What Happens If The DOT Lets Air Canada Deny Refunds?

Right now, the US Department of Transportation (DOT) is in the middle of a disagreement with Air Canada over passengers’ rights to a refund due to flights canceled amid the coronavirus pandemic. The DOT has issued an ‘Enforcement Notice,’ which includes frequently asked questions on the topic of refunds. The heart of the matter is whether these policies apply to Air Canada – a foreign airline.

Air Canada dreamliner
Should domestic policies apply to foreign carriers that operate flights into the country? Photo: Air Canada

Air Canada’s resistance

According to PaxEx.Aero, Air Canada has filed only one public response on this topic. It states that:

  1. It does not intend to refund passengers on canceled flights (even if they were to/from the United States)
  2. DOT policies do not apply to Air Canada – primarily because they are not actually laws

The following is part of Air Canada’s argument, according to PaxEx.Aero:

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.

Delta and United
US carriers have overall been compliant with the policies set by the US DOT. Photo: Getty Images

Who’s right and who’s wrong?

If we look at air passenger rights in Europe, we can see how EU policies apply, even to foreign carriers. EU Air passenger rights apply if a passenger’s flight “departs from the EU to a non-EU country operated by an EU or a non-EU airline.”

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The US DOT states, “The Department’s rules regarding flight delays and cancellations apply only to flights that operate to, from, or within the United States.”

Air Canda’s primary defense is that the refund guidance issued by the US DOT is just that – guidance. It is not law that has been formed through international agreements or Presidential or Congressional action. Thus, the Department is not authorized to regulate foreign air carriers in this manner.

WestJet Air Canada Transat
The implications of any further action could be far-reaching. Photo: Chris Loh/Simple Flying

What are the implications?

As we aren’t exactly legal experts, it’s difficult to know how this battle will proceed and if any further course of action can be taken by the US DOT to convince Air Canada to issue refunds to affected passengers.

Indeed, with transborder traffic being one of Air Canada’s largest markets, there are likely thousands of Americans unhappy with the airline, unable to obtain refunds. The issue would extend even further with many Canadians who had flights planned to the United States – for which this debate would also apply to.

Simple Flying reached out to Canadian air passenger rights advocate Gabor Lukacs for comment. Mr Lukacs commented, saying:

“Air Canada is poking the US DOT in the eye, and advancing frivolous and vexatious arguments. When in Rome, do as the Romans do. WhenAir Canada operates to and from the US, it has to abide by the US regulator, or it risks having its license suspended. It is plain and obvious that the US DOT has jurisdiction to regulate commercial activities of airlines to the extent that they operate to and from the US. This is unlikely to end well for Air Canada.”

Thus there are a few possible outcomes to this debate:

  • Through his experience on such issues, Mr Lukacs seems to think that the US DOT would be able to suspend Air Canada’s license to operate flights to the US. This would likely force Air Canada to issue refunds to all passengers with canceled flights to and from the United States due to the pandemic.
  • Should Air Canada win its case and maintain its position, then airfare policies for other foreign airlines flying to and from the country could change, possibly to the detriment of the consumer.

How do you think this battle will unfold? Will the US DOT concede to Air Canada? Or will there be repercussions for the Canadian carrier? Let us know your thoughts in the comments.