Airline execs double down on refund refusal amid parliamentary grilling
OTTAWA -- Airline executives are once again defending their decision not to issue refunds to customers after thousands of flights were cancelled due to COVID-19.
Executives from Air Canada, WestJet and Air Transat mounted this latest defence as parliamentarians took them to task during a House of Commons health committee meeting on Monday. When MPs from various parties pressed them multiple times for an update on the refund situation, the executives once again defended their decision to issue vouchers as opposed to full refunds.
"We do believe that refunding with travel credits is an appropriate and responsible approach in extraordinary circumstances such as this" said Jared Mikoch-Gerke who is the manager of aviation security at WestJet Airlines Ltd.
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While The Canadian Press reported that WestJet has offered refunds to travelers whose tickets list a U.S. or U.K. city as the destination or origin – provided the flight isn't a part of a vacation package – travelers whose flights were booked for within Canada or to continental Europe, Mexico or the Caribbean are still stuck with vouchers.
Mikoch-Gerke explained that an April statement from the Canadian Transportation Agency clarified "that airline tariffs do not always provide for cash refunds, especially in cases beyond our control."
In a statement sent to CTVNews.ca on Tuesday, The Canadian Transportation Agency [CTA] disputed Mikoch-Gerke's claim, stating that the CTA "never granted airlines the right to refuse a cash refund for a cancellation related to COVID-19."
"If a person believes they are entitled to a refund for a flight that was cancelled for reasons related to the COVID-19 pandemic and doesn't want to accept a voucher, they can ask the airline for a refund," the statement read.
"If a passenger thinks they are entitled to a refund and the airline refuses to provide one or offers a voucher with conditions the passenger doesn't want to accept, they can file a complaint with the CTA, which will determine if the airline complied with the terms of its tariff. Each case will be decided on its merits."
Despite this, Ferio Pugliese, senior vice-president of Air Canada Express and government relations, echoed Mikroch-Gerke's comments.
"In the cases where they were not refunded, they did not purchase a refundable ticket...This is not out of the ordinary for the industry," Pugliese said.
He noted that those who did purchase refundable tickets have been given their money back, adding that these refunds amounted to "just over $1 billion."
Air Transat's senior Director of Government and Community Affairs Howard Liebman said that there are "a couple of models out there" for the refunds, including taxpayers or users paying. Either way, Libeman said the situation for the airline industry is "grave."
The airline has had its flights grounded since mid-March. While the initial decision to suspend flights was only intended to last until the end of April, the first Air Transat flights are now scheduled to take off on July 23.
"We still live and die by our clients, and if we have gotten this far it shows how grave the situation is for us and for our industry, and that help is needed," he said.
"It is a pretty dire situation, and we have not operated or sold tickets for more than three months."
Mikoch-Gerke explained that in addition to the economic hit airlines have taken in the wake of COVID-19, the pandemic-era distancing measures are also going to make it difficult for airlines to become profitable again.
"On a 737 aircraft, which is the majority of our fleet, if we maintain social distancing for the extended future, that would put our load factor at effectively 62 per cent of normal capacity alone," he explained. "So if you look at the break even of 77 per cent and a seat distance capacity of 62 per cent, there's obviously some challenges that are inherent in there."
Still, as airlines wrestle with their own survival during a pandemic that has hit multiple industries hard, customer remain out of pocket for their cancelled flights — instead saddled with a voucher they likely won’t use in the foreseeable future, as borders remain closed amid the ongoing pandemic.
On June 4, six consumer associations and civil society members penned a letter to the government imploring they ensure customers are refunded in their original form or payment.
"Canadians have been unequivocal in their request to be reimbursed for their cancelled trips in the same manner as their American and European counterparts rather than receiving a credit," the letter reads.
"It is therefore imperative that the Government of Canada take immediate action to enforce the rights of consumers to a refund to the original form of payment if that is what they elect."
However, the government has yet to compel the airline to issue any refunds. During a House of Commons committee in Ottawa last Tuesday, Transport Minister Marc Garneau defended the airlines.
"In the best of all worlds we would like to make sure all passengers are happy, but the airlines have been hammered by the pandemic," Garneau said.
With files from CTV News Toronto’s Pat Foran and The Canadian Press.