Air Canada was one of the worst offenders during the pandemic for keeping customers’ money even when they cancelled flights. This is clearly against U.S. law and Air Canada will pay the largest-ever consumer protection fine assessed by the Department of Transportation.
When called on it, the airline told DOT that taking money from customers and failing to provide the promised services is permitted under Canadian law, and U.S. law doesn’t apply to them even,
- for flights to the U.S.
- that have been sold to U.S. consumers
The Department of Transportation proposed to fine Air Canada $25.5 million. DOT received over 6000 complaints against Air Canada for refusing to provide refunds during the pandemic. They found 5,110 violations of law, and recommended fines of $5000 per incident because, as DOT explains,
A passenger is entitled to a refund if the airline cancelled a flight, regardless of the reason, and the passenger chooses not to travel.
When Air Canada filed its response, thumbing its nose at U.S. authority, I wrote out how this would end,
- The parties would agree Air Canada is subject to U.S. law (for flights to the U.S. and sales to consumers in the U.S.)
- That refunds are required when they cancel flights (anything else is fraud)
- However the amount they’d actually pay in fines would be substantially lower than $25.5 million
- Because they’d get credit for the refunds finally provided to customers (which they did after the Canadian government shelled out subsidies to Air Canada much larger than the refund amounts and made refunds a condition of picking taxpayer pockets up North).
- Air Canada agreed to a fine of $4.5 million
- But will get $2.5 million credit for refunds given to customers
- And pay just $2 million as a penalty
While it’s a fraction of the original proposed fine, this is the largest consumer protection fine ever issued by the Department of Transportation. It also recognizes Air Canada has to follow U.S. consumer protection rules even if outright theft from customers is acceptable under Canadian law. Customers do need to remember and be reminded that Air Canada was a bad actor throughout the pandemic.
DOT notes that investigations remain underway of other U.S. and foreign carriers and that they plan “to issue a rulemaking soon to address protections for consumers who are unable to travel due to government restrictions.”