New refund requirements for cancelled flights take effect

Flight cancellations discouraging passengers After two flight cancellations and multiple delays, Elaine Sloboda is re-considering her reliance on air travel.

New refund requirements for commercial flight delays and cancellations are now in effect across Canada.

As of Sept. 8, airlines are now obligated to provide passengers with refunds for flights cancelled or delayed due to reasons outside the airlines’ control. The new federal requirements under the Air Passenger Protection Regulations (APPR) will now apply to all flights from and within Canada, including connecting flights.

Under the new requirements, if a passenger’s flight is cancelled or delayed by three hours or more for reasons outside of an airline’s control, the airline must offer the passenger a reservation on a flight operated by the airline or one of their partners within 48 hours of the departure time on the passenger’s original ticket.

If the airline can’t meet that requirement, it must offer the passenger either a refund or alternative travel arrangements, free of charge. For large airlines, this could mean having to rebook the passenger on the next available flight of any airline, including competitors.

Passengers are free to choose a refund at any time after the 48-hour window and before being provided a confirmed reservation on an alternate flight. Airlines must pay refunds within 30 days, and any airline that does not follow the new regulations could face a fine of up to $25,000 per incident.

Under the previous APPR rules, airlines were required to rebook affected passengers, free of charge, on the next available flight operated by them or a partner airline. There was no requirement that the flight depart within 48 hours of the original flight, and airlines were only required to provide refunds or offer alternate travel arrangements for disruptions that were within their control.

However, after Canadian airlines denied refunds for flights cancelled due to COVID-19, Minister of Transport Marc Garneau gave the Canadian Transportation Agency the authority to establish new guidelines on Dec. 18, 2020.

While the Canadian Transportation Agency positions the new guidelines as offering increased passenger protection, Gabor Lukacs, an advocate for Canadian air passengers and the president of the non-profit Air Passenger Rights, said they actually do a disservice to airline passengers.

“It’s a sham. It’s smoke and mirrors,” Lukacs told CTVNews.ca in an interview over the phone on Wednesday. “The government is telling people they’re getting new rights while, in reality, the government is giving passengers a watered down version of the rights they already have under the law.”

Lukacs explained that in many jurisdictions outside of Canada, including in the United States, the European Union, Israel and Turkey, airlines are required by law to provide refunds in the original form of payment for cancelled flights whether the reason for the cancellation was within the airline’s control or not. That's without the stipulation that the airline has 48 hours to re-book a passenger onto another of its own or a partner airline’s flights.

He said that expectation is also codified in the Canada Transportation Act and the Air Transportation Regulations, as well as in some provinces’ legislation. However, Lukacs said, the new requirements under the APPR give a false appearance of legality to airlines denying requests for a refund within 48 hours of the time a cancelled flight was scheduled to depart.

“The government is giving more opportunities for airlines to say they don’t have to refund passengers in some cases,” Lukacs said.

For example, under the new APPR requirements, a passenger whose travel plans are dependent on them arriving at their destination within a 24-hour window isn’t owed a refund for a flight cancelled outside an airline’s control, as long as the airline offers them an alternative flight within 48 hours. If they decide not to accept the alternative flight because it won’t get them to their destination in time, new APPR requirements do not spell out a requirement to refund them.

“That seems to be a big loophole to try to allow airlines to have some kind of appearance of legality for pocketing the money of people who decide not to travel when their flight is cancelled,” Lukacs said.

He said anyone who finds themselves in such a position could consider taking legal action against the airline involved, citing a different set of regulations, such as the Canada Transportation Act or the Air Transportation Regulations, as well as existing case law.

“If it were me, I would sue the airline in small claims court on the basis of the case law, because it’s not a good faith performance of the contract to offer a flight in 47 hours,” he said.