Canadian Airlines May No Longer Need To Offer Refunds On Cancelled Flights

**Update: 27/03/20 @ 16:10 UTC – Additional information from Passenger Rights Advocate Gabor Lukacs included indicating it should still be possible to demand a refund. Furthermore, customers are advised to check the insurance policies of their credit cards for cancellation coverage.**

The Canadian Transportation Agency (CTA) issued a statement yesterday declaring that airlines are not necessarily expected to provide passengers cash refunds for canceled bookings due to the COVID-19 pandemic. The CTA justifies its position by saying that it aims to strike a balance between protecting passenger rights while also not creating unnecessary financial hardship for carriers in a situation that is completely outside of airline control.

Air Canada
Air Canada has laid-off 5,000 employees due to the pandemic. Photo: Air Canada

The CTA’s statement

Below is a portion of the CTA’s statement:

Advertisement

“The legislation, regulations, and tariffs were developed in anticipation of relatively localized and short-term disruptions. None contemplated the sorts of worldwide mass flight cancellations that have taken place over recent weeks as a result of the pandemic. It’s important to consider how to strike a fair and sensible balance between passenger protection and airlines’ operational realities in these extraordinary and unprecedented circumstances.”

Advertisement

The statement goes on to talk about the two sides it must strike a balance between. For the passenger and consumer, it acknowledges the injustice of having a flight canceled with no alternate arrangements available. On the other hand, the CTA says, “airlines facing huge drops in passenger volumes and revenues should not be expected to take steps that could threaten their economic viability.” The full statement by the CTA can be viewed on their website.

The balance that the CTA feels is the best approach is for airlines to issue vouchers and credits for airfare that has been paid for. It also says that the expiry date should be reasonable given the situation, suggesting that 24 months is what it considers ‘reasonable’.

Advertisement
WestJet has had to let go of 50% of its staff. Photo: Getty

Is it right?

The CTA makes it clear that consumer and passenger regulations and legislation were developed without consideration of an event happening on such a large scale. Of course, what we are seeing right now is unprecedented and the single largest disruption of the aviation industry in its entire history.

Yes, passengers paid for a service that was not delivered. And yes, many passengers will need that money for alternate arrangements or to deal with job losses resulting from this situation.

At the same time, most airlines are reporting negative revenue as their bookings have been wiped out and refunds for earlier bookings have been handed out. Furthermore, thousands upon thousands of employees will be laid off. From an operational standpoint, airlines may need what little cash remains in order to operate their limited services. This will include repatriation flights with half-empty aircraft.

It’s not a good situation for anyone involved.

Air Transat’s Airbus A310 will be retiring a month early. Photo: Chris Loh/Simple Flying

There’s more to the story than the statement, however. In fact, Toronto’s City News reports that Air Passenger Rights advocate Gabor Lukacs believes the CTA’s statement “deliberately and knowingly” misleads the public. Speaking with City News, Lukacs says the following:

“The law is clear and unambiguous that a full refund to the original form of payment is owed to passengers. It has been confirmed in numerous legally binding decisions by the CTA.”

Lukacs advises passengers wishing to have a full refund to “insist on receiving a full refund to the original form of payment, and to open a dispute/chargeback with their credit cards if necessary.”

Airline response

Canada’s second-largest airline, WestJet, responded to our request for comment saying:

“WestJet thanks the Canadian Transportation Agency for providing clarification during this difficult and unprecedented time for our industry. We continue to offer our guests flexible change/cancel policies for travel in March, April and May with refund to travel bank for use within 24-months. We have updated our travel bank policy to extend its use by a year (to 24 months) ensuring our guests have enough opportunity to take the flight or vacation they had planned on prior to the escalation of this global crisis.”

Air Canada’s response to us was a lot briefer with the airline stating:

“Our policy is in line with the CTA position, and it also accords with that of most major carriers around the world. For more information on the options we offer travellers please see https://www.aircanada.com/ca/en/aco/home/book/travel-news-and-updates/2020/covid-19.html

Conclusion

The guidance that airlines need to issue vouchers and credits for unused flights seems to strike a fair balance. Passengers will take a hit in the short term while airlines are spared from complete collapse and the declaration of bankruptcy. Clearly, this entire situation is out of their control.

However, an expert in the field of passenger rights in Canada, Gabor Lukacs is of the firm belief that if passengers press hard enough, they can get their refund.

Do you agree with this policy of doing away with cash refunds? Why or why not? Let us know in the comments!

Advertisement

132
Leave a Reply

newest oldest most voted
Norm

After the COVID-19 headwinds have dissipated and the Airline Ambiance is back to a routine transition, there should be a proviso established through IATA, which obliges all Airlines to arrange to have their Aviation Insurance Programs, extended to cover these eventualities in the future. A Pool of World Class reinsurers can be called upon to present a Proposal, and make it a mandatory rule for their Insurance Program to include the Airline and its clientele for all the multiple consequences that may be incurred by both.

James

In essence, it’s a customer-funded bailout, not sure if it’s better than taxpayer-funded one

Knudsen

As a Canadian, I support any smart decision that can protect the airlines from brankruptcy. Though it is commonly believed that those who are able to travel have the money, the situation is not as simple as that today. Peolpe have been laid off, every money thy can gt may help them to buy food, medicine, pay rents, mortgages, crdeit cards, etc. So a refund could help. I know it is not that simple. Usually, the airlines would apply their rules if the passenger would have to change ticket, time o travel, etc and the passenger would have to pey compensation fees or forgo his rights. So, if airlines today cnnot give the service, they should refund. A contract is a contrac, though the times are a’changing as Bob Dlan would be singing… .

Monik Nordine

Insurance should cover the cost of cancellations, not consumers. All of this is insured I am sure. Passengers who need the money to cover their living costs in the face of the crisis should be refunded and the Airlines will establish their normal operations in a few months time. This is a people crisis and people need to be helped, not business. This is the time where businesses are supposed to rally for the people who support them during the 99% and now that we are facing the 1% do the right thing please.

Sherry

I don’t not agree with this outcome. I live in Moncton and booked with sunwing to go to a wedding in Orlando in March I filled out the form for a refund in method of payment. Now they offer for 24 mths future travel. Well sunwing only travels 4 mths out of a yr here so that’s limiting me 8 mths to travel. And sunwing only flys to a certain amount of places so my travel plans are limited to only thoses places. That’s why with sunwing a refund would be a lot better. In my 38 years of living I travels once on a air plane travel isn’t my thing so now I feel like I have to go because they have my money. I just got payed off because of this virus have a daughter and live by myself have a mortgage a car payment bills to pay now it’s the time I would need my money Back. Some people are living hard right now and it seems like the airlines are only thinking about them self’s and they have no money to make it in business. Selfish times right now

Neil Matthewson

This seems to me to be a very prudent decision.

Rdr

Does that mean money owing to a credit card for a cancelled trip can be not paid for 24 months without penalty by the traveller?

Peter F

I would agree only on a condition of price freeze. I should be able to get same hotel/flight/package at same time period next year without paying any extra

Brian Nelligan

My flight was cancelled but there are several other that day that they could have our me on. So instead of cancelling it they should just move me to another flight for no cost.

Rob Lesser

Totally disagree.
The contract was not completed as flights were cancelled.
In essence you are forcing the public to bail out the airlines.
Besides with job losses and accumulating debts due to the virus nobody will be able to afford a vacation soon.
Also airlines should not be bailed out as they have collateral (aircraft & real-estate) to guarantee loans.
Better yet gov’t should force Credit cards to cut back on their high user rates.

Lorne

I disagree with the decision. Why do traveller’s who purchased tickets many months (8) in advance have to bear the problems of a failing airline due to Covid. Should we also bear the losses of hair salons, restaurants etc. Just because they have our money is no excuse for them to be able to keep it. We traveller’s may be unemployed now as well and need the cash as do the airlines , restaurants and others but now traveller’s are denied access to their money. Absolutely unbelievable.

Rob

It is absolutely disgusting that the CTA would suggest that not refunding for services not rendered is a “reasonable” outcome for passengers. Not only is it not reasonable, suggesting that it is does not constitute law. In fact the law is clear that if services are not rendered a refund must be given. This bullying of passengers must stop. I can see, given the current situation that the airlines are given a pass as far as compensating passengers as per the passenger rights legislation, which the airlines also failed to respect even before the Covid-19 crisis. In Air Canada’s case they give you a credit which has several restrictions. They can’t be combined. They can only be used towards base fares and if your flight is less than the value of the credit you will forfeit the remainder. How is that fair? Most banks are in cahoots with the airlines and not allowing chargebacks, but pressure is mounting. Undoubtedly this issue will end up before the courts and the airlines and the banks will pay a hefty price in the end.

Mark Hamer

I understand the airlines huge problem. I booked and paid for unlimited flights February to May. I hope airline allow me to extend my ticket, but I don’t mind if they can’t. This is not time to say I deserve everything.

Jonathan Hokanson

Air Canada & Westjet have been ripping me off for years by charging exorbitant fees whenever I need to make a change to my itinerary. Send them into bankruptcy and charge their executives with criminal misbehaviour.

Frank

They should give an extra 10% if you take the credit. That way you are getting something for them keeping your money. That would be fair.

Ajay

I agree with CTA decision.

Elvira Reichmuth

I have paid for business class to fly to Toronto on the 29. May 2020 return. It’s upsetting but nobody has control what happened,.l am okay with a two year voucher!!!

FRED

No I do not agree. This is a statement and that is all. This is not a point of law. Statements do not change laws. I have travel booked and if my trip is cancelled by air canada due to any reason then I am entitled to a refund back to the original form of payment. These are difficult times and people need their money. Airlines need to do the right thing and just give people’s money back.

Frank

The Canadian government talks about undue hardship to Canadians, the cta talks about undue hardship to the airlines. This is a perfect opportunity to see how the Canadian corporations and government agencies care for you. I’m sure there will be a lawyer somewhere who would be willing to file a class action lawsuit against these airlines. The cta stance on this matter is in favor or the airlines not you the consumer. Who is to say the price of the vacation package you purchased would be the same price in the next 24 months. Who to say what additional charges these airlines would add to recouperat lost revenew. Now you can see how little we mean to these airlines and the cta. The cta has the airlines best interest at heart not the consumers. The only way things will change is to boycott the air lines and don’t travel with any of them for awhile and they will see financial hardship without any new bookings. Then will will realize they value of there consumers.

Louis

Pragmatic yes and I support the 24 months rebooking but certainly under the premiss of basic UK contract law the service wasn’t provided and therefore voids the contract (I haven’t read the T&Cs though). I was flying AA this month and they wouldn’t even give me credit but I had to make a decision on when I want to move my flights to before my departure date – oh and my travel agent could only phone them within 48hrs of departures – literally I had 24hrs to decide and I notice looking at SkyScanner the option they moved me to is cheaper than what I paid. To me credit and even 12 months to rebook would have been more than satisfactory to me. I do also recognise that others will have had their finances turned upside down yet they are still tide into these trips in the future when it may be economically impractical for them.
I think my response may have supported everyones view, so I will plump for the CTA’s view which appears a balanced approach for everyone and hopefully gives people who are struggling to get back on their feet.

Robert

Amazing.
Who gave the CTA the authority to overide hundreds of years of established contract law. This seems to be a huge overreach and hopefully will be challenged.

Stephen

I don’t see how this could stand up in court. Contract broken ( goods not delivered as agreed : refund required.)

Ursula Silling

I think it is common sense, and the 24 months give peace of mind. However, customers who had been willing to pay extra for flexibility and free cancellation should continue to be able to do so. The airline charged extra to allow for this risk, for whatever reason.
In some countries customers might also have a clear reason to worry as airlines which had been in a very bad shape before the outbreak might simply not be able to provide the promised alternate flights in the future. Who will take responsibility in such a case? Credit card companies? Travel agencies? The consumer? A very difficult situation.

Ken

Disagree. We are pensioners living on a meagre income. We were in Europe and Air Canada cancelled our Apr 2 flight. Rebooked it to Apr 3. They cancelled it a day later. Did not offer an alternative flight. We were now on our own and booked a flight Lisbon to London to Montreal @$5700 2 tickets economy. Next day AC moved the Lisbon to London portion to the day after London to Montreal….how would they expect us to get home? Could not get through to AC so booked another flight with Lufthansa same route $5600. Made it home. We don’t need an $11,000 credit. We need the cash to pay our credit card. We are not in the airline banking business.

Jo Davies

What if the airlines go under? Does the customer then get their money back? Probably not.

Rita

I do not agree with this decision, my husband has health issues and we were going to see the family out west. What happens if we can’t fly again?
Yes its beyond the airlines control but it’s beyond ours as well!!

Brian Targett

No I don’t agree . If the credit was 100% of the money spent then yes . The fact is I have had credits before and when all the extra fees and up charges are applied you get about 1/3 of your money . Is that fair for the general public . A company that makes billions and they prey on the public should not keep our money. Especially when they will also get a government bailout it’s win win for them. We the people who keep the airlines in business.

Sheri

And what will happen to my credit IF the smaller airlines (Air Transat, Sunwing etc) go bankrupt anyways within the next 12-24 months before I’ve had a chance to rebook my travel?

Walter

We will personally be challenging this out flight was booked for a special event, the vent now isn’t happening the airline says they will no longer fly to the same location so not only are we out 8000 dollars which we have to pay for we can’t even use it to go to the location we want to go, this is not law and I don’t belive can be enforced

KFH

I’m sure, that will make tourist flock to Canada as soon as possible, eeh?

For the mentally challenged, what good is a voucher on future flights, for a tourist planning a once-in a lifetime travel through Canada?

Will Canadian hotels now also issue two-year vouchers for rooms, that were booked with the proviso, that the could be cancelled at any time with full reimbursement (hence the higher price)?

And, finally, what happens to the vouchers, when companies go haywire anyway?

The scheme is so harebrained, it could have been lifted from a Trump-tweet with “use-before” his next tweet.

December 2019 I had started planning a four week trip through Canada in 2020 from Toronto to Vancouver – including a few days spent at the Calgary Stampede, and returning back to Europe via Japan (Tokyo, Kyoto, Osaka). This will of course not take place in 2020. Not even at short notice, as I prefer to wait out the first wave of bankruptcies. Anyone having turned up at a hotel closing down for good midnight before arrival, knows that things quickly becomes complicated – especially if your luggage has also been delayed/mislayed “intercontinentally” by the airline 😉

Luckily I’m my own travel agency, so no bookings have been made yet.

With this, new, CTA “arrangement” I’ve dropped any ideas of future travel through Canada. Whether 2020, 2021 or later. Life’s to short for this kind of lottery, indistinguishable from ordinary fraud. Whether state supported or not.

I can still travel to Japan, completely avoiding Canada in 2021. Even after the wave of bankruptcies, there’ll be many airlines available. I will have to contend with never visiting Canada during my retirement. Alas, the world is a large place, and I have still a few countries to visit. I will miss the experience, but maybe – just maybe – that will be the lesser of two evils 😉

Anne Knight

I agree with giving passengers who have booked flights credits to fly at a later date. My husband cancelled our flights to Regina which were 1240.00 when he was trying to just secure a credit for flying at a later date. We have not been able to reach air Canada by phone now for st least 10 days. I got hold of a customer service rep after being out on hold for almost two hours who said she could not reverse this error snd dirty, we cancelled and the reservation is gone and they won’t do anything for us. Unless they make this right, we will NEVER fly with them again amx eill. Ash this airline every chAnce we get. This is not right. They basically have stolen our money with no recourse other than to sue then which we will do if they don’t return our money. Anyone want to join. Class action suit? I know a good lawyer

Jacob

My flight was cancelled 5 days after purchasing a ticket for a flight 3 weeks into the future. No refund was offered, no credit was issued,no rebooking was ordered. This is ok?

I am willing to be flexible. However I don’t understand why there should be an expiration date on the credit. My money had no expiration date. If the airline industry is going to take this stance, they should at least let the customers share their credits with other potential travelers.

Charlene McQuade

I do like this because everyone is on the same page. The only problem we have is anything can happen in the 2 years of individuals and if so is unable to use the voucher because of health restrictions,so have to spend more money on insurance or your spouse is deceased not able to fly,what happens then? We really do not want any bankruptcy to happen.

John

so i i have a voucher and now i don’t want to go to Italy but stay in the US do i have to travel 4 1/2 hrs to Toronto Canada to take my flight somewhere in the US?

W.Nichols

Where is the billions Trudeau pulled for industry support. You are saying if you can afford to fly you can afford to take the hit. People on limited incomes can only fly by saving over time. Congrats to CTA for the theft from limited income customers that are under the greatest risk and may not be around in two weeks nevermind two years.

Rosalie Johnson

I don’t agree with this decision not to refund Consumers. This is a very financial difficult time for Canadians and some may not recover financially. Let’s care more about people than corporations.
We are seniors and have health issues and may not be healthy enough to fly within the next 24 months. We are pensioners and saved for approximately a year in order to take this trip.

This is our money and service was not rendered. We are not asking for anything in addition just what we are owed.

Bob

So maybe the solution is the airlines continue to operate these flights, but when the consumer cant clear customs to get into a different country then it becomes the problem of the consumer. Then they dont get a trip AND no flight credit AND no refund because it was them who cant get into another country and not the fault of the airline. Even if you do get out if the country, be prepared to not get back in. Yes, it is unfortunate that plans were disrupted in all of this, but airlines also had their ability to operate these flights removed by someone other than them. This is a group effort and we are all in it together.

John Furner

Air Canada flights mid March were stopped when the Government of Canada declared a level 4 travel risk warning,” avoid all non-essential travel”. I had no choice but to stay in Canada, forgoing travel to the Dominican Republic March 23rd. My payment now is not refundable. Being in my mid 70s I don’t agree with the CTA decision. Winter in northern Ontario is h*****n seniors. No guarantee I will be alive within 24 months. Why punish seniors? Putting financial loss of a company over personal loss of a senior doesn’t provide comfort. We have contributed to society for over 70 years but now don’t count. Please refund my $3500 before it is too late. Air Canada booking # [redacted].

Neil

I absolutely do not agree with this decision. If the airlines go bankrupt, we will never get to use those vouchers and will be out our money.

A L A

I Completely DISAGREE with CTA’s clarification and changing of rules without engaging any the public who are affected by this ridiculous idea that no one thought about the fairness of this existing rules!

Airlines need to refund what as a passenger I paid in advance, it is my money and I have full right to get it back. Airlines are commercial businesses and bankruptcies are part of business. On one side it is okay for Airlines to layoff individuals and on other side they should hold on to customer’s cash? why?? This is UNJUST!

Don Armstrong

Kick in the teeth to all Canadians who need the money refunded now in these trying times. Consumers have been treated badly by these airlines for years and now again are given the go ahead to steal our money. Prices for tickets will increase in the future and many tickets will never be used, way to go Liberals, see you at the polling station.

Marco K

Why should I pay for something that I did not get. Who says that I will be in the position to be flying within 2 years with Air Canada again.

Let’s see if I really have to take the voucher, let’s see if European law applies here and if I can sue Air C and send a cirthese inguys with Air C a bit in the circle to keep them busy.

I will never ever again book with them for my whole life, and I will get the message shared with whom I know so that they are also not going to fly with Air C. I will not spend a single dollar when I touch down on my transit stop to SF and I will not buy anything that I know is from Canada.

Veronica Johnson

Yes to prevent total collapse of the aviation system it’s fair. Hopefully the airline will not raise prices to the extreme when service returns to make it financially difficult for customers

james forrest

It all depends on what the airlines will charge for flights when travel resumes. In view of the fact that they are gouging stranded travellers now , there is NO doubt the fares will be excessive and the credits will in essence be irrelevant.

Carl

This article is somewhat misleading — no fault of the author’s.

Yes, the CTA issued a statement, but this is merely an opinion and not a change in regulation.

The underlying premise stands…
You entered into a contract where you exchanged $$ for a flight. The airline is unable to provide the flight, thereby breaching the contract. You are entitled to your money back. Especially if services haven’t been rendered…. Why do they need to hold on to your $???

Alternatively, you may reference a Frustration of Contract. To no fault of the airline industry, they are unable to render the services promised as part of your contract. Contract law says that if a party is unable to render services due to unforseen circumstances (COVID19), then both parties should be made whole in a state that they were previously in before agreeing to the contract.

I’m sorry for everyone that just accepts the CTA’s opinion and assumes it’s law. Fight for your right to a refund. If you don’t get it from the airline, then ask your credit card to issue a charge back on the premise that the service you paid for isn’t being rendered.

K W C

For those people that want a refund how about they can transfer their credit to either a family member or someone else then it’s a win for both sides if the person needs the money they receive the money from the credit and the airline doesn’t have pay out the money.

tim evans

I am a senior of 70 years and I could use the 6 thousands dollars I paid for a trip on the 31st March to Mexico.

Rob Lesser

In that it is common knowledge that most CC’s are already maxed out and few have savings beyond a week or two it is simply criminal to use CC purchased tickets hostage to save the airlines.
It adds up to 20% public funded bailout. (20% is average CC interest rate)

Charles Dionne

As long as I can get a promissory note on flights that I have purchase and will be honored for 24 months, I find that reasonable.

Chris

The vouchers wouldn’t be so bad if one could use them towards any future trip with the same airline. BUT we are being forced to use them towards the same resorts well. That’s not right! Will that resort in a already trying country survive the economic backlash of covid-19? They can’t guarantee that!