For some travellers, vouchers are ‘useless’
Confusion over flights cancelled due to pandemic exposes gap in passenger protection regulations
Wilma and Jack Jacobs booked their 50th anniversary trip far before COVID-19 began. They had planned a cruise in July through Ireland, England, Scotland and the Netherlands.
When the pandemic began to unfurl, the trip was off and the couple got refunds on some of their costs, such as their hotels. But the two biggest costs, the cruise deposit and the airline tickets, would not be refunded, they were told. Instead, they would get credit for both: $960 for the cruise deposit and $2,487.94 for the Air Transat flight.
Though they have 24 months to use that credit, Wilma Jacobs said they don’t plan on using it and feel a refund is in order.
“There’s no way we would … step on an airplane or get into a cruise, because we’re very high risk for COVID,” Jacobs said. “It’s a useless offer that they’re making to us.”
The couple are two of thousands of Canadians whose flights were cancelled due to COVID-19. Most did not receive refunds, offered credit instead. Some have signed petitions; others have joined class-action lawsuits. And though Canada’s airline watchdog initially sided with the airlines, it appears to be reconsidering its position, leaving the future uncertain for both the airlines and their customers.
On March 25, the Canadian Transportation Agency (CTA) said in a statement that it believes providing vouchers regarding obligations around refunding passengers for cancelled flights due to COVID-19 could be an “appropriate approach” unless contracts dictate otherwise, in accordance with the new Air Passenger Protection Regulations (APPR) that came into effect December 2019. This was in contrast to the United States and the European Union, which are both requiring that airlines offer refunds.
A statement a month later clarified that the earlier statement wasn’t binding and that customers have a right to demand a refund based on their contract with the carrier.
Members of Parliament from the opposition parties grilled airlines at Monday’s health committee, demanding explanation for why the companies
couldn’t provide refunds.
And this week, Scott Streiner, head of the CTA, said officials should rethink whether or not airlines have an obligation to refund passengers in such situations, and said Canada may need to address “gaps” in the APPR.
This particular “gap” is one that airline passenger rights advocate Gabor Lukacs cautioned could be a problem back in February 2019.
He said Canadian law dictates that passengers should be receiving refunds, and that the APPR does not properly outline this right.
The APPR states that if a flight is cancelled for a reason within an airline’s control, the passenger has a right to a refund. If the reason is out of the airline’s control, however, it states that they are only owed alternate arrangements.
Lukacs urged Canadians to push back when offered credit, or to try and get chargebacks from their credit card companies.
“Passengers have to put up a fight,” he said. ‘They need that cash to stay alive’ The airlines have been through layoffs due to COVID-19 — Air Canada lost more than $1 billion last quarter. The government is offering a bridging loan program for large employers such as Air Canada.
Jacobs feels for the airlines, but thinks they shouldn’t be considered for government money if they’re not refunding consumers.
“Our government is supporting the airlines … but they should also be supporting consumers on this.”
Lukacs doesn’t think the situation is as dire as the airlines are making it seem and he is calling on the government to uphold the law and ensure Canadians get refunds.
James Brander, a professor at UBC’s Sauder School of Business,believes the federal government and the CTA have been “trying to walk a fine line” because the survival of Canadian airlines is in question. The government could mandate that the airlines offer refunds right now, he said, but they’re not.
It’s a tradeoff between a large financial blow to a big company, and spreading that blow out across the customers instead, Brander said.
“Eventually, the customers will either fly or get their money back.”
John Korenic, an adjunct professor at Sauder, doesn’t think airlines’ current difficulties justify not offering refunds to customers whose flights were cancelled.
“If you’ve bought a product and it’s not delivered, then you should get a refund.”
He said what’s happening now could inform consumer behaviours in the future — for example, customers might be more inclined to buy last-minute tickets instead of booking ahead.
Ben Dachis, director of public affairs for the C.D. Howe Institute, said airlines have high fixed costs that don’t just go away, and so the companies are hanging onto what they have.
“They need that cash to stay alive,” Dachis said.
But, people are understandably frustrated, he said. “They’ve paid cash, and they’re not getting cash back.”
Grant Bishop, associate director of research at C.D. Howe, said he can understand airlines’ reticence to try and retain the cash they have.
But, he said, “that comes at the expense of consumer goodwill.” ‘I had no choice’ Some Canadians accepted the credit offered by airlines, only to find out there were additional costs involved.
Tomislav Roki’s mother, Lucija, arrived in Toronto with her grandson from Croatia on March 6, just before the COVID-19 pandemic began shutting down flights, stores and schools across Canada.
Her flight home, scheduled for May 19, was cancelled and she was offered credit by the website the ticket was booked through, CheapoAir. The credit could be used only on an Air Canada flight, and booked through Air Canada or CheapoAir.
But when Tomislav Roki tried to rebook his mother’s return flight for June, he was told the price of the flight had risen — to the tune of around $900 extra per person.
The agent told him there were very few tickets available, said Roki, but he saw many available on the website, he said. After asking them to look again, the agent came back with another price, closer to $700 per person.
Exasperated, Roki booked the flight. “I had no choice,” he said. “I said, I’ll pay it.”
A $2,246 trip became $3,714. But Roki believes the airline should have provided the new flight at no extra cost.
“This is just honouring the ticket (she) had,” he said.
In an email, an Air Canada spokesperson said the airline is offering refunds to customers who purchased refundable tickets and have refunded $1billion since the beginning of the year.
“It’s important to remember that airfares are and have always been dynamic and will fluctuate both up and down based on a number of factors including day/time/destination,” they wrote.
Air Canada quietly changed its policy this week to allow refunds for some customers originating from outside Canada. And this month, WestJet broadened its refund offer for flights with a U.S. or U.K. city as the destination or origin.
Lukacs believes that had the Canadian carriers offered refunds from the start, Canadians might have more of an appetite for a government bailout of the industry.
“There would have been more public support,” he said. “The airline companies missed the mark here in terms of public relations.”
Jacobs said it “seems unfair” that so many Canadians aren’t getting refunds, especially when others in the United States and Europe are.
“We’re more than frustrated,” she said.
“Our government is supporting the airlines … but they should also be supporting consumers on this.”
WILMA JACOBS