Crime doesn’t pay. Financial difficulty does not justify theft. Now Air Canada may really going to have to pay up thanks to a stiff fine from the United States Department of Transportation.
United States DOT Proposes $25.55 Million Fine Against Air Canada
The U.S. Department of Transportation’s Office of Aviation Consumer Protection (OACP) is seeking a $25,550,000 fine against Air Canada for its “extreme delays” in providing “required” refunds during the pandemic.
When a carrier cancels or significantly changes a flight to or from the United States, the airline is responsible for providing refunds, upon request, according to U.S. law. Airlines have seven days to refund passengers from the date of the request for flights purchased with a credit card and twenty days for flights purchased with cash.
During the pandemic, the Department of Transportation (DOT) has received a whopping 6,000 complaints concerning refunds on Air Canada. The DOT has determined that of those complaints over 5,000 likely represent violations to U.S. policy.
But Wait, Isn’t Air Canada Now Refunding Tickets?
Air Canada was bailed out by Canadian taxpayers in March 2021 on the condition that it retroactively issue refunds.
Doesn’t that make the issue moot (deprived of practical significance)? No. The DOT notes that Air Canada’s willingness now to issue refunds does not absolve it of past violations or make it more likely to issue refunds in the future.
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.
Some passengers have been waiting over 13 months to receive refunds for cancellations.
Next Steps For Air Canada
Air Canada must now file, within the next 15 days, an answer to the complaint admitting or denying specifically and in detail each allegation of the complaint and offering a response to the proposed assessment of civil penalties.
Already, Air Canada has vowed to fight the DOT, arguing that the unique circumstances of the pandemic made it acceptable to deny refunds. A spokesperson noted:
“Air Canada remains firm on its position and will vigorously challenge the proceedings.”
Meanwhile, the Canadian government chose not to mandate refunds or fine Air Canada for failing to make a good faith effort to issue refunds prior to the bailout.
Air Canada will have all sorts of affirmative defenses for its conduct, but there is no justification for its action. Yes, times were tough. They were tough for consumers too. They were tough for everyone. The “big guy” got a huge bailout. It did not declare bankruptcy.
Now it can and should pay up for holding people’s money hostage contrary to federal law. If Air Canada wants to do business in the United States, it must abide by the rules of conduct set by the DOT, including issuing refunds when flights are involuntarily cancelled (pandemic or not).
Is the Air Canada DOT fine too little, too much, or just right?
image: Air Canada