The U.S. government proposed to fine Air Canada $25.55 million for selling tickets to customers, cancelling their flights, and refusing to issue refunds. When customers complained to the Department of Transportation, Air Canada claimed they weren’t subject to U.S. law. And Air Canada sought to dismiss the fine arguing that, despite U.S. government claims, the law doesn’t require refunding customers when an airline fails to provide the paid-for service anyway.
The response from the Department of Transportation to this nonsense is brutal, in typical understated legal-speak of course.
Air Canada attempts to argue that its practice was indeed fair, and that the Office of Hearings cannot possibly find otherwise as a matter of law. To reach this remarkable conclusion, Air Canada relies on three arguments:
(1) OACP relied on nonbinding guidance;
(2) OACP brought this case without adequate notice; and
(3) Air Canada’s no-refund policy is consistent with Canadian law and its own contract of carriage.
These first two arguments are false and have no foundation or basis in fact, and the third argument is irrelevant and is used by the carrier to divert attention away from how the carrier harmed consumers by deciding to keep their money without providing the service that they paid for.
Air Canada is now looking to come to a settlement with the U.S. government. Expect them to agree that they’re subject to U.S. law when they fly to the U.S. and sell tickets to consumers in the U.S. (duh), that refunds are required when they cancel flights (anything else is fraud), but that the amount they actually pay in fines will be substantially lower.
They’ll no doubt get credit for the refunds they’ve actually provided to customers, something they did only after the Canadian government shelled out subsidies to them much larger than the refund amounts and made refunds a condition of picking taxpayer pockets up North.
At this point what matters is a recognition that defrauding customers may be acceptable under Canadian law but it’s not ok here, and that customers need to remember and be reminded that Air Canada was a bad actor throughout the pandemic. Of course United was as well – but they buckled under pressure from the DOT.