Air Canada Settles, Will Pay $4.5 Million For Refusing To Issue Timely Refunds

Air Canada Settles, Will Pay $4.5 Million For Refusing To Issue Timely Refunds

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Air Canada will finally pay for refusing to refund passengers in the United States in a timely fashion, though the fine is only a small portion of what was initially proposed.

The backstory on Air Canada’s DOT fine

Back in June 2021, the United States Department of Transportation (DOT) announced it would pursue a $25.5 million civil penalty against Air Canada for refusing to provide customers with refunds during the pandemic, when flights between the United States and Canada were canceled or had significant schedule changes.

The DOT requires airlines to provide cash refunds in these situations, and Air Canada was among the worst airlines during the pandemic when it came to adhering to that. The company was notified multiple times throughout 2020 and 2021 that it wasn’t following the DOT’s rules. Air Canada only started retroactively issuing refunds in April 2021, as a condition of accepting aid from the Canadian government.

Air Canada tried to fight back against this fine, making some bizarre and disingenuous arguments. There’s now an update to this case.

Air Canada agrees to pay $4.5 million for slow refunds

It has today been announced that the Department of Transportation’s Office of Aviation Consumer Protection (OACP) and Air Canada have come to an agreement, and Air Canada will pay $4.5 million related to these issues. This is now pending approval from the Administrative Law Judge presiding over the case.

As US Deputy Secretary of Transportation Polly Trottenberg describes this:

“Today, the US Department of Transportation’s OACP is holding airlines accountable by ensuring that they treat passengers fairly when flights are significantly changed or cancelled. The Department is committed to protecting airline consumers and ensuring that all passengers receive the timely refunds to which they are entitled.”

While this amount is significantly lower than what was initially being sought, this does mark the highest amount the OACP has ever assessed against an airline. In addition to the $4.5 million settlement, Air Canada has also agreed that going forward, the airline will refund airfare to passengers who purchase nonrefundable tickets to or from the United States when their flights are canceled or significantly delayed.

Of the $4.5 million, $2.5 million will be credited to Air Canada for refunding passengers who purchased a nonrefundable ticket for a flight to or from the United States that the passenger decided not to take. The remaining $2 million will be paid to the US Treasury.

The OACP believes that this settlement is in the public interest, and serves to deter Air Canada and other carriers from committing similar violations in the future.

Bottom line

Air Canada will pay a $4.5 million fine for not providing timely refunds to passengers traveling to & from the United States when flights were canceled. $2.5 million of that can be used by Air Canada for refunds, and only $2 million is going to the US Treasury.

It’s good to see that Air Canada is facing some sort of punishment for its refund policy, though this fine is a far cry from the initial $25.5 million penalty that was proposed.

What do you make of this settlement between Air Canada and the DOT?

Conversations (13)
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  1. alcw Guest

    we never got TAP to refund us for covid cancellation in 2020.

  2. Lara Guest

    Alitalia was worse in my opinion. They absolutely refused to refund - and only gave a year to use their ‘credits’. But they are no longer operating.. guess you can’t get blood from a turnip.

  3. JohnHam New Member

    A fine that's not really a fine.

  4. axck Guest

    Huh, so that is why I got that refund back in spring from them after giving up last year…

  5. Jeff Guest

    How do I get on board this? I've been pursuing my refund for months! I received my confirmation email in May of this year, was told it may take up to two billing cycles (of the credit card used) before it was issued. SEVEN MONTHS LATER no one can tell me where my refund is!

    1. RCB Guest

      File a complaint with the DOT, I've found that gets my refunds taken care of within a week or two.

  6. PM1 Guest

    I was one of the passengers impacted by this. While the $4.5MM fine is better than nothing, it doesn't do justice to the hours and hours passengers have spent on the phone with condescending AC personnel. AC probably knew from the get go that they would be able to negotiate the fine down and face virtually no consequences. I bet other airlines will try this exact tactic in the future.

  7. Charles Guest

    People should be thankful that the DOT actually defends consumers.. In countries like South Africa multiple airlines are doing exactly what Air Canada did and will get away with it

    1. Todd Guest

      Hell, in CANADA, Air Canada did this to us, as did WestJet.

  8. Todo Guest

    Should have banned them from flying to the US for a year. Such paltry fines serve no purpose.

    1. teo Guest

      the us would never ban Canadas life support flag carrier and if they did canada would immediately ban access to Canadian airspace which is essential for us carriers.... would need up costing the us a lot.... also american has racked up a lot of Canadian fines growing to over $250 million and being settled at just 8 million, canada and the us allow each other to get away with things as along as it doest screw one side over the other

  9. guisun Platinum

    I'm done with AC. This was blatant, they way they lied about how AC flights flying to and from US was under no USDOT jurisdiction to avoid paying refunds was really a slap in the face. Many needed their money, just like businesses were hit hard by the pandemic. People lost jobs during pandemic, and here is AC lying about having to refund. AC got a "pandemic loan" as the expense of passengers, and it was not even just Canadians, but worldwide.

  10. Super New Member

    My theory is that this is what AC planned for all along. They didn't have the cash on hand to pay back refunds so tried to stall and delay for as long as they could, knowing they would get a fine, but hoping the fine would come at a time when they were in a healthier financial situation (and the fine would be negotiated down to an insignificant number).

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Todd Guest

Hell, in CANADA, Air Canada did this to us, as did WestJet.

1
Charles Guest

People should be thankful that the DOT actually defends consumers.. In countries like South Africa multiple airlines are doing exactly what Air Canada did and will get away with it

1
Todo Guest

Should have banned them from flying to the US for a year. Such paltry fines serve no purpose.

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