DOT Issues Largest Fine Ever Against Air Canada For Stealing Customer Money

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,

  1. 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.)
  2. That refunds are required when they cancel flights (anything else is fraud)
  3. However the amount they’d actually pay in fines would be substantially lower than $25.5 million
  4. 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).

That’s what’s happened. The Department of Justice sent out a press release touting a settlement in the case (HT: @Travel33t).

  • 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.

Of course United was as well – but they buckled under pressure from the DOT. And so was JetBlue, and many foreign carriers like TAP Air Portugal.

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.”

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. People crap on AA but they were one of, if not the, best at getting customers their money. At the height of the pandemic they were losing $100m a day. Crazy to think about.

  2. should have been the full $25.5 million. That is still tiny compared to the amount of customer cash they held.

  3. Lol @owned by the government. AC is run by the biggest and greediest corporate d-bags you can imagine. Millions in bonuses while stealing from their customers

    The fine is not large enough and subsidized by the taxpayer.

    A ban from US airspace for this scum airline would have been more appropriate.

  4. Good but the fine shouldn’t have been lowered at all. Too bad it’s the Canadian taxpayer that will be footing this bill too.

  5. @Geo, @Ann: as per Wikipedia “As of April 2021, the Government of Canada owns approximately 6.4% of Air Canada.” Not exactly “fully owned by the government of Canada”

  6. The flagrant actions of Air Canada should be met with equally flagrant punishment. That “find” is a small fraction of the performance bonus paid to the president alone.

  7. Garbage airline. Terrible Y and mediocre J. Always last in on time performance, zero customer service.
    Should have been banned from US airspace after the SFO incident.

  8. An analogy would be needing to park a car in city center with parking lots starting at $10 per hour. Instead decide to park illegally on the street all day, get a $5 fine and are all set.

    Cheap short term financing for AC

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