Travel

Air Canada Paying $4.5 Million For Refusing Refunds

Air Canada will finally pay for refusing to refund passengers in the United States in a timely fashion, though the fine is only a small portion of what was initially proposed.

The backstory on Air Canada’s DOT fine

Back in June 2021, the United States Department of Transportation (DOT) announced it would pursue a $25.5 million civil penalty against Air Canada for refusing to provide customers with refunds during the pandemic, when flights between the United States and Canada were canceled or had significant schedule changes.

The DOT requires airlines to provide cash refunds in these situations, and Air Canada was among the worst airlines during the pandemic when it came to adhering to that. The company was notified multiple times throughout 2020 and 2021 that it wasn’t following the DOT’s rules. Air Canada only started retroactively issuing refunds in April 2021, as a condition of accepting aid from the Canadian government.

Air Canada tried to fight back against this fine, making some bizarre and disingenuous arguments. There’s now an update to this case.

Air Canada agrees to pay $4.5 million for slow refunds

It has today been announced that the Department of Transportation’s Office of Aviation Consumer Protection (OACP) and Air Canada have come to an agreement, and Air Canada will pay $4.5 million related to these issues. This is now pending approval from the Administrative Law Judge presiding over the case.

As US Deputy Secretary of Transportation Polly Trottenberg describes this:

“Today, the US Department of Transportation’s OACP is holding airlines accountable by ensuring that they treat passengers fairly when flights are significantly changed or cancelled. The Department is committed to protecting airline consumers and ensuring that all passengers receive the timely refunds to which they are entitled.”

While this amount is significantly lower than what was initially being sought, this does mark the highest amount the OACP has ever assessed against an airline. In addition to the $4.5 million settlement, Air Canada has also agreed that going forward, the airline will refund airfare to passengers who purchase nonrefundable tickets to or from the United States when their flights are canceled or significantly delayed.

Of the $4.5 million, $2.5 million will be credited to Air Canada for refunding passengers who purchased a nonrefundable ticket for a flight to or from the United States that the passenger decided not to take. The remaining $2 million will be paid to the US Treasury.

The OACP believes that this settlement is in the public interest, and serves to deter Air Canada and other carriers from committing similar violations in the future.

Bottom line

Air Canada will pay a $4.5 million fine for not providing timely refunds to passengers traveling to & from the United States when flights were canceled. $2.5 million of that can be used by Air Canada for refunds, and only $2 million is going to the US Treasury.

It’s good to see that Air Canada is facing some sort of punishment for its refund policy, though this fine is a far cry from the initial $25.5 million penalty that was proposed.

What do you make of this settlement between Air Canada and the DOT?

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