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DOT Proposes $25 Million Fine Against Air Canada

The U.S. Department of Transportation is seeking a civil penalty against Air Canada of over $25 Million USD, over allegations the airline has not provided timely refunds to flyers with cancelled flights. The Canadian flag carrier claims the action has “no merit,” and intends to challenge the action.

Air Canada could be facing fines exceeding $25 million USD ($30.42 million CAD), on allegations the airline has not provided timely refunds to flyers with cancelled flights. In a press release, the U.S. Department of Transportation (DOT) Office of Aviation Consumer Protection (OACP) announced they would seek a $25,550,000 USD penalty for the airline’s “failure to provide refunds in a timely manner to thousands of consumers who requested them.”

Civil Penalty Revolves Around Air Canada’s Refund Policy

According to the DOT’s release, they are justifying the high penalty based on several considerations, including “consumer harm caused by the violations.” The organization claims they have received over 6,000 complaints against Air Canada for not providing refunds on flights that were cancelled or experienced major changes, due in part to the COVID-19 pandemic.

“In May of 2020, OACP announced it would use its enforcement discretion to accommodate airlines that needed slightly longer than usual to process refunds given the high volume of requests, as long as airlines were making a good faith effort,” the DOT press release reads. “Air Canada did not make such good faith efforts.  Instead, for almost one year after the announcement of the May 2020 enforcement notice, Air Canada continued its no-refund policy in violation of U.S. law.”

Under federal law, airlines are responsible for providing refunds upon request to airlines which cancels or significantly changes a flight upon request. Refunds must be processed within seven days for those who made purchases with credit cards, or 20 days for tickets purchased with cash.

The DOT says they are also investigating refund practices of other airlines, including domestic and foreign carriers operating in the United States.

In a statement to The Hill, Air Canada said the DOT’s case “has no merit,” and intends to challenge the allegations.

“Since the start of the pandemic, Air Canada has refunded more than $1.2 billion to eligible customers with refundable fares whose travel was impacted by COVID-19,” a spokesperson for Air Canada told The Hill. “Since April 13, 2021, eligible customers, including eligible U.S. customers, who purchased a non-refundable ticket for travel on or after February 1, 2020 but did not fly have been able to obtain a refund from the carrier.”

Action Marks Second Time Air Canada Received Negative Attention for Refund Policies

The DOT’s action marks the second time a federal governing body has questioned Air Canada for their refund policies. In November 2020, the leader of Transport Canada said they would only consider an airline bailout policy if airlines produced refunds to flyers affected by the COVID-19 pandemic.

NavSTL June 23, 2021

Kinda seems like the Air Canada statement of "we started processing refunds for cancellations of nonrefundable fares until April 2021" basically admits the USDOT complaint that Air Canada didn't start processing refunds until almost a year after the May 2020 notice, no?

strickerj June 22, 2021

The last paragraph is correct, though perhaps incomplete - Last November, Transport Minister Garneau did say a bailout would only be considered if the airlines provided refunds. It was well after that (April of this year) that the deal was actually brokered, and it did indeed require passenger refunds in exchange for the agreed bailout.

cur June 20, 2021

Poor reporting. You should just delete the last paragraph. The Government du Canada ended up bailing out AC with a requirement that the bailout money be used to provide refunds. Not the other way around, like you reported.