DOT seeks $25 million fine from Air Canada over delayed refunds

The Department of Transportation (DOT) said Tuesday that it is seeking to fine Air Canada $25.5 million over its “extreme delays” in providing refunds for flights that were impacted by the coronavirus pandemic.

DOT said in a statement that its Office of Aviation Consumer Protection (OACP) filed a formal complaint against the airline for not providing refunds in a timely manner to thousands of customers who had their flights canceled or significantly changed due to the pandemic.

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

When passengers request refunds for flights, airlines have seven days to issue them for flights purchased with credit cards and 20 days for flights purchased with cash.

Refund requests spiked last year due to travel restrictions caused by the coronavirus pandemic.

DOT issued guidance in May 2020 saying it would use enforcement discretion to allow airlines more time to issue refunds as long as they “were making a good faith effort.”

But the department alleges that Air Canada continued the no-refund policy for a year in violation of U.S. law. It alleges that Air Canada committed at least 5,110 violations and passengers waited between five months and 13 months to receive refunds.

In a statement to The Hill, Air Canada says it believes the enforcement action “has no merit,” adding that it will “vigorously challenge the proceedings.”

“Since the start of the pandemic, Air Canada has refunded more than $1.2 billion to eligible customers with refundable fares whose travel was impacted by COVID-19,” the airline said. “Since April 13, 2021, eligible customers, including eligible U.S. customers, who purchased a non-refundable ticket for travel on or after February 1, 2020 but did not fly have been able to obtain a refund from the carrier.”

The complaint will go to an administrative law judge, and Air Canada has 15 days to respond to it.