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Air Canada COVID-19 Refund Settlement Overview:
- Who: Air Canada has agreed to a $4.5 million deal to settle claims with the U.S. Department of Transportation (DOT).
- Why: The DOT accused the airline of failing to properly refund thousands of consumers for flights that were canceled during the COVID-19 pandemic. Now, Air Canada will pay $2 million to the federal government, with another $2.5 million having gone to refunding customers.
- Where: The United States.
Air Canada has agreed to process $2.5 million of ticket refunds and pay $2 million to the federal government to avoid penalties pursued by the U.S. Department of Transportation over its refund policy during the pandemic.
In a proposed settlement filed Nov. 22 in the U.S. Department of Transport (DOT) Office of Hearings, Air Canada and the DOT said they had agreed to the settlement to “avoid protracted litigation.”
The action against Air Canada began in March 2020, when Air Canada started offering vouchers to affected passengers for flights to or from the United States that were cancelled or significantly changed by it in response to the impact of the COVID-19 pandemic.
The voucher was offered unless the passenger had specifically purchased a “refundable” ticket.
Thousands of consumers complained through the DOT’s complaint portal that Air Canada failed to provide requested refunds for flights it cancelled.
In April and May 2020, two public notices were issued reminding airlines of the Department’s position that it is unlawful for a carrier to cancel or significantly change a flight to or from the United States and then refuse to provide a refund, the settlement says.
However Air Canada continued providing vouchers until April 2021, when it announced a bailout from the Canadian government.
The settlement says Air Canada will pay $2 million to the U.S. Treasury, while another $2.5 million would be “credited to Air Canada” in consideration of some of the refunds it’s already provided.
The overall $4.5 million settlement is the largest amount the agency has ever charged in an enforcement against an airline, the department said.
The enforcement action came amid a long line of flight cancellation lawsuits, including one Air Canada faced from a Florida passenger.
In that case, the lawsuit said the airline failed to refund tickets when it should have.
What do you think of this enforcement action? Let us know in the comments!
Air Canada is represented by Evelyn D. Sahr, Charles A. Zdebski, Mark A. Johnston and Drew M. Derco of Eckert Seamans Cherin & Mellott LLC.
The Air Canada DOT Refund Settlement is Air Canada – Enforcement Proceedings, Docket No. DOT-OST-2021-0073, before the U.S. Department of Transportation Office of Hearings.
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