The U.S. Department of Transportation is seeking to impose a $25.6 million penalty on Air Canada over "extreme delays" in providing refunds for canceled and significantly changed flights to and from the United States.
The department's Office of Aviation Consumer Protection reported that it has received more than 6,000 complaints of denied refunds through its complaint portal since March 1, 2020, and from those complaints, it determined that the carrier had committed more than 5,100 violations in which passengers waited from five to 13 months for a refund. U.S. law requires airlines to refund passengers on delayed or significantly changed cross-border flights within seven days of a refund request for credit card purchases and within 20 days for cash purchases. With the high volume of canceled flights and refund requests related to the Covid-19 pandemic, OACP said it would allow slower refunds for airlines making a "good faith effort" to provide them.
"Air Canada did not make such good faith efforts," U.S. DOT said in its enforcement complaint. "Instead, for almost one year after the announcement of the May 2020 enforcement notice, Air Canada continued its no-refund policy in violation of U.S. law. For the length of time that Air Canada failed to offer prompt refunds for flights that it had cancelled or significantly changed, Air Canada continuously violated this regulation."
The penalty is based on calculated harm from the violation as well as a punitive amount "intended to deter Air Canada and other carriers from committing similar violations in the future," U.S. DOT said in a statement.
The OACP has filed the complaint with an administrative law judge, and Air Canada is required to file an answer to the complaint with 15 days, according to U.S. DOT. In a statement, the carrier said it "will vigorously challenge the proceedings" and that the enforcement notice was "guidance," not "properly issued regulations."
"As mere guidance, they cannot overrule or supersede the Department's well-established regulatory framework, as instituting a new regulation requires public notice and comment," Air Canada said in its statement. "Indeed, the Department’s Covid-19 Refund FAQs document acknowledges that it 'does not have the force and effect of law and is not meant to bind the regulated entities in any way.'"
More recently, Air Canada has stepped up its refund efforts, covering nonrefundable tickets both for flights canceled by the carrier and the traveler, as part of a liquidity program agreement reached with the Canadian government. The carrier last week reported that 40 percent of eligible travelers have submitted refund requests so far and that it had processed 92 percent of submitted requests.
The OACP currently is investigating refund practices of other carriers, based inside and outside of the United States, and "enforcement action will be taken in those cases as appropriate."