WASHINGTON – The US Transportation Department announced Tuesday that it is pursuing a fine on Air Canada for $25.5 Million, for what it called “extreme delays” in issuing refunds to thousands of customers whose flights were delayed or rescheduled over the US-Canada border.
A request for comment from Air Canada was not immediately returned.
The prospective charge — which Air Canada can appeal — is the latest repercussion of airlines cancelling thousands of flights during the early months of the coronavirus outbreak as air travel plummeted. The Transportation Department said it is looking into how other airlines, including those in the United States, handle refunds.
If an airline cancels or severely modifies the itinerary of a flight, federal laws oblige airlines to issue refunds to customers who request them. Airlines are required to reimburse credit card purchases within seven days for cross-border flights, escalating to 20 days for cash purchases.
Because of the increase in cancelled flights last year, the Transportation Department said it gave additional time for refunds provided the airline was making an attempt to return the money. Air Canada, on the other hand, failed to make a good-faith attempt to process reimbursements more swiftly, according to the department.
According to the agency, the level of the civil penalty was determined by taking into account variables such as the harm to customers as well as a deterrence to future refund delays.
Passengers who cancelled their bookings on North American airlines were frequently given vouchers rather than cash. As a result, airlines are sitting on billions of dollars in tickets that will almost certainly never be utilised. With the Air Canada returns, this did not appear to be the case.
An administrative law judge will hear the Transportation Department’s complaint.