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Airline Refunds: Address to the House of Commons Transport Committee
Speaking notes of Dr. Gábor Lukács

House of Commons December 8, 2020

 

Mr. Chair, Honourable Members, thank you for the privilege to appear here today.

Air Passenger Rights is Canada's independent nonprofit organization of volunteers, devoted to empowering travellers.

We accept no government or business funding, and we have no business interest in the travel industry.

We speak for passengers whom we help daily in their struggle to enforce their rights.

Last time we testified before this committee, we cautioned that the Canadian Transportation Agency had lost its independence, and its consumer protection activities had been compromised.

The COVID-19 pandemic has confirmed the magnitude of these anomalies.

Since March, we have witnessed an unprecedented assault on passengers' private property and the collapse of consumer protection.

Airlines whose revenues were decimated by the pandemic have helped themselves to passengers' money, and pocketed airfares paid in advance without providing any services in return.

During the pandemic, airlines have perfected the scheme. They kept selling tickets just to cancel flights at the last minute and keep passengers' money. For instance, between September 25th and October 31st, Air Canada cancelled about 75% of its flights scheduled for November.

Let's look at the numbers.

3,870,000 affected passengers.

It is a conservative estimate for the number of outstanding tickets on Canadian airlines as of September 30th. About 2.3 million are Air Canada customers.

Instead of protecting consumers, the Canadian Transportation Agency mounted a disinformation campaign on Twitter and on its own website.

On March 25th, the Agency published its "Statement on Vouchers" that told the public, without any basis or authority, that airlines don't have to refund cancelled flights, but may provide an I-owe-you instead.

The Agency's position can be summarized as follows.

First, it says that an airline can cancel a flight for "reasons outside the carrier's control" and keep passengers' money so long as the ticket was marked "non-refundable."

Second, the Agency blames you, lawmakers, for ostensibly tying its hands and taking away its power to order airlines to refund passengers.

These are pseudolegal arguments that conflate a "refund" with "compensation for inconvenience."

"Refund"' means the repayment of the price paid for services or goods. For example, if you order an item on the Internet but you don't get what you paid for, the seller must give you a refund.

Airline tickets are no different.

In 2004, when the Agency was still independent and impartial, it made a binding legal decision recognizing passengers' right to a refund for flights cancelled by an airline, even if the reason is outside the carrier's control.

The Agency reaffirmed this principle in three subsequent decisions in 2013 and 2014, and coined it a "fundamental right" of passengers.

These legally binding decisions are based on statutes and regulations that are in force today.

There is no "gap" in the law on refunds.

The Transportation Modernization Act imposed additional obligations on airlines to pay "compensation for inconvenience" for flight cancellations that are "within the carrier's control," but it did not alter passengers' fundamental right to a refund.

It is not the law that has changed, but the Agency's willingness to act independently and impartially, and to enforce the law.

The Agency's misleading statement has caused significant harm to the public and to the entire travel industry.

Not only the airlines, but also travel agents, credit card issuers, and even travel insurers used the Agency's statement as an excuse to deprive passengers of refunds for flights the airlines themselves cancelled.

The Agency's conduct has undermined consumers' confidence in the Canadian travel industry and the government to respect private property and protect consumer rights.

This loss of confidence will slow the entire sector's recovery.

Our core values and respect for the rule of law cannot be swept aside just because a major Canadian industry may suffer financially. The law must always prevail.

In the past months, we have seen lawlessness displace order and regulatory capture displace good government.

It may fall upon the courts to restore order; however, it is your mandate as elected representatives to restore good government and to put an end to the Agency's running amok.

Declaratory legislation, such as Bill C-249, is needed to restore public confidence and the rule of law.

Thank you.

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