Air Canada faces potential class-action lawsuits in U.S. over ticket refunds

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OTTAWA — Air Canada is facing potential class-action lawsuits and thousands of consumer complaints in the U.S. over its refusal to refund tickets for flights cancelled due to COVID-19.

Plaintiffs from New York and California are before federal district courts seeking class certification to sue the airline on behalf of U.S. customers who were offered only vouchers for future travel and not refunds.

The lawsuits accuse Air Canada of breach of contract and unfair practices by allegedly altering its refund policy after the pandemic struck.

“Air Canada changed its refund policy after it sold thousands of tickets to customers like the Plaintiff in a belated attempt to legitimize its unfair practice of denying customers refunds,” according to one lawsuit filed by a customer from New York.

“I think there is huge reputational damage to Air Canada,” said lawyer Stephen Fearon, who leads one of the lawsuits.

“When customers are able to fly again on a regular basis, those customers who have been stiffed by Air Canada certainly will remember this day.”

Air Canada is defending against the litigation. None of the allegations in the lawsuits has been proved in court.

Before the lawsuits can proceed as class actions, a judge must agree to certify a class of plaintiffs -- meaning that damages, if awarded, could be paid to all U.S. customers whose flights were cancelled, not just the lead plaintiffs.

The number of potential U.S. members of the class is unclear. One lawsuit estimates that 22 per cent of Air Canada’s revenues come from U.S. routes.

The litigation cites a U.S. Department of Transportation enforcement notice from April that advised both U.S. and foreign airlines to issue refunds, noting the “longstanding obligation of carriers to provide refunds for flights that carriers cancel or significantly delay does not cease when the flight disruptions are outside of the carrier’s control (e.g., a result of government restrictions).”

That contrasts with the position of the Canadian Transportation Agency, which issued a statement in March saying vouchers are “an appropriate approach in the current context… as long as these vouchers or credits do not expire in an unreasonably short period of time…”

Air Canada does consider U.S. DOT statements of refund policy to be legally binding on its U.S. operations.

“Air Canada has refunded $1.2 billion to eligible customers with refundable fares whose travel was impacted by COVID-19,” Air Canada spokesman Peter Fitzpatrick said in an email.

“Our policy exceeds the guidance provided by the CTA and provides industry-leading flexibility and returns value to our customers.”

Consumers filed 3,759 complaints over Air Canada refunds with the U.S. Department of Transportation between January and July, more than any other non-U.S. air carrier.

Among the complainants is Scott Osburne, the manager of a physical therapy clinic in Portland, Oregon, who tried to obtain refunds for tickets to Vancouver for a trip to celebrate his husband’s 50th birthday.

“We will never fly Air Canada again,” he said. “We may never go to Canada again. This is so annoying."

Osburne said he tried, unsuccessfully, to cancel the credit card payment through American Express. But he was able to get full refunds for COVID-19 cancellations of other international flights he had booked this year from Delta Airlines and Air France.

Connor Mojo of St. Louis, Missouri, also failed to secure a refund from Air Canada for tickets he had booked for a family holiday in Banff, Alberta. The voucher isn’t much use to him, he said.

"If I'm not planning on flying from the U.S. to Canada in the next year or two,” he said. “I would potentially have to make a trip just to use that credit."

Unlike Osburne, Mojo was able to get his credit card company to cancel the payment to Air Canada.

Many of the complaints were filed with the U.S. DOT by Canadians who had booked travel to or through the U.S. but were unable to get satisfaction through the airline.

Most U.S. and European airlines have granted refunds for COVID-19 cancellations.

Calgary-based WestJet said earlier this month it would refund all passengers, but Air Canada will pay back only those who held more-expensive refundable tickets.

Throughout the pandemic, the federal government has maintained that paying refunds would be financially devastating for an airline industry that has seen as much as 90 per cent of its passenger traffic disappear. In June, Air Canada said it was holding as much as $2.6 billion from advance ticket sales.

Even as it weighs a federal bailout for the industry, the government has refused to say whether granting passengers refunds would be a condition of receiving taxpayer money.

Transport Minister Marc Garneau was not available for an interview with CTV News on refunds.