MONTREAL — ********** has agreed to a US$4.5-million settlement of charges it failed to promptly ****** customers after cancelling flights amid the ******** ********.
The U.S. Department of Transportation says the settlement will resolve a legal action by its aviation consumer protection agency over what it calls **********’s “extreme delays” in reimbursing thousands of consumers for nixed flights between the U.S. and Canada.
The agreement — the agency’s largest-ever assessment against an ******* — is pending approval by an administrative law judge.
Earlier this year, the U.S. Office of Aviation Consumer Protection (OACP) fined ********** US$25.5 million and said the Montreal-based carrier “unlawfully failed to provide timely refunds.”
********** sought to dismiss the proceedings in June, saying the agency had not conducted a “well-reasoned analysis” of ****** regulations and the company’s conditions of carriage.
********** says the two parties have now agreed to settle the matter without “any finding wrongdoing,” noting it revised its policy to allow refunds for substantially changed flights 13 months after the ******** set in.
“This agreement was entered into to avoid protracted litigation as ********** focuses, together with all stakeholders, on rebuilding following the ********,” spokesman Peter Fitzpatrick said in an email.
U.S. Deputy Transportation Secretary Polly Trottenberg said the U.S. government is committed to enforcing fair treatment of travellers when flights are cancelled or significantly changed.
“The department is committed to protecting ******* consumers and ensuring that all passengers receive the timely refunds to which they are entitled,” she said in a statement Monday.
About US$2.5 million will be subtracted from the US$4.5-million settlement in recognition of refunds already granted to customers on U.S.-Canada flights, the parties said.
The transportation department received 6,533 ****** complaints against ********** between March 2020 and August 2021, it said in an email.
North of the border, passengers filed 16,200 complaints to the Canadian Transportation Agency between March 2020 and May 2021, more than 9,700 of which relate to refunds, the regulator said.
On top of the settlement, ********** has agreed going forward to reimburse fares to customers whose flights to or from the U.S. are cancelled or significantly changed by the *******, the transportation department said.
“We changed our policy so that as of April 13, 2021, customers who buy a non-refundable ticket can get a ****** if their flight is cancelled or ******* by more than three hours,” Fitzpatrick added.
Air Passenger Rights president Gabor Lukacs said he is grateful for the department’s efforts.
“It is sad, though, that the Canadian Transportation Agency (CTA) aided and abetted ********** and other airlines in these wrongdoings, and that Canadian passengers had to enlist a foreign regulator’s help,” he said in an email.
Last month, a Federal Court judge ordered the agency to release confidential emails between chief executive Scott Streiner and ******* lobbyists and other “third parties” over the regulator’s statement in March 2020 that flights cancelled by airlines as a result of ******** could be compensated with vouchers rather than refunds.
“There were communications between third parties and the CTA,” wrote Justice Mary Gleason on Oct. 15, saying they were relevant to bias allegations by Air Passenger Rights against the arm’s-length agency.
On Friday, ********** announced it was withdrawing from further federal relief after borrowing more than $1 billion to pay back customers whose flights were cancelled during the ********.
Though Ottawa retains an equity stake in the *******, **********’s exit from the multibillion-dollar rescue deal marks “another convincing sign of our progress” and liquidity, CEO Michael Rousseau said in a release.
The company left about $4 billion in government aid on the table, choosing instead to rely on independent financing arrangements, including $7.1 billion raised last quarter.
