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Master thread Air Canada Refunds vs credits; Class action lawsuit filed

Old Dec 10, 2020, 7:55 pm
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As of April 13, 2021 (in conjunction with the federal government bailout), AC is providing refunds for flights cancelled due to COVID, which applies to tickets with travel after February 1, 2020, and purchased before April 13, 2021. This includes flights cancelled by customers rather than AC.

Going forward (i.e. tickets purchased on or after April 13, 2021), cancelled flights will be refunded if AC does not offer a re-booking option with departure +/- 3 hours from the original time.

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Master thread Air Canada Refunds vs credits; Class action lawsuit filed

Old Apr 2, 2020, 1:02 pm
  #46  
 
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Originally Posted by Adam Smith
It may have been "evident" to you, but the exact extent and consequences were not "evident" to many. Nor are your comments at all relevant to those who purchased tickets before then who now can't get refunds. No one can blame AC for selling me a YYC-NAS ticket for Easter 2020 last August, or a bunch of YYC-YVR trips for Q2/Q3 in December.

No, that's not how it works. If the customer has a right to get a refund from an intermediary, e.g. credit card issuer or travel agent, the consumer doesn't have a claim, the intermediary would have a claim, and that would be subject to the terms of whatever agreement exist between the intermediary (or any further intermediaries) and AC, which may or may not be unsecured.

Furthermore, any tickets/credits that are honoured don't become claims against AC in an insolvency, because AC has fulfilled (or will fulfill) its obligation.

No one can say for sure what would happen to travel credits in an insolvency. It would depend in part on the scope of the problem. If it's relatively small, compared to the other liabilities, they may simply be left untouched rather than having to go through the potentially significant hassle of appointing representation for the holders and dealing with their rights, as well as thorny questions such as whether a haircut should be imposed on amounts charged to cover true 3rd party charges - AIFs, GST, UK APD, etc. It may be less costly to the parties involved to simply leave the travel credits in place.

I generally agree with you. And with settlements like Red Bull and DRAM, sure. But the big difference here is that the harm is relatively identifiable and recent. The DRAM one, in contrast, took place over something like a decade, had an unclear impact on each individual consumer, and given the length of time, it was difficult to calculate what losses had been incurred by any given party. In this case, the amounts are generally much larger, and tickets are sold at most 12 months out (and typically much shorter), so most customers should have pretty good records. And the remedy is pretty clear - AC can simply refund us all our money.

Conserving cash is important, but advance ticket sales aren't nearly as meaningful to AC's balance sheet as you think. At December 31, 2019, AC had $6 billion of cash and $2.94 billion of advance ticket sales. I've already done a more detailed analysis elsewhere.

Write to your MP. Write to Garneau. Write to the CTA. That's what I've done, and have encouraged my non-FT friends to do when they've run in to this issue. The government isn't going to respond to us .....ing on FT, but if enough people start making a stink about this, they might do something. (Which would hopefully ensure that the CTA doesn't allow airlines to file tariffs that don't contain reasonable refund provisions).
It would be helpful if your read my comment again and stopped and thought it over as your statement as it does not actually respond to the specific statement that I had made. Let's refresh your memo with what I wrote;
Associated with this will be a claim of bad faith. The Airlines persisted in selling airline tickets right up until the Canadian government made its more explicit return to Canada request and moved to stop international flights. This isn't about the stupidity of people who continued to fly. Rather it is about a business decision to keep selling tickets that the airlines were aware that they would not be able to honour. They were gambling with customer funds. The airlines had a duty of care to warn customers as far back as mid February as the pandemic grew that there was a strong likelihood that flights would be cancelled. It was evident this would explode even then. Yes, there was a responsibility of the customers to act in a prudent manner, but the airline industry dropped the ball on this.

I did not refer to "many". My comment was in reference to airlines which IMO were well aware of the risk of a pandemic. As far back as 2008, ICAO was running training and information programs on the risks of pandemics. Your defense expects one to accept that Air Canada was unaware of the risk of pandemic and that its risk management modeling did not account for this.

I don't think it unreasonable to say that Air Canada should have a high level of expertise in the management of its business. It follows then that it would have been obvious to AC that this crisis was at the very least going to cause a disruption of travel even in mid February. The fact that the Canadian government did not respond in a timely manner by suspending air travel from the apex of the infection is not a defense for irresponsible behavior. Even if you want to cut the airline slack, the warnings were being given in early March, by the feds, that people should not travel. There was no caution presented on the airline's website, no effort made to warn. NOWHERE in my comments did I mention airline tickets purchased in the previous year. I identified the tickets sold in the period leading up to the travel suspension. You also expect people with common sense to accept that Air Canada was surprised by the travel ban. We are also to accept that there was no ongoing discussion between the airline industry and the MoT. It was pretty clear what the US and Canadian governments were warning about and it was clear that they were trying to give people enough time to get back. And yet, airlines like Air Canada kept selling RT tickets. It was wrong.

It looked to me like the airline was selling tickets for travel to Italy up until the ban despite the mass carnage being reported at the time and the dire warnings that travel would be impacted well into the summer. Brilliant idea there, selling vacation packages to Italy in the midst of a mass die off of Italians.

Your argument is that the airline did not have an obligation to warn and that it was acceptable to keep selling a product that the airline could not deliver. Good luck with that defense.
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Old Apr 2, 2020, 11:10 pm
  #47  
 
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Originally Posted by Adam Smith
That's an oft-repeated fallacy around here. The situation is far more nuanced. See, for example, this post not very far up this thread, where I discussed some of the particulars of insolvency.
My big fear is that you'll call up for a chargeback, and it'll get rejected because technically you did receive your travel voucher that you paid for. Because most bankruptcies don't involve much in vouchers/credits, I don't think this has come up. But an enterprising creditor in a big bankruptcy might push it, and airlines are accumulating months of revenue tied up in these vouchers. If this event did happen, maybe the banks/issuers would back-stop consumers until they rewrote their rules.

With your nuances and more unknowns, good reason to push for your cash back now instead of playing the role of involuntary financier.
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Old Apr 3, 2020, 12:18 pm
  #48  
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If your flight involves US point, then DoT just gave a warning to airlines today that a refund for an airline-initiated cancelled flight must be provided upon request.

https://www.transportation.gov/sites...3%202020_0.pdf
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Old Apr 3, 2020, 12:56 pm
  #49  
 
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Originally Posted by seawolf
If your flight involves US point, then DoT just gave a warning to airlines today that a refund for an airline-initiated cancelled flight must be provided upon request.

https://www.transportation.gov/sites...3%202020_0.pdf
I haven't accepted a voucher from AC yet in hopes DOT would signal to them they need to get their act together. The above letter seems clear enough to me that they will. My plan is to give this a few days to work through AC internally and then call and request a full refund.
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Old Apr 3, 2020, 12:56 pm
  #50  
 
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Originally Posted by seawolf
If your flight involves US point, then DoT just gave a warning to airlines today that a refund for an airline-initiated cancelled flight must be provided upon request.

https://www.transportation.gov/sites...3%202020_0.pdf
Interesting to see what Air Canada says about this. They promptly denied any form av refund other than the 24 month voucher for a trip to MCI that I booked early December where the outbound leg has been cancelled. The flight is still three weeks out so haven't actually cancelled it yet. Wanted to see if they get pressured into actually making the right thing and issuing a full refund for the service they can't deliver.
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Old Apr 3, 2020, 1:01 pm
  #51  
 
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Originally Posted by seawolf
If your flight involves US point, then DoT just gave a warning to airlines today that a refund for an airline-initiated cancelled flight must be provided upon request.

https://www.transportation.gov/sites...3%202020_0.pdf
I hope that will change the Canadian authorities and regulators position on the matter.
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Old Apr 3, 2020, 2:51 pm
  #52  
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Originally Posted by Transpacificflyer
It would be helpful if your read my comment again and stopped and thought it over as your statement as it does not actually respond to the specific statement that I had made. Let's refresh your memo with what I wrote;
Associated with this will be a claim of bad faith. The Airlines persisted in selling airline tickets right up until the Canadian government made its more explicit return to Canada request and moved to stop international flights. This isn't about the stupidity of people who continued to fly. Rather it is about a business decision to keep selling tickets that the airlines were aware that they would not be able to honour. They were gambling with customer funds. The airlines had a duty of care to warn customers as far back as mid February as the pandemic grew that there was a strong likelihood that flights would be cancelled. It was evident this would explode even then. Yes, there was a responsibility of the customers to act in a prudent manner, but the airline industry dropped the ball on this.

I did not refer to "many". My comment was in reference to airlines which IMO were well aware of the risk of a pandemic. As far back as 2008, ICAO was running training and information programs on the risks of pandemics. Your defense expects one to accept that Air Canada was unaware of the risk of pandemic and that its risk management modeling did not account for this.

I don't think it unreasonable to say that Air Canada should have a high level of expertise in the management of its business. It follows then that it would have been obvious to AC that this crisis was at the very least going to cause a disruption of travel even in mid February. The fact that the Canadian government did not respond in a timely manner by suspending air travel from the apex of the infection is not a defense for irresponsible behavior. Even if you want to cut the airline slack, the warnings were being given in early March, by the feds, that people should not travel. There was no caution presented on the airline's website, no effort made to warn. NOWHERE in my comments did I mention airline tickets purchased in the previous year. I identified the tickets sold in the period leading up to the travel suspension. You also expect people with common sense to accept that Air Canada was surprised by the travel ban. We are also to accept that there was no ongoing discussion between the airline industry and the MoT. It was pretty clear what the US and Canadian governments were warning about and it was clear that they were trying to give people enough time to get back. And yet, airlines like Air Canada kept selling RT tickets. It was wrong.

It looked to me like the airline was selling tickets for travel to Italy up until the ban despite the mass carnage being reported at the time and the dire warnings that travel would be impacted well into the summer. Brilliant idea there, selling vacation packages to Italy in the midst of a mass die off of Italians.

Your argument is that the airline did not have an obligation to warn and that it was acceptable to keep selling a product that the airline could not deliver. Good luck with that defense.
First of all, there's no need for your antagonism, nor your condescension. I'm not "defending" AC. I'm merely pointing out that you're treating this issue as black and white, when it's very grey. You're using 20/20 hindsight to say that all sorts of things were clear when they were volatile and uncertain.

Flights to Italy were allowed right up until they weren't. AC didn't know what flights it was going to operate until the bans came in. Until flights were banned, they were permitted, so should AC not have been allowed to sell seats on those flights? In mid-February, do you think AC knew that it would be allowed to operate to FCO on March 13th (or whatever the last day was), but not on the 14th? In many cases, governments didn't even make these decisions until hours or minutes before they were announced. In some cases, they didn't even really know what they were announcing when they announced them (hello, US ban on flights from Europe). So how do you expect an airline to know what a government is going to do?

I don't see it as AC's job (or any other airline's job) to put warnings on the website about things that people should be reading in the news anyway. Someone who purchased a ticket to FCO on March 1st for travel on March 15th, let's say, should have known that COVID-19 was a growing problem and that there was a risk. What would the warning have said? "Flights to Italy are at high risk of being cancelled because of COVID-19"? On what date should AC have started to display that? February 17th? 12th? 21st? March 2nd? I flew YUL-FCO on March 6th, and at that time, the number of cases in Italy outside of the hot zones in the north was tiny, and the talk was around how they were doing a good job of keeping the north quarantined and limiting the spread in the rest of the country. The next day, they realized the problem was much bigger than they thought, and announced that as of the 8th, they were closing all museums etc around the country. And a few days after that, total lockdown nationwide. But you think that AC should have known about that two or three weeks earlier? I don't think they were surprised by the ban when it came, but I think it unreasonable and unrealistic that you expect them to have had such good foresight several weeks before.

I think you significantly underestimate how difficult these things are to predict and how fast they change. In an environment as volatile as that, no business can have the level of certainty you're ascribing to AC.

Even if AC had put a warning on the website that flights to some of these locations, or even all flights, were at higher risk of being cancelled due to COVID-19, what do you think that would have done? Someone booking a ticket to FCO on March 1st for travel on March 17th, do you think a little red warning box on the AC website would have changed their purchasing decision? Someone buying a YYC-YVR for April 18th? Let's get real, a little box in red text warning about COVID-19 wasn't going to tell them anything they didn't know.

AC is at fault for refusing to refund customers' money after cancelling their flights. That's a decision that's in their control and doesn't rely on some crystal ball. And it really doesn't matter when those tickets were purchased (unless it was on or after March 19th, when one could argue that customers were forewarned that there would be 24-month credits instead of refunds for involuntary cancellations). That's really the issue here.

Originally Posted by tecate55
My big fear is that you'll call up for a chargeback, and it'll get rejected because technically you did receive your travel voucher that you paid for. Because most bankruptcies don't involve much in vouchers/credits, I don't think this has come up. But an enterprising creditor in a big bankruptcy might push it, and airlines are accumulating months of revenue tied up in these vouchers. If this event did happen, maybe the banks/issuers would back-stop consumers until they rewrote their rules.

With your nuances and more unknowns, good reason to push for your cash back now instead of playing the role of involuntary financier.
Card companies are already being flooded with chargebacks and adjusting as a result. As I've mentioned in another thread, Amex France has cut a deal with AF to reject all chargebacks, and there are similar discussions going on in many places. For instance, I went to submit a chargeback against SQ on my Canadian Amex card the other day, and after being asked whether it was related to COVID-19 and answering yes, I was shown the following message:

We understand that these are challenging times. Contacting a merchant directly is usually the fastest way to resolve a dispute. Many merchants already have special cancellation and refund policies for charges related to COVID-19. If you’ve tried working directly with the merchant unsuccessfully and want to continue disputing the charge, we will contact the merchant on your behalf. Should the merchant provide sufficient proof or evidence regarding the validity of the charge, such as their cancellation or refund policy when you initially made the reservations, we will share the relevant details/documentation with you. Do you wish to continue?

This suggests that they're going to be looking hard at these and rejecting a lot more than they usually have in the past.

As for vouchers/credits "not coming up" in past bankruptcies, I disagree that it hasn't come up. A painstaking list of liabilities is drawn up when a company goes in to an insolvency, so someone has definitely looked at it before deciding that it was immaterial. Even if the amount was only $10MM or $50MM in many billions of dollars of liabilities, it was a line item on a spreadsheet somewhere

It's true that those credits would likely be a much bigger amount as a percentage of liabilities today, so someone might look at them differently. But I still think there's a pretty good chance they survive intact.
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Last edited by tcook052; Apr 18, 2020 at 4:58 am Reason: off topic
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Old Apr 3, 2020, 3:34 pm
  #53  
 
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Originally Posted by seawolf
If your flight involves US point, then DoT just gave a warning to airlines today that a refund for an airline-initiated cancelled flight must be provided upon request.

https://www.transportation.gov/sites...3%202020_0.pdf
Looking forward to see Air Canada's reaction. Will they:
  • Keep refusing to refund all flights, regardless of US/EU obligations
  • Change their refund publicly to allow refunds for to/ex-US and ex-EU flights only, at the risk of looking bad/awkward for refusing to refund domestic and other flights
  • Put in place a NON-PUBLIC policy that allows for refunds only if customer presses and invokes US or EU regulation
  • Surrender and allow refunds on all flights they cancelled, which would put competing Canadian airlines refusing to refund in a bad spot
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Old Apr 3, 2020, 3:56 pm
  #54  
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Last edited by skybluesea; Dec 21, 2020 at 1:31 pm
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Old Apr 3, 2020, 4:43 pm
  #55  
 
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Air Canada could play it sneaky and reinstate or refrain from canceling upcoming flights if the relevant airports remain open; wait for most passengers to cancel first or not show up due to confinement and travel restrictions, which would disqualify those passengers from being entitled to a refund; and only refund the 0 to 2 people who check-in online or show up at the airport
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Old Apr 3, 2020, 7:33 pm
  #56  
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Last edited by skybluesea; Dec 21, 2020 at 1:31 pm
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Old Apr 3, 2020, 7:47 pm
  #57  
 
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Originally Posted by FlyerTalkUserName
I haven't accepted a voucher from AC yet in hopes DOT would signal to them they need to get their act together. The above letter seems clear enough to me that they will. My plan is to give this a few days to work through AC internally and then call and request a full refund.
I have flights May 23-25. I think I'll wait a few days to see if Air Canada updates its policy.
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Old Apr 3, 2020, 9:08 pm
  #58  
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Last edited by skybluesea; Dec 21, 2020 at 1:31 pm
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Old Apr 3, 2020, 9:15 pm
  #59  
 
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Originally Posted by slickvik
I have flights May 23-25. I think I'll wait a few days to see if Air Canada updates its policy.
Don't hold your breath. Air Canada didn't update its policy to take into account the European Commission's reiteration with regards to EC261 that airlines must refund. The only difference is that the US agencies have long enforcement arms that punch harder.
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Old Apr 3, 2020, 9:24 pm
  #60  
 
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Originally Posted by skybluesea
And why should this only apply to AC? How is it that airlines must provide refunds, but other travel providers NOT required? e.g. had to cancel Hotel booking but NO refund? Gov't should fix this too
Most of the examples are where AC has cancelled the flights and is refusing to provide a refund, rather than situations where the customer has voluntarily cancelled.

If a hotel closes, and is unable to provide the service you paid for, they would typically need to give you a refund under general consumer protection laws and principles. If you voluntarily cancel but the hotel is still open and able to provide the service, that's different, and generally you're subject to the cancellation terms or a goodwill policy. Apples and oranges.

AC has cancelled flights and is unable to provide the service that customers have paid for. Yet, even with the DOT and EU laws saying they need to refund fares where they've cancelled flights, they're still dragging their feet and refusing to provide refunds even if they are unable to provide the service the customer paid for.
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