Canadian airline customers whose travel plans are upended by the COVID-19 pandemic and travel restrictions can get credits from the carriers, but have no right to a refund, according to changes made by the federal government.
Canada’s move to waive airlines’ responsibilities to give customers their money back sets it apart from Europe and the United States, where airlines have been ordered by regulators to provide refunds to people whose flights were cancelled due to the pandemic.
In an online post on March 25, the Canadian Transportation Agency (CTA), the airline industry regulator, said existing rules that had required airlines to provide refunds in some cases were written to address “localized and short-term disruptions,” and do not apply in the COVID-19 outbreak, which has closed borders and halted almost all international aviation.
"It’s important to consider how to strike a fair and sensible balance between passenger protection and airlines’ operational realities in these extraordinary and unprecedented circumstances,” the CTA said.
That’s no help to Max Bolton, a U.K. citizen whose WestJet Airlines flight to London from Calgary was cancelled when the airline suspended most international routes. He had booked the flight home after losing his ski instructor job at a B.C. ski hill, which closed because of the pandemic.
Mr. Bolton said he called WestJet and explained he was almost broke and desperate to get home to his family in Leeds before much of the world went into lockdown. He needed the refund in order to buy an Air Canada seat.
WestJet offered him a credit for the cancelled fare, he said, but told him flights to London would not resume until late May or after. “By that time I would have been out of money, and probably not eaten for two weeks,” Mr. Bolton said.
Instead, he sold his car and scraped together enough money for an Air Canada ticket. “I’ve only just managed to get myself home," he said.
Even before the government made the change that allows airlines to refuse to give customers their money back, cancellation fees often almost equaled the refund.
Air Canada passenger Elayne Lester, eager to return to Toronto as the outbreak spread in early March, cancelled a flight from San Francisco and booked an earlier trip. After “non-refundable fees" worth US$477, her refund was US$13.
The world’s airlines are conserving cash and cannot refund cancelled tickets if they hope to survive, said the chief executive of the International Air Transport Association (IATA), a global aviation group. "The key element for us is to avoid running out of cash so refunding the cancelled ticket for us is almost unbearable, financially speaking,” IATA’s Alexandre De Juniac told reporters on Tuesday.
The seven Canadian airlines contacted by The Globe and Mail for this story separately said the flights were cancelled because of government restrictions on travel, and said they welcomed the government decision to allow them to offer credits that are valid for up to 24 months.
“This positive response allows airlines operating in Canada to focus our efforts on managing our business through this crisis so that we can hasten our return to service and fulfill the travel obligations we have for the more than 25 million guests who fly with us each year,” said Lauren Stewart, a spokeswoman for WestJet.
The CEO of Flair Airlines says about half of the passengers who paid for tickets are not showing up, and expectations of refunds place impossible demands on businesses trying to stay alive. “People just don’t bother showing up, and then they’ll say you owe us the money,” Jim Scott said by phone from Vancouver.
“Every flight is a losing flight. There is no money being in the airline industry right now," Mr. Scott said.
The European Union has told airlines to provide refunds, although enforcement of the order is up to member states. Last Friday, the U.S. Department of Transportation told airlines they must refund customers’ money.
IATA said it is “deeply disappointed” by the U.S. order, warning it puts 750,000 aviation jobs at risk. The industry group says government-imposed flight restrictions could cause airline revenues to plunge by US$252-billion this year, and many carriers will fail. The group is calling on governments to bail out the industry with cash, loans and tax breaks.
In Canada, Finance Minister Bill Morneau is expected in the coming days to announce bailout measures for the airline sector, which has laid off thousands of people in recent weeks.
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