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Refunds for cancelled flights will be key in COVID-19 aid to airlines

Monday, November 09, 2020 @ 2:38 PM | By Terry Davidson


Ottawa is pledging that a future aid package for Canada’s battered and bruised airline industry will be contingent on refunds being given to customers for cancelled flights.

Minister of Transport Marc Garneau said Nov. 8 that while the economic fallout from the ongoing COVID-19 health crisis has “hit the air sector harder than any other” — passenger levels have plummeted due to travel restrictions and widespread fear of transmission — there have been “many Canadians who have been negatively affected.”

“When this unprecedented pandemic broke out in the spring, Canadians who had already booked travel ended up stuck with vouchers for trips they could not take instead of getting refunds,” said Garneau in a news release. “They found themselves in a situation where they have given thousands of dollars in interest-free loans to airlines.”

Since widespread economic shutdowns and travel restrictions were ordered in efforts to stop the spread of COVID-19, Canada’s airlines have cut back on staff in a bid to stay afloat.

Meanwhile, many airlines have routinely been offering flight credits — typically good for two years — for a cancelled trip.

But there is reportedly growing worry among many of those holding vouchers that they will not want to travel during this period due to fears of transmission or a lack of money.

There have reportedly been class actions proposed, and the cancellations resulted in around 8,000 complaints — most being refund-related — being made to the Canadian Transportation Agency between mid-March and the end of August.  

But Garneau said help is on the way.

“The air sector cannot respond to these challenges on its own, given the unprecedented impacts on its operations,” he said. “To protect Canadians, the Government of Canada is developing a package of assistance to Canadian airlines, airports and the aerospace sector. As part of this package, we are ready to establish a process with major airlines regarding financial assistance which could include loans and potentially other support to secure important results for Canadians. We anticipate beginning discussions with them this week.”

But any help, he said, would come with strings attached.

“Before we spend one penny of taxpayer money on airlines, we will ensure Canadians get their refunds. Regional connectivity is important to Canadians travelling now and in the future. We will ensure Canadians and regional communities retain air connections to the rest of Canada, and that Canadian air carriers maintain their status as key customers of Canada’s aerospace industry. Any assistance the Government of Canada provides will come with strict conditions to protect Canadians and the public interest.”

In early May, the International Air Transport Association estimated revenues generated by Canada’s airline market would drop by 43 per cent as a result of the health crisis.

If you have any information, story ideas or news tips for The Lawyer’s Daily, please contact Terry Davidson at t.davidson@lexisnexis.ca or call 905-415-5899.