During the pandemic, Air Canada cancelled the flights and kept passenger money. They didn’t deliver the service that was promised, but wouldn’t issue refunds. That’s stealing.
United and JetBlue did the same thing, but they relented when the U.S. Department of Transportation issued threats. Air Canada didn’t budge, even telling the Department of Transportation that they had no jurisdiction over ticket sales in the United States to U.S. consumers for flights to or from the U.S. My advice at the time was to sue in small claims court.
Eventually the airline issued refunds – after the Canadian government gave them subsidies much larger than the amounts owed to customers.
The U.S. Department of Transportation moves slowly. It took 15 months, but DOT proposed a $25,550,000 fine against the Canadian carrier. After all, the U.S. government is clear that for flights to and from the U.S.,
A passenger is entitled to a refund if the airline cancelled a flight, regardless of the reason, and the passenger chooses not to travel.
The U.S. government sought a fine of $5000 for each of the 5110 complaints they found to be valid against the airline for refusing a refund after cancelling a flight. In practice, though, airlines often settle with the DOT for less than the proposed fine, and seek credit for other money they meant have spent compensating customers or providing other remediation.
Air Canada has filed its response and they’ve basically once again told the Department of Transportation to pound sand and seeks to have the complaint dismissed.
- Air Canada says ‘non-refundable tickets’ means non-refundable, even if the airline doesn’t honor its obligation to actually operate flights. A customer is only entitled to a flight credit for future travel (even, presumably, if the airline stopped serving the route or country that the customer is in). They suggest that if a customer wants a refund when the airline cancels a flight, they should give Air Canada even more money for a refundable ticket.
- They used to provide refunds before the pandemic, and they’ve provided refunds after receiving a government subsidy package, but their contract of carriage says they don’t have to and their actual practices – which were consistent with DOT rules – don’t create an obligation.
- A requirement to issue a refund for a cancelled flight (i.e. not keeping money when you don’t deliver a promised service) isn’t clearly spelled out in law, and is mere DOT guidance about what the law says,
[T]he Department improperly attempts to use Air Canada’s alleged
failure to comply with non-legally binding guidance documents, an archaic and privately issued Industry Letter, and non-binding statements in the preamble of the 2011 Enhancing Airline Passenger Protections rulemaking, none of which have the force and effect of law, to establish proof of an unfair practice.
The arguments remind me a bit of tax protestor arguments over the 16th amendment – that the constitutional amendment allowing for an income tax was never properly ratified, that “wages” aren’t income and can’t be taxed, and that progressive income taxes violate the 14th amendment’s equal protection clause. Or that if there are fringes on the flag in a courtroom then it’s an Admiralty Court which has no jurisdiction over a sovereign citizen.
This is a very dangerous motion. If Air Canada were to win their position then any airline could sell tickets, cancel flights, and keep customers’ money.
I do not expect the DOT’s complaint to be dismissed, however. The facts alleged by DOT must be presumed true for the purpose of a dismissal motion, notwithstanding Air Canada’s claim that they failed to ‘verify the complaint under penalty of perjury’. (If Air Canada won this point, they’d get a dismissal with leave for DOT to re-file.)
As a general matter I do not think courts should afford deference to agencies on the meaning of a law, but Air Canada has a pretty high hurdle to clear to argue that DOT has basically made up an obligation to issue refunds when the services offered are not delivered.