Government docs suggest months of inaction on ‘gap’ in passenger refund rules

OTTAWA — Internal documents suggest it took about half a year for the federal government to take action on air-passenger refunds after it first identified “gaps” in the rules.

Emails between Transport Canada and the Canadian Transportation Agency, the federal airline watchdog, reveal that back in May 2020, officials highlighted regulatory blind spots around reimbursing passengers whose flights were cancelled due to the COVID-19 pandemic.

One discussion document, recently released to the House of Commons transport committee, says the pandemic exposed holes in the regulatory framework.

“There are no clear and consistent ground rules for how passengers should be treated in circumstances when it is impossible for the airlines to complete passengers’ itineraries,” the document says.

But the correspondence suggests the issue barely resurfaced internally until shortly before then-transport minister Marc Garneau directed the agency on Dec. 21 to strengthen the refund rules, which have not yet been put into place.

Bloc Québécois transport critic Xavier Barsalou-Duval says the government showed “no sign of willingness” to tackle the issue through most of 2020.

“I think he wasn’t super interested,” Conservative MP Stephanie Kusie, who co-chairs the transport committee with her Bloc colleague, said of Garneau.

NDP transport critic Taylor Bachrach says Canadians deserve an explanation as to “why it took so long” to act.

“If you just look through the documents, it looks like they took the summer off, almost. It’s troubling because the amount of money that Canadians are owed — most of them are still owed that money — is a huge amount,” Bachrach said.

Earlier this month, Ottawa announced an aid package for Air Canada in exchange for a pledge to refund passengers, among other conditions, but several other airlines including Air Transat and Sunwing Airlines are still refusing reimbursement.

The Air Canada deal came exactly 365 days after the federal government issued an advisory to avoid non-essential travel abroad, as border restrictions and grounded fleets across the globe cratered demand and set off hundreds of thousands of flight cancellations by Canadian carriers over the next 13 months.

Initially, most airlines offered vouchers — travel credit — valid for one to two years, leaving those urgently in need of cash in the lurch.

“Some people may have lost their jobs. And we don’t know when it will be safe to travel again,” said Sylvie De Bellefeuille, a lawyer Quebec-based consumer rights group Option Consommateurs.

“They’re worried about their health and say, ‘We don’t know what’s going to happen in two or three years.'”

The emails underscore Canada’s weak passenger protection laws compared to some countries, despite a new passenger rights charter that came fully into effect in December 2019.

Details included in the correspondence note that the United States and European Union require airlines to fully refund passengers “if the airline cancelled a flight, regardless of the reason.” In Canada, however, reimbursement hinges on the tariff — the contract between passenger and carrier — as “no refund obligation” exists.

“Repeatedly the minister already said that he had no ability to mandate the refunds, that the (transportation agency) was an arm’s-length body, that we should look at the waivers that come with the airline tickets,” Bachrach said.

“And yet we see in December that indeed the minister was able to do something. But at that point airlines had been sitting on billions of dollars of Canadians’ hard-earned money in the midst of a pandemic, when a lot of families had been financially devastated.”

The Transport Department said Wednesday that the government has been aware of the refund issue from the outset, “and that’s why we began to assess options and next steps as early as last spring.”

“We will continue to be there for Canadians and we expect airlines to do everything they can to find solutions for their customers,” the department said in an email.

In December, Garneau instructed the agency to craft a new regulation that would provide passengers with refunds when flights are cancelled for reasons outside airlines’ control.

“The ongoing COVID-19 pandemic has highlighted a gap in the air passenger protection framework, which did not foresee the potential for large-scale and lengthy flight cancellations and groundings of air carrier fleets not only in Canada but globally,” he said, using language mirroring what was written in the documents more than seven months earlier.

Scott Streiner, chair and chief executive of the quasi-judicial agency, has said it aims to have the new regulations in place by the summer.

Consumer protection laws in a majority of provinces safeguard passengers’ right to reimbursement, even if that right is not spelled out in the 2019 passenger bill of rights, said advocate Gabor Lukacs.

He questioned the premise of a “gap” in the rules, saying the government is “misleading the public about their rights.”

Consumer Protection BC, a provincial regulator, said in a release Wednesday that airline customers “should be provided with a full refund in the same way they paid, as outlined in the law.”

“If they choose to ignore these laws, we’re willing to take action to bring them into compliance and help get consumers their money back,” said vice-president Shahid Noorani.

For the NDP, the back-and-forth between the Transport Department and the federal transport regulator suggests a relationship that is uncomfortably closer than the term “arm’s length” suggests.

“When you look at the degree of co-ordination and collaboration that’s evident in these documents, I don’t think that’s a fair characterization,” Bachrach said.

The emails were heavily redacted, with Access to Information Act provisions cited above the blackouts.

“It’s unclear whether indeed the redaction reflects information that is commercially sensitive or related to privacy under the relevant legislation, or whether it’s simply embarrassing for the government,” Bachrach said.

“All we get is a black box, literally.”

This report by The Canadian Press was first published April 28, 2021.

Christopher Reynolds, The Canadian Press