US Pursues $25 Million Fine Against Air Canada Over Refunds

The United States Department of Transportation (DOT) is pursuing a fine against Air Canada. Seeking a civil penalty of over $25.5 million, the airline is accused of failing to provide refunds in a timely manner, leading to a high volume of customer complaints.

Air Canada A220
Air Canada is facing a fine from the DOT over refunds. Photo: Vincenzo Pace | Simple Flying

DOT seeks $25 million fine from Air Canada

The DOT’s Office of Aviation Consumer Protection (OACP) announced it has filed a formal complaint against Air Canada. Filed with an Administrative Law Judge over the airline’s failure to provide refunds, the OACP is taking issue with Air Canada’s failure to provide refunds in a timely manner. The DOT has been looking into Air Canada’s refund practices for some time.

Totaling $25,550,000, the penalty comes after thousands of passengers complained that the airline canceled or significantly changed flights and refused to provide refunds. The DOT mandates refunds for customers in certain situations.

Air Canada
The OACP is seeking $25 million from Air Canada as a penalty for not providing refunds in a timely manner. Photo: Vincenzo Pace | Simple Flying

The goal of the fine is also to deter Air Canada and other airlines from committing similar violations in the future. Even if the airline is undergoing a major crisis, the carrier is still required to follow the laws surrounding refunds.

Air Canada now has 15 days to answer the complaint. The airline can either admit or deny specifically and in detail each allegation of the complaint and respond to the proposed assessment of civil penalties.

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Complaints against Air Canada soared

In general, complaints against airlines over refunds soared during the crisis. As airlines cut flights, altered schedules, and sought to manage their network and operations during the crisis, passengers faced changing flight schedules and uncertainty.

According to the OACP, it has received over 6,000 complaints through its portal against Air Canada. The complaints alleged the airline denied refunds for flights significantly delayed or canceled by the carrier. Another 89 complaints also came through the DOT’s open docket on the refunds.

Air Canada 787
Air Canada is mandated to provide refunds to customers who booked travel between the US and Canada or from the US to another country via a transfer in Canada. Photo: Vincenzo Pace | Simple Flying

In the complaint filed with the Administrative Law Judge, the OACP asserts that Air Canada committed at least 5,110 violations. While some passengers did get their refunds, the wait time was anywhere from five to 13 months.

The OACP announced in May 2020 that it would use its enforcement discretion to accommodate airlines that needed slightly longer than usual to process refunds, given the high volume of requests. Airlines had to make a good faith effort, however, in giving out refunds. According to the DOT, Air Canada did not, and the DOT asserts it continued its no-refund policy, in violation of US law.

Air Canada also suffered from a public image hit over refunds in Canada. As part of the airline’s support package from the Canadian government, it had to provide eligible customers refunds. Just last week, Air Canada extended its refund policy, allowing tickets purchased before April 13th, 2021, for travel on or after February 1st, 2020, to submit their request for a refund if they did not fly for any reason.

Transport Canada, Boeing 737 MAX, Recertified
The Canadian government has recently mandated air Canada to provide refunds. Photo: Getty Images

When are passengers entitled to refunds?

The DOT requires airlines to refund passengers for a variety of reasons. One is if an airline cancels a flight. Passengers are entitled to refunds if the carrier cancels a flight and chooses not to accept an alternate itinerary or travel option.

A second case is if there are schedule changes or significant delays. The question of “significant delay” is not specifically explained.

Other refunds are mandated if an airline is involuntarily moved to a lower class of service, is unable to fly, and utilize their ancillary fees such as baggage or seat upgrades or WiFi.

Air Canada A330
Air Canada became notorious over customer complaints regarding refunds during the crisis.. Photo: Air Canada

For canceled or significantly changed flights to or from the United States, airlines have to provide refunds, upon request, within seven days of the date of the request for flights purchased with a credit card. If the ticket was purchased with cash, airlines have 20 days to refund the ticket.

The DOT had to warn US airlines last year to provide refunds after complaints soared in the early days of the crisis. Airlines have largely been working on refunding customers. However, the OACP is continuing to investigate the refund practices of other US airlines and foreign carriers flying to and from the US.

What do you make of the OACP’s initiation of enforcement proceedings seeking $25 million from Air Canada? Did you have trouble getting a refund during the pandemic? Let us know in the comments!