Pressure is mounting on the federal government to make it mandatory for Canadian airlines to refund passengers for flights cancelled due to pandemic travel restrictions if those companies are receiving aid from taxpayers.
The minister of transport’s office is being hit with a growing number of complaints from MPs, consumer groups and travellers arguing that it’s unfair for Canadian airlines to issue travel credits rather than full refunds.
Shona Chapman said COVID-19 forced her out of work. She said she’s had to temporarily close her salon in Barrie, Ont. after 25 years in business, and has been deferring car payments to get by. A travel credit from WestJet for her Mexico vacation won’t pay her mounting bills, she said.
“It’s very unfair,” said Chapman, who is seeking a $1,400 refund. “It makes you angry … It’s like we’re giving them a mass interest-free loan.”
Hard-hit airlines are burning through cash. Most of Canada’s airline fleet is sitting idle due to a pandemic that has led to widespread travel restrictions and a dramatic drop in demand. Major airlines have tapped into Canada’s wage subsidy program to hire back workers; they’re also considering accessing a new loan program for big companies.
CTA says pandemic doesn’t erase travellers’ rights
Airlines say the Canadian Transportation Agency gave them the green light to compensate grounded travellers with vouchers by issuing a statement that cited “these extraordinary circumstances, when flights are cancelled for reasons outside airlines’ control.”
The CTA later clarified its position and said the pandemic doesn’t negate passengers’ rights. People who believe they are entitled to a refund can still request one from the airline; if they’re turned down, they can file a complaint with the CTA. The agency told CBC News it has received more than 5,100 air travel complaints since mid-March.
Yesterday, Prime Minister Justin Trudeau said the government is working with airlines and concerned Canadians on the issue.
“Getting the balance right will be delicate, but it’s something we’re working on,” he said.
Watch: Prime Minister Justin Trudeau on air travel refunds
That “balance” amounts to finding a way to compensate customers while protecting airlines from bankruptcy.
Minister of Transport Marc Garneau said that while he understands Canadians are frustrated, airlines have lost 95 per cent of their revenue in Canada and still have fixed costs to pay.
“They’re in a world of hurt at the moment,” Garneau told Chris Hall, host of CBC Radio’s The House, on May 15. “So we have to take that into consideration, given the fact we want the industry to survive and rebuild and resume operations.”
Garneau’s office adjusted that response yesterday to echo the prime minister’s call for a balanced approach.
Air Canada offers ‘options’
Today, Air Canada announced what it called “two new options” for customers with refundable or non-refundable tickets: a voucher “for the remaining value of their ticket that has no expiry date, is fully transferable and retains any residual value,” or the conversion of the remaining value of the ticket into Aeroplan Miles, “with 65 per cent more value versus the normal rate for buying miles.
“In cases where Air Canada cancels flights due to COVID-19, customers with refundable tickets will continue to have the option of refunds,” reads a statement from the airline. “Since January 1, 2020, Air Canada has refunded nearly $1 billion to customers.”
In a statement, Sunwing said it initially offered customers a full cash refund, but then adjusted that policy to match what “all other Canadian airlines and tour operators” were doing.
“We understand that some customers would have preferred a refund, but are confident that during the next two years they will be able to take the flights or vacations they had planned,” the airline said.
Natalie Flaman is a travel adviser with Centre Holidays in Calgary; these days she’s working a gig economy delivery job to make ends meet. She defends the practice of issuing vouchers redeemable for two years.
“I don’t know where the money would come from to give back those cash refunds,” said Flaman. “If it’s not there to give, how do you give it? If we want to see the future of air travel kept in Canada, we really have to focus on keeping them afloat right now.”
As a publicly-traded company, Air Canada has about $2.6 billion tied up in ticket sales for future travel over the next year. The airline told CBC News much of this amount is related to travel that hasn’t happened yet and includes fully refundable fares.
Growing public anger
WestJet said the pandemic has “dramatically impacted the financial well-being” of its operations. It reduced its workforce by almost 9,000 people, released the bulk of its outside contractors and asked suppliers if it could delay payments. Porter and Sunwing have cancelled flights until the end of June.
But even as the pandemic continues to undermine the air travel sector, public anger is growing over the fact that companies are receiving government aid and, in many cases, are still not refunding passengers.
On their websites, major Canadian airlines state they’re currently providing credit for cancelled flights which must be redeemed within 24 months. Porter, which confirmed it’s doing the same, received $135 million from Export Development Canada in commercial financing, secured by some of its fleet.
No refunds, no aid, says Bloc MP
Two petitions with more than 25,000 signatures combined have been submitted to Parliament in recent weeks calling on the government to demand that airlines refund passengers.
Bloc MP Xavier Barsalou-Duval supported one of the campaigns, launched by a consumer rights advocacy group in Montreal, Option Consommateurs. He said the government should be refusing government aid to any airlines that aren’t paying back passengers.
“It’s very hard to get an answer from the government,” said Barsalou-Duval. “They’re protecting the airlines. I understand the airlines are having difficult times right now and lost a lot of revenues. But a lot of the people who pay for their flight also lost a lot of revenue. [Many] of them lost their jobs and have to pay their bills.
“It’s not the customer who pays $5,000 or $10,000 that should keep those companies afloat.”
Bob Scott, who spearheaded the other petition, says there’s “absolute fury with the airlines.” Scott won a battle with KLM Royal Dutch Airlines to get his money back for a cancelled flight to Namibia. He’s now putting pressure on the Canadian government to make government aid contingent on reimbursing passengers.
“This is not their money,” he said. “It’s immoral to hold onto other people’s money like this.”
The NDP and Conservative transport critics both have criticized the government’s handling of the issue. Conservative MP Todd Doherty said in a statement to CBC News that, compared to other countries, “Canada has not acted” on this issue.
Watch: Conservative Leader Andrew Scheer on airlines’ pandemic refunds policies
NDP MP Niki Ashton said Canadians are being “left holding the bag” during a time of broader financial insecurity.
“This is a government that has claimed in the past to protect airline passengers and Canadian consumers,” she said. “It’s making some important steps during this crisis to support Canadians financially. Well, this is part of all of it.”
The consumer group Air Passenger Rights says it has been overwhelmed by more than 50 complaints a day and is challenging the CTA in federal court over its statement on vouchers.
“Cashflow of airlines does not override the rule of law as written in consumer rights,” said group president Gábor Lukács.
He said the U.S. and the European Union have said the rule of law prevails and cannot be trumped by financial considerations. He calls the vouchers a “form of suicide” for the industry.
“It’s very nearsighted because they are undermining the public confidence in those businesses,” he said. “One day the pandemic will be over, but who is going to be buying from companies that don’t guarantee you actually get back your money?
Reine Desrosiers said she found out yesterday she’ll be getting her money back from Sunwing for a cancelled family vacation to Cuba in March. Desrosier said she’s put in more than 40 hours of calls and emails trying to get her money back over the last two months.
“I don’t feel that I should have had to go to those extremes in order to get what was rightfully mine,” she said. “Being refunded doesn’t negate all the aggravation and all the anger that I still feel toward the airlines and how this entire situation unfolded.
“To me it feels like the airlines are taking people as fools … I’m completely disgusted and disheartened by the whole experience.”