies need the cash right now. So the poor consumer, who’s maybe also just lost their job, doesn’t?

    And sone airlines are cheating. Here’s a news story about Ryanair, offering generous refunds. But, when you try to use the refund, all the tickets you are offered are ~$100 more than the exact same ticket on their website that anyone can buy for cash…

    https://www.theguardian.com/business/2020/mar/26/ryanair-accused-of-ripping-off-passengers-over-rebooked-flights

    In what world is this not theft?

  17. @Sam

    Stop throwing around Force Majeure like you have any idea what it means for contract law.

    Force majeure voids the contract and the airline is not responsible for getting you to your destination or for damages that follow. You get your money back. If you buy a Lamborghini and a hail storm destroys all the Lamborghini, the dealership can’t shout Force Majeure, keep your money, and drop Kia in your driveway.

  18. @ Ben

    2 years seems like a long time now. But it wont after all the money gets spent on the current unplanned virus expenses, the money that was suppose to pay for everything else that goes w/ a vacay besides the flight & hotel (like car rental, meals/drinks out, touristy things, shopping, etc) so great I’ll be stuck with a flight and hotel, but no spening money, so cant go anywhere or do anything.

  19. @PTO. a bit late now. And there is BSP And the airline doesn’t technically have the money in many cases until the passenger has flown and it was issued by a third party – tour operator / travel agent etc

    @ the nice paul. Hundreds of thousands of these people work for airlines in fact its millions if you count all the staff who work at airports whether it’s the duty free shop , cafe or the refuelling companies. What is the difference between the consumer who lost their job and the employee in the same position ?

  20. Just a note that Gabor Lukacs, the creator of Air Passenger Rights Canada, says passengers should be refunded and that an unsigned statement on the CTA’s website is not legally binding:

    “IMPORTANT: The article correctly notes that the federal transportation lapdog (CTA) issued an unsigned statement on its website, backing the airlines.
    The unsigned statement has no legal effect.
    No legally binding decision or determination was issued to reflect what is in this unsigned statement.
    Actual decisions and determinations of the CTA are found here:
    https://www.otc-cta.gc.ca/eng/decisions

    This is in reference to an article posted today by CBC News.

  21. If it was a true credit they were offering towards future travel in the next 24 months I think that would be a fair compromise given the circumstances, but that’s not what they’re offering. The credit is only good for the same traveler, can’t be combined with other credits, and has to be used all at once – if the new ticket is more expensive you pay the difference, if it’s less you forfeit the difference. I was able to successfully do a charge back on two AC bookings last week (pointing out the DOT regulations they were RTs originating in the US).

  22. The Canadian government has consistently supported the country’s carriers over the country’s passengers/citizens, as our Passenger (really airline) bill of rights shows. No surprise we are expected to subsidize outfits like Air Canada twice, as tax payers and passengers.

  23. @Icarus

    Those people also have a contract with their employers, which I’d expect their employers to honour. If the company goes bust and they lose their jobs, I expect the state (and me, as a tax-payer) to help them out — though I realise that’s far too socialistic for some of the red-blooded ‘Muricans on here.

    You may not have noticed, but the world we have known until now is fundamentally based on people honouring contracts. An airline which has got into financial trouble can’t unilaterally alter the terms of contracts. Airlines have shareholders, and it is they that should first be turned to if the business is suddenly short of working capital — after all, one of they reasons the airlines are short is because they returned so much capital to the shareholders.

    I guess you could now argue that many of us are also shareholders, through pension plans, etc. You’d be right. But I don’t expect the company I therefore part-own to steal money from customers. I certainly don’t expect them to justify their illegal/ unethical actions on the basis that they’re looking out for my interests (yeah, right…), so that’s why they had to steal money.

  24. @ The nice Paul

    What you propose overturns about 400 years of corporate law.

    Shareholders of a corporation are exposed to limited liability. The cost of this limited liability is that corporate profits are distributed AFTER corporate taxes have been paid. Contrast this with a sole proprietorship or partnership, where income from the business passes directly through to the owner, at the cost of unlimited personal liability. Obviously, intermediate forms have developed over time–in the United States these are LLCs, LLPs, and S-Corporations–but the trade-offs are always along the dimensions of taxation, liability, and access to capital markets.

    Arguing that shareholders should be forced to put up capital above their initial stake would frankly defeat the purpose of incorporation, probably the most important economic development in the past 500 years.

    What companies need right now are loans. The private capital market cannot supply that credit. The only entities large enough to do so are governments. They are the ultimate backstop in modern economies. Governments, however, need to enforce consumer protections in return for these loans.

  25. @Ben That Canadian Transportation Agency statement is only an opinion not a regulation or enforceable decision. Basically little chance of success for people who complain to the CTA. Canadian consumers still have recourses other than the CTA under federal and provincial laws like contract law and consumer protection laws that entitle them to be reimbursed for services paid but nit delivered. But they will have to fight for it with chargeback, small claims court lawsuits and class action lawsuits

  26. What about those who booked expensive refundable tickets? I have an $8K refundable ticket with Finnair departing YYZ in early May that I will have to cancel this weekend.

    I do not want a 24 month travel voucher either – I might or might not travel on Finnair in the foreseeable future. All depends on what trips we take in the future.

  27. I think Australian airlines are next. I say this as I just got an email from Qantas about their new voucher policy which looks like the Air Canada rukes

  28. If the airline refuses to give you a refund for something that is out of your control, then your only recourse is to go to your credit card company to file for a refund with them.

  29. @Richard I don’t think he’s suggesting that shareholders should be liable, but rather that the airline could issue additional shares, diluting the existing shareholders, but raising additional capital

  30. Currently if you have booked an award ticket with miles you can self-cancel at any time with a (varying) penalty, either cash or miles. And you can expect a cash refund of fees and taxes, in due course, as well as a redeposit of your miles.
    This used to be seen as pretty onerous, but in the current set of circumstances is a handy escape hatch.
    Of course most of the cash component would not go the airline ultimately (dishonourable exception BA) so it is not a great concern to their bottom line.
    Funny how things can be turned on its head in the blink of the eye.

  31. @Anthony Thomas – don’t count on credit card disputes to get money. The credit card companies aren’t insurance or charities. They ONLY rebate amounts if there is fraud or they can get the vendor to pay them. In this cash the vendor offers compensation so the credit card will NOT reimburse you.

    Amazing to me that people think credit card companies are this general backstop to make them whole. They are businesses like any other and only reimburse you if they can get payment from the vendor or attach funds they have on hold that would go to the vendor. Even then they research it and if the vendor has a valid case they side with them and give you nothing.

  32. Southwest is no longer issuing refunds for cancelled flights. They haven’t announced the change so it is even worse than the United approach.

  33. @Richard @bob
    Bob is exactly right. I’m not suggesting the end of limited liability and if shareholders would prefer their company to collapse, well, that’s their right.

    But the company doesn’t have the right to steal from their customers to make up for inadequate working capital.

  34. We have non-refundable (main class) tickets we purchased 6 months ago from Alaska for May 6 for a domestic flight.
    Alaska now offers the option to cancel and have them deposit the funds into the My Account wallet (or get a voucher). They might still cancel the flight as we get closer to the date, in which case, in theory, I could get a refund. With the changes that airlines are making, is it “safe” to wait until May? I am concerned that either DOT might change the rules (as in Canada) or Alaska might change its current offer. Also I do not know if Alaska is complying with the current rules of DOT in case they cancel a flight. While still tied to the airline’s existence, the funds in the wallet offer more flexibility than a voucher. Hopefully once in the wallet, the airline would not take the funds away. Your opinion would be appreciated.

  35. @Ben the title is misleading, can you change it. CTA is not requiring refunds, not Canada. Other Canadian laws do require refunds.

  36. Terrible. I have a flight on Canadian North in June for an arctic safari in Nunavut that was cancelled. Nunavut is restricting all travel to those who reside in the province. So far the airline has only offered a credit until January 2021, as if that’s useful. I was hoping I would have recourse through the CTA for my $2500 flight. Instead the airline gets floated by tourists who get screwed. 🙁

  37. So —— has anyone thought of this fix ?
    Forget all the airline bs, ripping off customers, ignoring consumer law etc., its time to dictate YOUR terms

    You say an airline owes you money, any money, preferably a lot of money, (so your not betting $100 against $10000 costs), you hire a lawyer, you go to court, airline calls your bluff, no-one shows up, you get a court order against the assets of the airline, you impound one of their aircraft and or all their ground equipment at your home airport – or whatever is in your jurisdiction, unless and until they pay your funds, costs, and legal fees.

    Your milage may vary depending on your nation, state, jurisdiction

    Thats what I wd do in Australia, esp where the feds are obligated to comply with court orders

    Over to the commentariat

  38. Air Transat is not refunding consumers for cancellations and only offering credits. What is truly maddening is that you have a very limited time to use the credits as you must do so by December 31, 2020! Total scam! So in essence we will see thousands of people trying to rebook all at once and realistically we will not be able to go to original destinations/hotels. We paid for a service in full and now we can not get a refund for a service not provided is deplorable. Future considerations for bookings will definitely not include the airline carriers who essentially ripped us off not only due to the issuance of a credit, but the restricted timelines! What happens when travel is still not safe……….

  39. Outrageous!!! Airlines lobbied for this. Tax payers and passengers now are expected to pay Canadian airlines bloated remuneration for their executives and pilots. NUTS!!!

  40. You are propagating misinformation. The statement from the CTA is merely an opinion. It is not a binding ruling and has no base in case law. The law is clear – refunds are required to be issued on the same method of payment.

    Your article is 100% wrong.

  41. Air canada give future credit whic have to use before the end of this year,that making us have to cancel to get refund with losing 50% total cost;because we dont know we can make it in this year.After we cancel ,now heard that they do credit until next year… It looks like scam…

  42. Even if one were to agree somehow that Canadian airlines should be off the hook with refunds for canceled flights, AC isn’t even doing a good-faith effort, as someone pointed out above. Their flight credit expires in too short order, and doesn’t protect against a fare increase for the same itinerary.

    I feel bad for my friends north of the border. While the US3 leave alot to be desired, AC is effectively a blood-sucking monopoly for Canada. How could a family of four even afford a simple coast-to-coast domestic flight there?

  43. Tbh I didn’t really have a problem with receiving credit for my recently cancelled return trip to MEL. I tried to cancel my booking online and then the website asked me to fill out a form for each passenger for each leg in order to cancel the booking. At 4 passengers with 4 individual legs that means filling out 16 cancelation forms.

    Can anyone confirm if I’m right or wrong here???

    Come on AC. If you’re going to screw us you should at least make the process easy for everyone.

  44. I received the following:
    “If you have a non refundable fare, you can still cancel your trip and receive 100% of the unused value of your ticket as a future travel credit. This credit is valid for travel before March 31, 2021.”
    I paid double the original cost for the return flight. How do I get a refund now?

  45. “Here in the US we’ve seen airlines try to get away with not providing refunds for cancellations” is misleading.

    1) They keep the ticket value for you for 1 year.
    2) After 1 year, if you choose not to use the ticket value, you can get your cash back.

    Stop trying to straw man an imaginary group that can afford to buy tickets to travel but is depending on its refund to survive. Given the crisis, how the airlines are handling it is fair enough.

  46. Question for John:
    In my case, Air Canada does not indicate anywhere on their web-site that the “cash back” is an option if I chose not use their the credit (ticket) after 1 year.
    If Air Canada offers the cash back, where/how can I find it?
    Is this option available on other airlines?

  47. To bob polak, my quote was directed to OMAAT regarding his opinion on the US side, particularly how United Airlines handled the situation. Air Canada could possibly have a different policy, and if the “cash back” is not available even after 1 year, I agree that it is not ideal.

  48. What happens if you die or become physically unable to travel in the next two years? Can your estate then claim the money you were owed? So much for the Air Passenger Bill of Rights!!! The little guy always loses.

  49. I have been told by my Travel agent that I can pay a $300 per ticket cancellation fee and get the remainder refunded by Air Canada. So I’ll be out $600 total. Perhaps it’s worth $600 to never have to deal with this despicable, money-grubbing airline ever again. Canadians are so used to being screwed all the time, that AC is probably surprised we noticed they’re stealing from those of us whose schedules will not permit a later itinerary. (Health issues, caring for infirm parents, etc. make an extended European trip in the foreseeable future impossible.)

  50. I have an Air Canada flight booked for the end of the month that they will not refund (just flight credit). I went to my credit card company (TD Bank) who let me know that if I chargeback, it will be decided in the airline’s favor and the airline may decide to revoke the voucher option if I chargeback. Anyone encountered this? This feels illegal and manipulative. Any advice?

  51. Hi Debra, Have you followed up on the advice to pay the cancellation fee to receive a refund? If so how did this work out and how did you do it?

  52. act of god – so what. business is a risk. stuff happens some good, some bad some very bad. a contract is entered into and then the terms of that contract are retro actively altered to protect one party’s continued viability to the detriment of the other party. no different than a builder taking a 100 percent deposit to fix your roof then keeping the cash because he is very ill and the building association defends this because his business may go bust but dont worry he will do it in two years only by then u live in an apartment so its kinda pointless. this is very bad – a society is built on the rule of law or at least the belief there is obvious justice at hand – otherwise there is anarchy.

  53. Our Air Canada one way non-refundable 1st class flight Vancouver to Los Angeles on 5/26 was cancelled and rebooked to another flight 3 different times by AC, the current flight being 6 3/4 hrs earlier than our original flight. Our flight from Los Angeles on American at the beginning of the trip was just canceled and refunded. We would like to cancel the AC return flight if we can get a refund, as we have no confidence that we will have a need for or even want to use a credit with Air Canada in the next 24 months. However, the AC agent I spoke to regarding a refund said our flight was not cancelled, just “rescheduled” and the US DOT Enforcement Notice Regarding Refunds did not apply to Canadian airlines. What’s my next step, or am I screwed?

  54. Does USA DOT rules not apply to Air Canada if the flight is from the USA to Canada? Because DOT says we should be given a refund for any plane that leaves from the US, but I feel Air Canada is disregarding the fact that they have planes in the U.S. Maybe the shouldn’t be allowed to have business in the U.S. then if they can’t follow USA DOT regulations?

  55. I purchased a RT ticket that was to leave today on AC. Windsor to Toronto to Amsterdam. Return was to be in 5 weeks from Paris to Toronto to Windsor (study abroad program). AC canceled all flights. I am 20 and spent almost $1,000 on these flights. I saved and saved for it. I can’t use it in next 24 months Due to school and work commitments and now I lost over 25% of my purchase price. Being near a Detroit, I should have picked a US Airline who would have provided a full refund. I thought I was saving a little money but it ended up costing me. No more flying on Canadian airlines for me…..not with the risk.

  56. I purchased 5 business class tickets from US to Copenhangen for cruise that was to begin May 29th. The flights are completely cancelled. Air Canada is going to charge me $275 per tickets unless I take the voucher. That is $1375 total! If I take the voucher I have to use it all at once, so all 5 of us would have to travel together again at the sometime ( might not be possible as kids are all young professionals) Also, if I move the date to one year later the cost of the ticket is $1000 more for the exact same route. So I either have to pay $5000 more for the exact same ticket OR lose $1375 if I take the refund. How is this fair? If they are going to refuse refunds on cancelled flights at the very lease they should price protect the exact same route. They are screwing us twice. Once by forcing us to take the voucher and again by raising the cost of the new ticket so that they hit you again. Oh, and if we dropped down to coach so as not to have to pay the additional $5000, then they would keep the cost difference. This is a no win situation. I think I am going to just take the $1375 hit rather than be held hostage to this airline from ever how much more money they can get from me. This was a family splurge to celebrate a milestone. Never have I bought business class tickets for the family before.

Leave a Reply

If you'd like to participate in the discussion, please adhere to our commenting guidelines. Your email address will not be published. Required fields are marked *