A year ago, as passengers started pressing Air Canada for refunds against cancelled flights, the airline fought back. In dozens of DOT filings the carrier asserted that its policy of not refunding passengers was in compliance with DOT policy and that the Agency did not hold jurisdiction to enforce otherwise. Now, in the wake of a proposed $25 million penalty for its actions, the carrier is repeating those positions directly to the US Department of Transportation.
In a brief filed today the carrier asserts that the US DOT “failed to allege specific facts, and cannot establish, that Air Canada’s policy of providing flight vouchers to customers whose non-refundable flight reservations were cancelled on or after March 19, 2020 and prior to April 13, 2021 due to governmental restrictions caused by COVID-19 (“Contractual Refund Policy”) constituted an unfair practice.”
Among the airline’s claims:
- Transborder flight cancellations occurred because of “mounting concerns relating to the spread of COVID-19, and pursuant to a number of government directives (both of which were outside of Air Canada’s control)”
- It was compliant with the terms of its Conditions of Carriage and Tariff, applicable fare rules, and DOT and CTA regulations to offer “a full refund in the form of a travel credit” when Air Canada cancelled the flight, so long as the booking was non-refundable
- “The Enforcement Complaint fails to allege facts that would demonstrate that Air Canada’s Contractual Refund Policy caused or was likely to cause substantial harm that could not be reasonably avoided, and that the alleged harm was not outweighed by any countervailing benefits to consumers or to competition.”
Most pointed, however, is Air Canada’s position that consumers should expect it to follow the letter of the rules with respect to its contract of carriage, rather than its actual behavior. The carrier admits that, prior to the COVID-19 pandemic, it would provide refunds to travelers under similar cancellation circumstances.
But it also says that does not matter, “Air Canada did not ever publicize or commit to its goodwill policy or give any assurance that it would remain in force, and therefore, customers had no basis for relying on this temporary goodwill customer service policy.”
Air Canada suggests that the requirement to refund passengers to the original form of payment when a flight does not operate is merely guidance, not law. Moreover, the carrier says the “longstanding obligation” only exists in an Industry Letter from 1996 (which was never provided to Air Canada or publicly issued), and (2) a statement from the preamble to a 2011 rulemaking unrelated to the current scenario.
Air Canada also claims that the requirement to issue refunds “where ticket refunds are due” as part of its Customer Service Plan “does not specify those situations in which a refund is due, nor the form in which a carrier must provide a refund when one is owed, following a cancellation, delay, or schedule irregularity.” Indeed, the airline cites the DOT’s COVID-19 Refund FAQ suggesting that alternates to a refund can also be offered as supportive of this position.
Simply stated, the Department could have mandated that Customer Service Plans include a requirement that cash refunds be provided in the event a non-refundable ticket is cancelled by the carrier, but it declined to do so, consistent with the ADA which leaves matters of commercial ticket pricing to the marketplace. DOT may now wish such a requirement had been specifically included in Section 259.5 given the extraordinary circumstances of the pandemic and in light of the pressures and criticism it was and is facing, but that wishful thinking does not change the facts or the law.
Air Canada also asserts that any alleged harm from its decision to not provide cash refunds to customers was not outweighed by countervailing benefits.
DOT has not alleged sufficient facts to establish that customers were substantially harmed or likely to be substantially harmed, that the harm could be reasonably avoided, and that the harm is not outweighed by benefits to consumers or competition, and this cannot suffice.
Air Canada chooses to blame the customer for purchasing a non-refundable ticket, “Each customer had the option to purchase a refundable ticket and reasonably avoid the chance that they may be unable to receive a cash refund in the event of this or any other type of cancellation that was outside of Air Canada’s control… If consumers wished to ensure they are fully protected from potential loss, they were free to purchase a refundable fare option at a higher price point.”
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