As Canada’s largest airlines cut capacity and cancel dozens of routes even as summer travel season approaches, airlines and travellers on both sides of the Atlantic are continuing the debate over whether passengers with travel plans foiled by COVID-19 are entitled to full refunds or vouchers for future travel.
In Canada, vouchers are standard fare for consumers who bought non-refundable tickets, in contrast to the full refunds their peers are entitled to in Europe and the United States.
On Wednesday, the European Commission confirmed passengers have the right to full refunds within seven days despite pressure from 16 member states to temporarily relax the regulations to allow for vouchers so cash-strapped airlines don’t collapse.
Instead of amending the rules, the European Commission issued a non-binding suggestion that airlines offer more attractive vouchers, refundable after one year and transferable to another traveller.
The decision outraged European airline associations, who have decried the commission’s decision given airlines have no cash coming in yet and are facing up to €9.2 billion in cash reimbursements through the end of May, according to the International Air Transport Association.
The IATA noted the refund rules were not designed to deal with mass cancellations caused by a global pandemic — and emphasized that Canada allows the voucher approach.
“While passengers have a clear right to reimbursement of their tickets, we believe refundable vouchers, or a delayed reimbursement, represents a fair and reasonable compromise given the unprecedented liquidity situation airlines are currently facing,” Airlines for Europe managing director Thomas Reynaert said in a statement.
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A woman walks through a mostly empty Ronald Reagan Washington National Airport in Arlington, Virginia, on May 12, 2020.
Andrew Caballero-Reynolds/AFP via Getty Images
The United States also requires airlines to provide refunds when the carrier cancels or significantly changes a passenger’s flight, but customer complaints about refunds have soared since the pandemic.
On Tuesday, the U.S. Department of Transportation said it received 25,000 complaints in March and April, up from a typical 1,500 complaints per month. The department issued its second enforcement notice on the matter since travel restrictions began, reminding airlines that they may offer vouchers as long as they also give customers the option of a refund.
“The department is asking all airlines to revisit their customer service policies and ensure they are as flexible and considerate as possible to the needs of passengers who face financial hardship during this time,” U.S. Secretary of Transportation Elaine Chao said in a statement.
The issue is particularly charged in the U.S. given the federal government’s US$50-billion bailout for major airlines.
Meanwhile in Canada, full refunds are but a wish for customers who booked standard tickets since cancelled. Instead, most Canadian airlines are offering 24-month travel vouchers.
Canada’s air passenger protection regulations require airlines to ensure customers can complete their trips when flights are cancelled for reasons outside the airlines’ control, but they do not mandate refunds in such circumstances.
In late April, the Canadian Transportation Agency said the vouchers could be a “reasonable approach in the extraordinary circumstances.”
“Vouchers for future travel can help protect passengers from losing the full value of their flights, and improve the odds that over the longer term, consumer choice and diverse service offerings — including from small and medium-sized airlines — will remain in Canada’s air transportation sector,” it stated.
Passengers can file complaints with the CTA if they believe they are entitled to a refund, although the agency has paused all dispute resolution activities until June 30. It did not respond to questions on Wednesday on how many complaints have been filed.
Parked WestJet Boeing 737 aircraft fill an unused runway at the Calgary International airport on Tuesday, May 5, 2020.
Gain Young/Postmedia News files
The National Airlines Council of Canada, which represents Air Canada, WestJet, Jazz and Transat, supports the CTA’s guidance that vouchers are acceptable given the financial and operational crisis the pandemic caused.
“The industry is reeling from the unprecedented impact of the COVID-19 pandemic, with over 90 per cent of capacity pulled from the market, billions of dollars worth of aircraft parked, and virtually no revenue coming in,” NACC president Mike McNaney said in an email.
But some passengers hope to band together to get their money back in court. In April, a plaintiff filed a proposed class action lawsuit against Air Canada, WestJet, Transat, Swoop and Sunwing. It argues customers are entitled to refunds under contract law for frustrated contracts. The defendants have yet to file a statement of defence and the action has not yet been certified.
For its part, WestJet, which on Sunday announced it would suspend three dozen routes between June and July, said it “values the feedback we are receiving from our guests and appreciates how difficult this unprecedented situation is for all.”
The airline is monitoring the legal frameworks in every jurisdiction it operates, a spokesperson said in an email, adding it has waived rebooking fees and extended vouchers to 24 months.
Air Canada is offering refunds to customers who bought refundable tickets and offering 24-month vouchers to the rest.
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