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

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

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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.

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.

Air Canada refused to issue refunds for canceled flights

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.

Air Canada is facing a $25.5 million fine

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?

Conversations (32)
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  1. Kasman Guest

    After a bitter series of negative interactions with Air Canada, where they took the eventual dishonest position that my documented cancelable business class tickets were not truly cancelable, I was able to get a 100% refund at the end of 2020 using my CC company via a formal dispute action ($8500). I also filed a DOT complaint, so would be nice to see some retribution at some point.

  2. Sir Walter Raleigh Guest

    The USA should annex all of Canada and teach them how to govern themselves properly. This country that was conjured up out of thin air in 1982 should not exist, cannot be trusted to govern itself, and NEEDS either the USA or UK to run its affairs.

  3. GAF Guest

    I was actually lucky enough to be refunded by AC last summer for a Can-US flight booked weeks before the pandemic started. I requested the refund by asking AC via Facebook messenger. I shared my exact text used with a passenger rights group but subsequent passengers who tried it were denied. It was a total inconsistent mess trying to get a refund from them but I just happened to luck out.

  4. MixedNYGuy Guest

    Let’s see what happens to BA for engaging in the same type of refund shenanigans go which a federal judge has already allowed for further due diligence which may result in a class action.

  5. JeffB Guest

    I had the same issue for a refund and I talked to a rep and they basically said AC isn’t giving refunds cuz they don’t have to. The minute I saw the bailout I applied for my refund and got it 3 weeks later. I hope South Africa airlines is next to be fined or bailed out.

  6. Jojo Guest

    I called them to get a refund for my daughter's $600 ticket back in 2020, the lady had the nerve to say to me, this is a business and if we were to refund money to passengers we would lose money. She saud it like it was me or my daughter's fault with such attitude, she then said we can only offer her money in the firm of a voucher good travel whenever she wants....

    I called them to get a refund for my daughter's $600 ticket back in 2020, the lady had the nerve to say to me, this is a business and if we were to refund money to passengers we would lose money. She saud it like it was me or my daughter's fault with such attitude, she then said we can only offer her money in the firm of a voucher good travel whenever she wants. I pleaded with the lady that we really needed the money, but she kept insulting me like it was my fault. So now she is stuck with this virtual voucher thing when she could have had her money back. I would never travel with Air Canada.

  7. PM1 Gold

    Very glad to hear this Ben. I am one of those who had their refund delayed by 13 months (AC was the only airline out of 6 that delayed/denied my refund for so long). I complained to the DOT last April but didn't get a response at that time. So happy to see this after months of Air Canada's nonsense flippant argument.

  8. Eskimo Guest

    Will they pay the fines in "travel credits"?

  9. EH Guest

    We were one of the ones. We received a "voucher" of sorts. It gave me 2 years to rebook our flight to the same region. I only got that because I paid for trip insurance. Otherwise it would've been nothing at all. After said lawsuit/bailout we did get our money back minus 500.00 for the travel agent fee or some BS like that. These are business class seats to Italy, so they weren't cheap. Glad...

    We were one of the ones. We received a "voucher" of sorts. It gave me 2 years to rebook our flight to the same region. I only got that because I paid for trip insurance. Otherwise it would've been nothing at all. After said lawsuit/bailout we did get our money back minus 500.00 for the travel agent fee or some BS like that. These are business class seats to Italy, so they weren't cheap. Glad to see we got our money, dad to see it had to go like this for them to do it. We will definitely rethink Air Canada in the future.

  10. Mark Fischer Guest

    SAS should be next, a real shame for the airline industry!

    1. Sir Walter Raleigh Guest

      I wrote into Aeromexico for a refund, and they just gave me a pound of beans and tortillas!

  11. Christopher Foster Guest

    AC also paid 10 million in bonuses to the top brass. Air Canada is evil.

    1. B. Goodsell Guest

      The bonuses got stopped, both Canadians and others worldwide sent up enough disgust to have ethics kick in.

  12. Alex Guest

    I wish the DOT had fined AC $200M so they would end up paying at least $25.5M dollars. These things always get negotiated down, and AC will get away with murder, because our government refuses to protect Americans from foreign enterprises. At least those in the EU get protection from Amazon, Google, Facebook and Uber.

  13. Ram Guest

    Ah! This explains why I recently got a refund back. I had booked through Expedia and only got an airline credit. It was a huge amount for me (USD 2500+) because I had planned for a long international trip with multiple hops. Still I chose to agree with the situation and live with the credit. What pissed me off was that I was informed that I had to use all of my credit in a...

    Ah! This explains why I recently got a refund back. I had booked through Expedia and only got an airline credit. It was a huge amount for me (USD 2500+) because I had planned for a long international trip with multiple hops. Still I chose to agree with the situation and live with the credit. What pissed me off was that I was informed that I had to use all of my credit in a single transaction and any unused credit will be wiped off. Very happy that the refund was issued!

    And yes, bravo DOT!

  14. Alex Z Gold

    I wish that could fine Canada for keeping the borders closed!

  15. Mike Guest

    Air Canada will claim financial hardship and try to argue that the US government announced bailouts for their airlines in April 2020 which is a full year sooner than the Canadian government did. That excuse is really lame. At the outset of the pandemic Air Canada was boasting that they were in a strong financial position and on top of that they secured additional lines of credit. Air Canada was never poor.

    What happened is...

    Air Canada will claim financial hardship and try to argue that the US government announced bailouts for their airlines in April 2020 which is a full year sooner than the Canadian government did. That excuse is really lame. At the outset of the pandemic Air Canada was boasting that they were in a strong financial position and on top of that they secured additional lines of credit. Air Canada was never poor.

    What happened is Air Canada gambled and lost: they used ticket refunds as leverage in bailout negotiations with the Canadian government. They eventually got what they wanted while knowing all along that they were in violation of US law. If they had only given refunds to US customers they would have had a riot in Canada (a very polite riot).

    If Canadian companies want to do business in the US or any other country for that matter, they need to get the message that they have to obey consumer laws wherever they operate. That's a lesson that can only be learned with a fine - one that hurts a lot.

  16. Sheri Almond Guest

    I have a "closed case" from my request for refund/voucher, although I've received nothing, nor any information after many requests and Tweets.

  17. Greg Guest

    And so...who gets the money? I recently received my refund from Air Canada (some 14 months later). Happy to have a fine levied against them, but would think that the aggrieved parties (i.e. all of us who waited forever for our refunds) would be the beneficiaries of any financial penalty, no?

  18. Lee in Alpharetta Guest

    I was one of the "victims." Booked a flight from the USA to Tokyo in July of 2020 to fly in April of 2021, hoping that things would be back to normal by then. Air Canada canceled all my flights in January of this year so I started trying to get a refund. Some of the agents were downright surly, telling me I was wrong about the DOT regulations.

    Got nowhere until the Canadian...

    I was one of the "victims." Booked a flight from the USA to Tokyo in July of 2020 to fly in April of 2021, hoping that things would be back to normal by then. Air Canada canceled all my flights in January of this year so I started trying to get a refund. Some of the agents were downright surly, telling me I was wrong about the DOT regulations.

    Got nowhere until the Canadian government stepped in with the bailout. Then got a refund during the phone call I asked for it. Left a very bad impression on me, though. Will think twice before booking them in the the future.

  19. AC Guest

    I’m hoping something similar will happen to TAP. Still waiting for a refund… doubt I’ll get it. Do you think TAP get fined as well and do the right thing?

  20. Deborah Guest

    I was eventually issued a refund from Air Canada AFTER paying a $300 per ticket penalty. Now, I understand I will get that money back -- someday. One thing is certain: I will never again book Air Canada. They treated their customers like dirt. Canadians are used to it. Europeans and Americans demand better.

  21. Sung Guest

    I had Canadian friends defend Air Canada position, purely on fact "Americans" were criticizing Canada/Canadian company(since some of the passengers were Americans), even though they would normally be completely be against Air Canada, if the complaints were from Canadians only. This fine from US DOT will cause a backlash from the Canadian public. They will claim it is USA bullying Canadian company, how USA does not have jurisdiction, that Canada doesn't deserve fines because they...

    I had Canadian friends defend Air Canada position, purely on fact "Americans" were criticizing Canada/Canadian company(since some of the passengers were Americans), even though they would normally be completely be against Air Canada, if the complaints were from Canadians only. This fine from US DOT will cause a backlash from the Canadian public. They will claim it is USA bullying Canadian company, how USA does not have jurisdiction, that Canada doesn't deserve fines because they did some repatriations flights for Canadians, etc..

    1. David Diamond

      While I'm not the "Canadian public", I am a Canadian, and none of the Canadians I know are against Air Canada getting fined by Canada, the US, the EU or really any entity that chooses to pursue the issue. They deserve every bit of penalty coming their way.

    2. Sung Guest

      Glad that you see it that way. I was quite shocked they disagreed that average people's money was being held hostage.

  22. smallmj Guest

    Peanuts. They should have been hit harder with such a flagrant violation

  23. keitherson Guest

    Also it would be helpful to link to the actual DOT Press Release or statement than simply collect more internal clicks for your own articles, Lucky. I had to google for that...

  24. keitherson Guest

    Thank you Pete. Absolutely embarrassing as a Canadian that the US has to stand up for consumer rights.

  25. Drew Guest

    @Lucky,

    What does DOT do with the funds from any fines they imposed? Do they go back to airports too support infrastructure upgrades? Would be curious to see an article about what happens to the funds from fines.

  26. Todd Scheven Platinum

    Bravo DOT. I only wish the penalty came out of Air Canada's coffers and not my pocket, as a Canadian taxpayer, because let's face it, they'll be paying that fine with proceeds from the federal bail-out.

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

David Diamond

While I'm not the "Canadian public", I am a Canadian, and none of the Canadians I know are against Air Canada getting fined by Canada, the US, the EU or really any entity that chooses to pursue the issue. They deserve every bit of penalty coming their way.

1
Kasman Guest

After a bitter series of negative interactions with Air Canada, where they took the eventual dishonest position that my documented cancelable business class tickets were not truly cancelable, I was able to get a 100% refund at the end of 2020 using my CC company via a formal dispute action ($8500). I also filed a DOT complaint, so would be nice to see some retribution at some point.

0
Sir Walter Raleigh Guest

The USA should annex all of Canada and teach them how to govern themselves properly. This country that was conjured up out of thin air in 1982 should not exist, cannot be trusted to govern itself, and NEEDS either the USA or UK to run its affairs.

0
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