Canada’s transportation regulator released new draft rules for passenger refunds that broadly match what consumers believed were the rules all along, and are not retroactively applicable.
Canadian Transportation Agency (CTA) published the proposed Regulations Amending the Air Passenger Protection Regulations July 2, more than 15 months after their bulletins in the early days of COVID-19 pandemic had infuriated consumers by allowing airlines to issue vouchers for future travel instead of refunds for cancelled flights.
The CTA proposal is open for public comment by e-mail until August 31.
CTA indicated the new regulations would mean that if the airline can’t provide the passenger with an alternative flight within 48 hours of the original departure time, the airline would have to provide a refund, or rebook passengers who do not wish to be refunded on the next available flight. The refund would be made to the ticket purchaser, using the purchaser’s payment method. Consumers could choose vouchers or credits, but only if they are worth more than the ticket and do not expire, and the purchaser confirms in writing that this is their preference. Refunds would be required within 7 days for tickets purchased by credit cards, and within 20 days for tickets purchased by other forms (cash, points, etc).
In making the announcement, the CTA added that the requirement under current rules is that “when there is a flight delay of three hours or more or a cancellation that is outside their control, all airlines must rebook affected passengers on the next available flight operated by them or a partner airline.”
This view was hotly contested when it was originally made in March 2020 in the weeks after the COVID-forced cancellation of virtually all flights. The CTA indicated it developed the new regulations following input from the public, consumer rights organizations and the airline industry during a consultation held from December 2020 to March 2021, and also made it clear that the new regulations would not be made retroactive. “They would apply to all future flights to, from and within Canada, including connecting flights (once the new requirements came into force). The proposed regulations would not affect refund-related complaints for previous flights cancelled or delayed as a result of the COVID-19 pandemic.”
Airline refusal to provide requested refunds was a significant source of consumer anger in the first months of the COVID outbreak. The CTA struggled to keep up with already backlogged complaints, and released a statement March 25, 2020 that airlines would be meeting their obligations under Canadian law if they offered passengers affected by cancellations vouchers or credits for future travel, as long as they do not expire in an unreasonably short time. A clarification in late April noted that Canadian law requires only that airlines ensure passengers can complete their itineraries, and it does not obligate airlines to issue refunds if a flight is canceled or delayed for reasons beyond their control.
Consumer protection organizations argued CTA’s statement was incorrect and that by established laws and precedents, consumers should be entitled to refunds. Further, the CTA statement caused airlines, travel agencies, credit card issuers and travel insurers to deflect refund requests. A number of class actions from consumers seeking redress have been filed.
A June 2021 report of the Standing Committee on Transport, Infrastructure and Communities covered many elements of the COVID aftermath on the airline industry. It reports that CTA Chair and CEO Scott Streiner told the committee in hearings that its spring 2020 statements do not “change the obligations of the airlines or the rights of passengers; it simply gave suggestions and should not be interpreted as a binding decision,” and also with regards to the obligations of airlines “because the statutory framework does not include a general obligation around refunds for flight cancellations beyond airlines’ control, any passenger entitlements in this regard depend on the wording of each airline’s applicable tariff.”
That report makes a number of pro-consumer recommendations, emphatically requesting the government amend legislation and regulations to make explicit passengers’ pre-existing right to receive reimbursement. It recommends recognizing a fundamental right to a refund for passengers of cancelled flights exists beyond the protections found in the Air Passenger Protection Regulations, that all Canadian airlines should fully refund passengers for flights they were unable to take due to the pandemic. It also recommends that the CTA “be required to explain what measures it takes to prevent regulatory capture”.
The federal government made passenger refunds a condition of further government assistance last fall. In April 2021, Air Canada and the government announced a $5.9 billion package that would “speed up” customer refunds. The funding included $4 billion in loans, $500 million in equity investments and a separate $1.4 billion loan to help fund the customer refunds. Westjet has offered refunds since last October. Air Canada and Air Transat have also done so, following public aid, but other airline passengers continue to wait for refunds, according to consumer advocacy group Air Passenger Rights.