Canadian Government Will Help Airlines, With A Catch

Filed Under: Air Canada, WestJet

In positive news for both Canadian airlines decimated by COVID-19, the federal government has announced that it will commence talks this week with the industry about providing federal assistance.

There’s a catch, however, and it’s one many Canadian fliers will be pleased to hear: as part of any support package, airlines will have to provide refunds to customers whose flights were cancelled due to the pandemic.

While US and European authorities had already required airlines in those countries to refund passengers for pandemic-cancelled flights, Canadian airlines have to date gotten away with issuing credits or vouchers instead.

The result? They have kept millions of dollars of ticket revenue without providing the service paid for. And as those of us who have been burned by airlines going rapidly ka-put in the Canadian market before have learned, vouchers are only good if the airline is still around to honour them.

Air Canada Rouge flights were one of the first things to go during COVID-19, and customers whose flights were canceled may get refunds as part of a government aid package for the industry.

Even if all the providers remain solvent, vouchers and credits usually have conditions or time limits attached to them that may make them difficult to redeem, even for those customers whose own economic situation hasn’t been so affected by the pandemic that they can afford to lose out on the cash.

It’s no surprise that Canadians haven’t been happy about it, and it is believed that most of the 8,000 complaints filed with the Canadian Transportation Agency in the first five months of the pandemic are related to refunds, along with a couple of proposed class action lawsuits.

Canadian air travel volumes are down about 90% since March, so I expect that this is going to be a tough pill for the airlines to swallow, but astronaut-turned-Transport-Minister Marc Garneau was crystal clear that “before we spend one penny of taxpayer money on airlines, we will ensure Canadians get their refunds.”

Garneau also alluded to ensuring that regional communities maintain air connections, though what that will look like remains to be seen.

I hope the government holds firm on this, but I expect the talks will take time, so I don’t recommend making immediate plans for that refund money.

Comments
  1. Canada should just join the USA or let us annex. Backwater country and middle power at best. Think of the clout their economy and people could have as Americans.

  2. So is the government going to back pay the airlines with this federal assistance? Or do we just have to refund tickets with money that we no longer have, in hopes of receiving assistance in the future? As we had no revenue from April-November

  3. Total scam. This would entail airlines getting a lot more money from customers (forcibly via the government) than they’ll return to customers.

  4. As a Canadian taxpayer, I second Gary’s comment. Any benefit to customers receiving the refunds would also be greatly diminished by the many month delay of receiving them (i.e. they already took steps to plan for not receiving the money in the meantime).

  5. INS Vikrant

    Not going to happen for two main, linked political reasons.

    1. Canada wouldn’t wish to join the US as a single additional state – each province and territory would insist on joining as a separate state with 2 senators each for starters which would mean 26 senators and at least 50 seats in the House (38m population / 750,000 per current house seat).

    2. The GOP would lose any chance of retaining or getting power because Canadians simply wouldn’t vote for them. Most Canadian conservatives are repulsed by the GOP. Compared to the US GOP Canadian conservatives would be considered liberal with their support of free healthcare at the point of use, welcoming immigration and having strong social programmes and that’s just for starters.

    US needs to give statehood to DC and Puerto Rico states first before looking to expand any more.

    Anyway it’s good the Canadian government are finally insisting the airlines refund passengers fully and it should have been insisted upon much earlier.

  6. I still can’t wrap my head around the concept of airline being able to terminate a contract without providing full refund. How on earth can that be legal?

    If I told my clients I will not provide the service they paid for and I won’t give them their money back (but they can buy another service from me that they may or may not want and I may or may not provide), I would have lawyers all over me.

  7. @ChrisC i agree. Camada helped us fight the confederates. They would help us surpress the neo-confederates helping themselves along the way.

  8. So this completes the circle….I give the government my taxes, the government gives my taxes to the airlines, and the airlines give me back my tax money (ie unused ticket purchase). Right.

  9. They should give assistance directly to people (ie refunds), and let Air Canada eat dirt. Canada should not to get into any kind of dealings with a criminal enterprise, much less pour money into it. What Air Canada did is called theft. It still boggles my mind that Air Canada try to justify their position. I mean, they even think nationals laws of other countries does not apply to them because they are Canadian company, even though they fly into other countries airspace, and land in foreign countries.

  10. Air Canada has gotten billions in subsidies over the years (direct and indirect in form of protectionism), has now stolen billions from Canadians, while the CEO makes >$100 mil a year.

    This rotten company just needs to die.

  11. For most of the tickets cancelled in 2020, AC has already handed out (or plan to) provide vouchers instead of refunds. Does this mean that customers can actually request a cash refund instead of their vouchers ?

  12. @arshi007

    This would be an impossible undertaking for AC.

    This is an airline with IT incapable of anything.
    AC themselves have no idea where the vouchers are, they ve lost PNRs, have issued ecards that if invalidated will have nowhere to go back to.

  13. @ChrisC you conveniently forget the most obvious fact, that Canadians are very happy not being a part of the USA.

  14. Air Canada’s Q3 results today indicated it has about CAD $1.5 Billion in cash that is for cancelled bookings that have not been refunded back to the customer and instead are future travel credits. Just to give you an idea of how Air Canada alone would have to pony up $1.5 Billion, let alone all the other carriers, to get the government “assistance.” Depending on the “assistance” and other conditions, it may not be worth it for the airlines to actually take.

  15. Great, if only it applied to all airlines. Still waiting for a refund for a flight, although most of the ones I booked were eventually refunded.

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