Lawsuit Over Refunds In Canada Can Continue Court Rules

There has been another development in the months-long battle against Canadian carriers and their issuance of vouchers in place of cash refunds. Canada’s Federal Court of Appeal has dismissed the bid of the Canadian Transportation Agency (CTA) to have Air Passenger Rights’ (APR) case against the federal regulator thrown out. While this is far from a victory for thousands of passengers hoping to get their money back, it keeps the issue alive and at least grants legitimacy to the fight for refunds.

Air Canada A320
Air Canada issued vouchers rather than refunds for many flights canceled when the crisis first erupted. Photo: Air Canada

The Canadian Transportation Agency (CTA) says on its website that it is an independent, quasi-judicial tribunal and regulator that has, concerning all matters necessary for the exercise of its jurisdiction, all the powers of a superior court.

The Canadian Transportation Agency’s statement on vouchers

APR, an advocacy group focused on Canadian air travel, is suing the CTA because of a misleading “Statement on Vouchers” published on March 25th, 2020. The statement went public on the CTA website and supported the practice of Canadian carriers providing vouchers instead of refunds for flights that were canceled in connection with COVID-19. Below is a portion of the CTA’s statement, which understandably caused outrage and anger for travelers who were out thousands of dollars due to canceled flights:

“While any specific situation brought before the CTA will be examined on its merits, the CTA believes that, generally speaking, an appropriate approach in the current context could be for airlines to provide affected passengers with vouchers or credits for future travel, as long as these vouchers or credits do not expire in an unreasonably short period of time (24 months would be considered reasonable in most cases).”

WestJet 737 MAX 8
In March, WestJet thanked the Canadian Transportation Agency for “providing clarification during this difficult and unprecedented time for our industry.”  Photo: Getty Images

APR took legal action in response to the statement in April 2020, and the CTA subsequently conceded that the “Statement on Vouchers” is not legally binding.

APR claimed that the “Statement on Vouchers” creates a reasonable apprehension of bias because the CTA is publicly commenting on complaints that would come before the CTA for adjudication.

“Those members who were involved in the creation, approval, or endorsement of the Statement on Vouchers should not be permitted to adjudicate passenger complaints relating to refunds, because they may not be impartial,” said Dr. Gabor Lukacs, APR’s president.

In May 2020, APR requested a temporary injunction to have the “Statement on Vouchers” immediately taken down, and to bar CTA members from hearing complaints pending a final decision in the court case. However, this temporary injunction was denied.

Air canada westjet tails
Many other parts of the world have forced airlines to issue refunds for canceled flights rather than issue vouchers. Photo: Chris Loh/Simple Flying

CTA tries to have entire case thrown out

The CTA argued that this denial of the temporary injunction decided the whole case, moving to have it thrown out of court. However, Justice Webb of the Federal Court of Appeal rejected the CTA’s argument, saying:

“The arguments related to the reasonable apprehension of [CTA] bias should be made at the hearing of the judicial review application.”

Therefore, this case will proceed to a full hearing before a panel of justices of the Federal Court of Appeal. Dr. Lukacs and APR are very pleased with the Federal Court of Appeal’s decision to let the case continue, saying that it merits a full hearing.

Air Transat Boarding
APR’s case against the CTA will continue with a full hearing. Photo: Air Transat

APR claims that the CTA has been evading questions by the media about the creation, approval, and endorsement of the “Statement on Vouchers” and is failing to comply with a request under Canada’s Access to Information Act. It also says that the CTA is refusing to disclose documents that could answer these questions in the court proceeding.

“Canadians should be concerned about the lack of transparency in the Canadian Transportation Agency’s operations,” said Dr. Lukacs, who would like to see a federal inquiry into the CTA’s affairs and its close relationship with the airline industry.

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