Ottawa developing new refund regulations for large-scale flight cancellations

Ottawa developing new refund regulations for large-scale flight cancellations-Milenio Stadium-Canada
Air Canada has reported that it collected $492 million in public funds through the Canada emergency wage subsidy to pay its employees in the period ending Sept. 30. (Darryl Dyck/The Canadian Press)

The federal government is developing new regulations to protect passengers in the event of another catastrophic event that results in large-scale flight cancellations. 

Air Canada racks up second-most refund complaints in U.S. in May

“The ongoing COVID-19 pandemic has highlighted a gap in the air passenger protection framework, which did not foresee the potential for large-scale and lengthy flight cancellations and groundings of air carrier fleets not only in Canada but globally,” Transport Minister Marc Garneau said in a statement.

“In the event of a future situation that causes similar large-scale flight cancellations, this gap needs to be closed so that travellers are treated fairly.”

Garneau said he has directed the Canadian Transportation Agency to develop new regulations around the issuing of refunds to passengers that will apply to future flights that are cancelled for reasons outside an airline’s control.

It will impact airlines that are not able to complete a passenger’s Itinerary “within a reasonable time” because of a major event such as a pandemic.

“This updated regulation should be made in a manner that is fair and reasonable to passengers, and to the extent possible not impose an undue financial burden on air carriers that could lead to their insolvency,” Garneau said.

Conservative MP Stephanie Kusie said the announcement does not address the existing problem of outstanding passenger refunds from flights that have been cancelled during the pandemic so far.

“The sector still requires a plan that puts airlines in a position where they can provide refunds to passengers who deserve them,” she said on Twitter.

The federal government is currently developing a financial assistance program for Canadian airlines, airports and the aerospace sector. Garneau said the package is being developed with “strict conditions to protect Canadians and the public interest, including issuing refunds for flights cancelled as a result of the COVID-19 pandemic.”

Refunds before assistance: Garneau

Garneau has previously said that in his communications with Canadian airlines, he has made it clear that they must provide refunds before they can get any more government aid.

“We said very clearly no — until they commit in writing to refund passengers, they will not get a cent from the Canadian government,” he said earlier this month.

So far, the federal government has spent $1.4 billion helping Canadian airlines pay up to 75 per cent of employee wages during the pandemic, according to the federal government’s fall economic update.

Air Canada has reported that it collected $492 million in public funds through the Canada emergency wage subsidy (CEWS) to pay its employees over a period ending Sept. 30, according to regulatory filings.

Air Canada’s third-quarter results report to investors shows the dramatic impact COVID-19 has had on the company. The airline says it saw an 88 per cent drop in passenger traffic due to the pandemic and travel restrictions.

The airline reported total revenues of $757 million in the third quarter; that represents an 86 per cent drop of $4.7 billion from its revenues in the same time period in 2019.

Bleeding cash, Air Canada took what it called “the painful step” of cutting half of its workforce in June — 20,000 jobs — and indefinitely suspended 30 domestic regional routes. The carrier also retired some planes early and postponed or cancelled the delivery of some new aircraft, according to the company’s financial records.


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