Refunds for airline passengers: a far-from-perfect solution

Photo: Isaac Struna

While an agreement between the federal government and Air Canada obliges the carrier to reimburse its customers, we are still waiting for a measure that will enable all travelers left on the tarmac because of the pandemic to get their money back.

Flight cancellations, border closures, travel restrictions, mandatory quarantine: the pandemic has turned many consumers' travel dreams into a nightmare.

In several cases, those who wanted to be reimbursed were refused. The solution imposed on them was a travel credit. First with restrictions, then with fewer restrictions, but a travel credit nonetheless. This solution provoked consumer discontent, and rightly so. For no one knows when life will return to normal. Although the distribution of vaccines brings a wind of hope, it's impossible to predict when it will once again be possible to travel abroad safely. Some consumers will no longer want to travel, while others may not be able to do so because of their physical or financial health. Still others simply need their money now.

A year of waiting

In March 2020, the pandemic caught businesses, consumers and governments alike off guard. One year later, the situation continues. What have government authorities done to help air passengers? So far, very little.

On the pretext that refunding their passengers would jeopardize their financial health, many airlines have arrogated to themselves the right to keep their customers' money by offering them travel credit. In this way, they forced their customers to finance them without offering interest or a formal guarantee of repayment.

Faced with this situation, theCanadian Transportation Agency (CTA), the body responsible for overseeing the airline industry and enforcing its laws and regulations, maintained that the Air Passenger Protection Regulations (APPR) did not oblige air carriers to reimburse their customers when a disruption beyond their control prevents them from transporting them according to the planned itinerary and within a reasonable time. In so doing, the CTA virtually vindicated the airlines, leaving passengers to fend for themselves.

However, the RPPA does not exclusively and exhaustively provide for all air carrier obligations. Other laws and regulations impose binding obligations on them, and empower the authorities to take action to help consumers.

On the one hand, the Canada Transportation Act and its regulations give the CTA the power to intervene, notably when a tariff contains an unreasonable condition. It's hard to see how, in a society governed by the rule of law, it could be considered reasonable for a company, in this case an airline, to impose a condition on a consumer whereby it could keep his money without being obliged to provide him with the services for which he had paid!

On the other hand, airline fares are contracts that are also subject to provincial laws. For example, in Quebec, these contracts must comply with the Civil Code of Quebec (C.C.Q.) and the Consumer Protection Act (C.P.A.). While the C.C.Q. stipulates that, in the event of force majeure, the air carrier may be exempted from its obligation to carry its customers, it also stipulates that, in such cases, it is obliged to refund the sums it has received. As for the C.P.A., it allows consumers to request cancellation of a contract in the event of non-delivery, and protects them from unfair contract terms.

Taking the bull by the horns

Faced with the apparent inaction of government authorities, consumers had to take their own steps. In Quebec, thousands have filed claims with the Fonds d'indemnisation des clients des agents de voyages, managed by the Office de la protection du consommateur (OPC). To date, no consumer has yet been compensated, as the OPC is waiting to see what action the federal authorities will take.

Thousands of passengers have also lodged complaints with the CTA and are still waiting for news.

Applications for leave to sue class action were filed with the courts, notably in Quebec and the Federal Court. Theclass action was dismissed in Federal Court for lack of jurisdiction. At the time of writing, we are awaiting the Superior Court's decision on the Quebec application for authorization in the case of Lachaine v. Air Transat, Air Canada, Sunwing, Westjet et als. But even if authorization is granted, this case could take years to conclude.

Many consumers who had taken out travel insurance including cancellation cover turned to their insurers. Once again, many were turned down, as insurance companies consider that customers who have received travel credit have been compensated.

That leaves individual recourse. Many consumers have decided to take their airline or travel agency to civil court. In Quebec, the Court of Quebec, Small Claims Division, hears most of these cases. Given the delays inherent in these proceedings, few decisions have been handed down to date. But here again, the results have so far been mixed. While one couple succeeded in obtaining a decision ordering the carrier to reimburse them, another case has been suspended until the conclusion of one of the class actions.

Too little too late

Since the beginning of this crisis, federal government support for air passengers has been piecemeal. In response to repeated requests from the airlines for increased financial assistance, the Prime Minister of Canada made it clear publicly that this would be conditional on the reimbursement of air passengers. Negotiations have been announced.

In addition, following a ministerial directive, the CTA launched a public consultation aimed at adding new obligations for air carriers in the event of disruptions beyond their control. In doing so, the CTA has reiterated its restrictive interpretation of the regulation that carriers do not have to reimburse consumers. And the regulatory change, if adopted and implemented, would only provide a solution for future disruptions.

More than a year after the start of the pandemic, there is finally a glimmer of light at the end of the tunnel. The federal government and Air Canada have announced that an agreement has been reached. The government has granted the carrier financial assistance in the form of loans, and the carrier has, among other things, undertaken to reimburse its customers, including those who have obtained travel credit or Aeroplan points.

But as in so many cases, the devil is in the detail. For one thing, the refund is not automatic. Consumers will once again have to take steps to obtain it. And even though these sums have been withheld by the carrier for over a year, passengers have only a very limited period of time - barely 3 months - in which to make their claim. Furthermore, passengers who have purchased their tickets through a travel agency are obliged to request reimbursement via that agency. However, even if the commissions paid to these agencies are not compromised, some of them charge consumers a fee so that they can claim their due.

And what about the customers of other carriers? Nothing. The government says it's in negotiation mode. Yet the law is clear: passengers have the right to be reimbursed. It's high time our government put its foot down and ensure that the rights of its constituents are respected. If negotiations drag on, the government has the power to impose the essential conditions of any additional financial assistance, including passenger refunds, whether the airline industry likes them or not.