In what has been a fascinating back-and-forth, Air Canada continues to insist it has a legal right to deny refunds on cancelled flights. I give Air Canada credit for being bold…but not for understanding law.
A Bermuda resident purchased a ticket from Montreal to Chicago in March for travel in April. On the day of his flight, he received an email from Air Canada that his flight was cancelled. Rather than accept a rebooking at a time that did not work for him, the man requested a refund. He was denied and instead offered a voucher valid for 24-months. He lodged a complaint with the U.S. Department of Transportation, alleging that Air Canada’s violation of a refund was in contravention of U.S. law. Air Canada has aggressively defended its action. This case is just a sample of thousands like it.
Air Canada’s Legal Arguments
Certainly the art of arguing any legal case is taking facts and law and trying to best twist them into your favor. Air Canada does so in four ways, asserting:
- Air Canada’s Contract of Carriage and fare rules do not compel a refund
- DOT’s enforcement action to airlines does not carry the force of law
- Air Canada’s refund policy is neither unfair nor deceptive
- DOT has no jurisdiction in this case
First, Air Canada contends this flight cancellation and others like it was outside of it control due to COVID-19. Thus, per its contract of carriage, it is not required to offer a refund.
As for its policy of issuing refunds in similar situations for years, Air Canada insists it was a goodwill gesture, not a legal requirement:
“Certain customers with reservations for flights that were cancelled due to events outside of Air Canada’s control (including COVID-19) before March 19, 2020 may, as a goodwill gesture, have generously been offered a refund despite having booked reservations at a non-refundable fare. This approach was established as a matter of goodwill for customers, but was at no time required under Air Canada’s Conditions of Carriage, Tariff, Canadian Transportation Agency (“CTA”) regulations or, in the case of non-refundable tickets, the applicable fare rules.”
Second, Air Canada says that DOT mandates concerning refunds to do not carry the force of law.
“The Enforcement Notice and the Department’s COVID-19 Refund FAQS are guidance documents only; they were not promulgated through a formal rulemaking process under the Administrative Procedures Act, and they do not have the effect of law.”
Third, Air Canada says its refund policy is transparent and a perfectly reasonable response to the pandemic.
Finally, Air Canada case is out of the jurisdictional reach of the United States because it was purchased by in Bermuda (where the passenger lives) using Air Canada’s Canadian website.
Let’s take a look at all four arguments. There are others, by the way, that Air Canada makes, but we’ll focus on these four.
Air Canada’s Legal Arguments Come Up Short
The question is not what Air Canada’s contract of carriage requires refund, but what type of cancellation was this: voluntary or involuntary? The plaintiff argues that this was an involuntary cancellation (on his part) and I agree. Per the contract of carriage:
Air Canada claims it cancelled the flight due to COVID-19 and thus the decision was beyond its control. First, Air Canada operated dozens of transborder flights on April 22, so canceling that particular flight was not due to a government order. Furthermore, whatever reason Air Canada cancelled the flights falls under an involuntary refund (AC either cancelled the flight because it made commercial sense to do [“within its control”] or for safety reasons). In either case, a refund should be provided.
Second, Air Canada’s claim that the DOT’s promulgation of its rulemaking ability does not carry the force of law is also troubling. While the DOT cannot compel Air Canada to refund the passenger’s ticket, it can fine Air Canada for violating U.S. law. Congress has given the DOT broad regulatory authority to enact rules concerning the purchase of air travel and DOT acts within its lawful role when issuing guidance documents interpreting regulations.
Third, Air Canada’s refund policy is hardly transparent when it contravenes years of precedent and the highlighted section of the Contract of Carriage above seems to suggest a different outcome when a passenger finds his flight cancelled and no other suitable options available.
Fourth, the jurisdictional argument is absurd…but also the most dangerous. The DOT has jurisdiction because it is a trip that touches U.S. soil. That has long been the standard and to argue otherwise would upturn years of consistent jurisdictional interpretation. The goal of DOT’s consumer protection relegation is not simply to protect U.S. citizens, but to protect all passengers traveling to/from/via the USA.
Generally, I find the Air Canada arguments totally disingenuous. For example, it tries to distinguish between refundable and non-refundable fares, warning of the risk of purchasing non-refundable tickets:
Consumers have the ability to choose the fare they would like; however, that choice comes with consequences. Non-refundable fares, which are typically sold at a lower price point, carry certain risks in the event the consumer is unable to travel.
In the event that the consumer is unable to travel?
The passenger was ready to travel! Air Canada cancelled his flight. Whether under the guise of safety or for commercial reasons, the flight cancellation was certainly not voluntary on his part.
You can follow along the case here. This is a fascinating look at how far Air Canada is going to shield its obligation to provide refunds. While I understand Air Canada is in a very difficult position and commend it for offering fully transferable vouchers good for 24 months (which should be sufficient for most people), those who want a refund should get a refund. If you promise me a service and fail to deliver, especially when it was within your control, you must make it right.
Do you side with Air Canada or the consumer in this case?
image: Air Canada
Air Canada has soured my tastes so much. I’ve personally banned myself from flying them. I’ll fly WestJet or Porter (or other non *A members) to Canada from now on.
All the Canadian airlines have been pulling the same BS since the Canadian Transportation Agency is refusing to take any action. WestJet is only offering refunds on flights to the US or UK but other customers are still SOL.
Air Canada has never cared for passengers. I am a Canadian who flew constantly from the early 1970s (occasionally before that) and cannot remember a single Air Canada flight that was not marred by surly flight attendants, unpleasant gate agents and horrible management. (The airline was a government agency until after I left Canada in the early ’90’s. Wherever possible, I used Canadian Pacific or Wardair, then Westjet. For international, I used Eastern and American mostly. The airline has only become worse under private ownership.
My wife did have to take an Air Canada flight from Toronto to Tampa about ten years ago. She arrived at the Toronto airport more than two hours before departure and was stuck in an endless check-in line (not security, just AC’s own ticket counter to check her bag.). The airline refused to move her up in the line and she missed the flight. The airline then voided her ticket an forced her to pay full price for a flight to Orlando, a two-hour drive from our home. A complaint to the airline resulted in the same refusal to accept responsibility.
If there’s a worse airline for customer service, I haven’t encountered it in my more than five million miles of flying all over the world.
I was looking forward to a ride on a 777-300 on a domestic route, but in light of this nonsense, I won’t be flying them or any other *A airline (after an absurdly botched IRROPS on United that delayed me 12 hours on a route I could have driven in 8 hours).
I look forward to the mental gymnastics they employ on my complaint, since I’m a U.S. citizen who purchased a one-way ticket from the U.S. to Canada, so DOT most certainly does apply in my case. And despite being just revised on June 24, AC’s International Tariff does compel refunds in the event of a cancellation for any reason (not just those within the airline’s control), per under Rule 80 (Schedule Irregularities), Section B, Part 4, Paragraph d:
“d) If the passenger chooses to no longer travel or if carrier is unable to perform the option stated in (a) (b) or (c) above* within a reasonable amount time, make involuntary refund in accordance with RULE 100 – REFUNDS”
* this addition is mine: the referenced paragraphs a-c describe rebooking/rerouting, which wasn’t possible in my case since service to my origin airport was suspended indefinitely)
Again, this passage refers to cancellations for any reason – the next part (Part 5) lists the additional responsibilities of the airline in the event the cancellation was within their control. (And even then, “within our control” has typically just meant not weather – you’d be hard pressed to find a judge who would agree suspending service for economic reasons wouldn’t qualify.)
FWIW, I’ve got a DOT complaint open: https://www.regulations.gov/docket?D=DOT-OST-2020-0074. Air Canada replied on July 17, and as I expected, they falsely claim that non-refundable tickets are not entitled to refunds in the event of cancellations outside the airline’s control, which is in their Tariff now but was not when I bought my ticket. For flights between Canada and the U.S., the Tariff at the time of purchase is the one that applies.
There’s also a thread on Flyertalk with a lot of good information on this topic: https://www.flyertalk.com/forum/air-canada-aeroplan/2014593-master-thread-air-canada-refunds-vs-credits-class-action-lawsuit-filed-59.html
I’m with the consumer. Air Canada cancelled the flight and owed him a refund. Period.
@ Matthew — Do you know of any data points on AMEX’s position on charge backs to Air Canada?
No direct data points. I assume they will fight back in the same way.
@ Matthew — No doubt. I just wonder what AMEX will do? I hate to waste my time unless others have already succeeded. I don’t doubt that others have certainly filed chargebacks with AMEX over AC’s refusal to issue refunds.
Excellent article! Thank you!
It would be appreciated if you also write or comment about flights to Europe and EU law.
Also, please comment on the fact that some people receive refunds less $300 cancellation frees plus tax. (Absurd!)
Lastly, please let swindled passengers know of this Facebook group who may assist them with their refund quests. It is AIR PASSENGER RIGHTS (CANADA)
I had one that was successful for a one way to the US.
AC is simply scum. Always has been, but true colours showing now.
Americans need to stop trying to save $5 and stop patronizing this thieving airline.
I will never fly air canada again we were a party of six flying to canada from sacramento California to take a cruise which was canceled and we we received a refund from cruise line with no problem but air canada refusing us a refund
I think Canada gets many, if not most things right, but the government’s coddling of their national airline is not one of them. From protectionist policies that keep foreign carriers out, to their permissiveness of allowing AC to deny refunds on non-US routes, it just seems ‘off brand’ for Canada.
Though to be fair, I would rather live in a country where I was free to travel to Europe and have a future travel voucher, than live in a country I can’t leave but have my $200 cash back.
Air Canada has jerk me for two Airline tickets in April 2020. And it hard for me to get in contact with to make any complaints . And I’ve been putting in claims with Aviation transportation Complaint Dept . I have a claim no . So I’m keeping my fingers crossed. I feel so disrespect and hurt. I WILL NEVER BOOK ANOTHER FLIGHT WITH CROOKS AIR CANADA
Having lived in Canada for 15 years, I’ve had my share of Air Canada flights; domestic and international. Choosing this airline is always the last resort for me. While the flights are never really bad, they’re just consistently n-o-t-h-i-n-g. The planes are often tired inside, the meals are average, and the flight attendants (who I watch closely because I was one for 30 years) routinely seem to just be going through the motions. They’re never rude, they just make it clear they’d rather be at home.
I wish Canadian Pacific was still around. They were a much better airline. Ask any Canadian!
The right legal argument is simply that this is a fundamental breach; nothing was provided and AC took the customer’s money. The customer didn’t get the benefit of the contract and under common law, deserves his or her money back.
I had an LHR-YVR booking cancelled ten days ago, I logged in and had three choices, loads of Aeroplan miles but I’m not a member, a voucher or a cash refund.
I opted for the cash refund and it was back on my card in 72 hours.
How come I didn’t have your options?
I requested refund. They deduct 300 CAD plus 39 CAD tax!!!!!!!!!! I lost 339 CAD. Not fair, I will never buy tickets from AC.
I am in the same boat. I bought a round trip ticket from the US on Air Canada and Air Canada cancelled my flights. Refund refused. Numerous very polite agents I spoke to said that they are required to follow Canadian law – US law/DOT rules are not relevant as it is a Canadian airline. Escalated to Executive Customer Service and same answer. It shouldn’t matter but I am US citizen and bought the ticket while physically in the US, in USD via the US website. I’ve complained to the DOT and received an acknowledgement e-mail from the DOT Office of Aviation Consumer Protection a month after complaining. Let’s see what happens next. 🙂
Such an insult, as if they repeat it often enough, it will stick. Don’t give up!
Thanks Matthew! Your blog is my favorite place to read unbiased travel reporting, esp. your legal analysis and history of taking on travel providers (I also went to law school/member of a State Bar). Please keep writing about Air Canada. And thank you for your work, which impacts your readers in a very positive way.
I am working on refunds with 6 airlines – United, Aeroflot, Qatar, Virgin Atlantic, Norwegian & Air Canada plus a couple of OTAs. Everyone has agreed to a refund though the timeline is very slow (I can be patient). Air Canada is the only one who is being unreasonable.
Some background: In the spirit of compromise, I suggested that I would be ok not receiving a refund if Air Canada could transport me between my origin and destination on AC or a partner in premium economy (which is what I had originally paid for) at a later date once flights opened up. They said that I would have to pay the difference in fare if the fare was higher but no refund if the new fare was lower. They wanted an interest free loan and the ability to charge me even more in the future. How is that fair?
That is criminal.
I am with consumer 100%!!!!