U.S. seeks $25.6 million Air Canada fine for refund delays

The U.S. Department of Transportation is seeking $25.6 million in fines from Air Canada for allegedly failing to provide timely refunds to U.S. customers after flights were canceled or significantly delayed during the coronavirus pandemic, the agency announced on Tuesday.

The department’s Office of Aviation Consumer Protection said that since March 1, 2020, it had received more than 6,000 complaints from consumers alleging Air Canada denied them refunds. In the complaint filed with an administrative law judge, the agency said it was seeking the civil penalty “for Air Canada’s extreme delays in providing the required refunds.”

The agency said the large penalty is “intended to deter Air Canada and other carriers from committing similar violations in the future.”

“When a carrier cancels or significantly changes a flight to or from the United States, the airline is responsible for providing refunds, upon request, according to U.S. law,” the agency said in a statement.

Airlines have seven days to refund passengers from the date of the request for flights purchased with a credit card and 20 days for flights purchased with cash, according to the agency.

Air Canada said in a statement that it believes that the Transportation Department is trying to enforce emergency guidelines that don’t have the force of law and plans to vigorously challenge it.

“As stated in the department’s own Enforcement Notice and Covid-19 Refund FAQ, these documents constitute agency guidance documents, as opposed to properly issued regulations under the Administrative Procedures Act,” the company said. “As mere guidance, they cannot overrule or supersede the Department’s well-established regulatory framework, as instituting a new regulation requires public notice and comment.”

Air Canada said it has refunded more than $1.2 billion to eligible customers who had refundable fares for travel that was affected by the coronavirus pandemic.

“In addition, Air Canada has been refunding non-refundable tickets as part of the Government of Canada financial package, which made an unsecured credit facility of up to approximately $1.4 billion available to Air Canada to support the refund of non-refundable tickets,” the company said. “Since April 13, 2021, eligible customers, including eligible U.S. customers, who purchased a non-refundable ticket for travel on or after Feb. 1, 2020 but did not fly have been able to obtain a refund from the carrier.”

The airline is required to file an answer to the complaint within 15 days, according to the Transportation Department.