US Pursues $25 Million Fine Against Air Canada Over Refunds

The United States Department of Transportation (DOT) is pursuing a fine against Air Canada. Seeking a civil penalty…

US Pursues $25 Million Fine Against Air Canada Over Refunds

The United States Department of Transportation (DOT) is pursuing a fine against Air Canada. Seeking a civil penalty of over $25.5 million, the airline is accused of failing to provide refunds in a timely manner, leading to a high volume of customer complaints.

Air Canada is facing a fine from the DOT over refunds. Photo: Vincenzo Pace | Simple Flying

DOT seeks $25 million fine from Air Canada

The DOT’s Office of Aviation Consumer Protection (OACP) announced it has filed a formal complaint against Air Canada. Filed with an Administrative Law Judge over the airline’s failure to provide refunds, the OACP is taking issue with Air Canada’s failure to provide refunds in a timely manner. The DOT has been looking into Air Canada’s refund practices for some time.

Totaling $25,550,000, the penalty comes after thousands of passengers complained that the airline canceled or significantly changed flights and refused to provide refunds. The DOT mandates refunds for customers in certain situations.

Air Canada
The OACP is seeking $25 million from Air Canada as a penalty for not providing refunds in a timely manner. Photo: Vincenzo Pace | Simple Flying

The goal of the fine is also to deter Air Canada and other airlines from committing similar violations in the future. Even if the airline is undergoing a major crisis, the carrier is still required to follow the laws surrounding refunds.

Air Canada now has 15 days to answer the complaint. The airline can either admit or deny specifically and in detail each allegation of the complaint and respond to the proposed assessment of civil penalties.

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Complaints against Air Canada soared

In general, complaints against airlines over refunds soared during the crisis. As airlines cut flights, altered schedules, and sought to manage their network and operations during the crisis, passengers faced changing flight schedules and uncertainty.

According to the OACP, it has received over 6,000 complaints through its portal against Air Canada. The complaints alleged the airline denied refunds for flights significantly delayed or canceled by the carrier. Another 89 complaints also came through the DOT’s open docket on the refunds.

Air Canada 787
Air Canada is mandated to provide refunds to customers who booked travel between the US and Canada or from the US to another country via a transfer in Canada. Photo: Vincenzo Pace | Simple Flying

In the complaint filed with the Administrative Law Judge, the OACP asserts that Air Canada committed at least 5,110 violations. While some passengers did get their refunds, the wait time was anywhere from five to 13 months.

The OACP announced in May 2020 that it would use its enforcement discretion to accommodate airlines that needed slightly longer than usual to process refunds, given the high volume of requests. Airlines had to make a good faith effort, however, in giving out refunds. According to the DOT, Air Canada did not, and the DOT asserts it continued its no-refund policy, in violation of US law.

Air Canada also suffered from a public image hit over refunds in Canada. As part of the airline’s support package from the Canadian government, it had to provide eligible customers refunds. Just last week, Air Canada extended its refund policy, allowing tickets purchased before April 13th, 2021, for travel on or after February 1st, 2020, to submit their request for a refund if they did not fly for any reason.

Transport Canada, Boeing 737 MAX, Recertified
The Canadian government has recently mandated air Canada to provide refunds. Photo: Getty Images

When are passengers entitled to refunds?

The DOT requires airlines to refund passengers for a variety of reasons. One is if an airline cancels a flight. Passengers are entitled to refunds if the carrier cancels a flight and chooses not to accept an alternate itinerary or travel option.

A second case is if there are schedule changes or significant delays. The question of “significant delay” is not specifically explained.

Other refunds are mandated if an airline is involuntarily moved to a lower class of service, is unable to fly, and utilize their ancillary fees such as baggage or seat upgrades or WiFi.

Air Canada A330
Air Canada became notorious over customer complaints regarding refunds during the crisis.. Photo: Air Canada

For canceled or significantly changed flights to or from the United States, airlines have to provide refunds, upon request, within seven days of the date of the request for flights purchased with a credit card. If the ticket was purchased with cash, airlines have 20 days to refund the ticket.

The DOT had to warn US airlines last year to provide refunds after complaints soared in the early days of the crisis. Airlines have largely been working on refunding customers. However, the OACP is continuing to investigate the refund practices of other US airlines and foreign carriers flying to and from the US.

What do you make of the OACP’s initiation of enforcement proceedings seeking $25 million from Air Canada? Did you have trouble getting a refund during the pandemic? Let us know in the comments!

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There Is Interest For The Airbus A220 In China

During its media briefing call yesterday, Airbus talked about the future of the Airbus A220 in China. While…

There Is Interest For The Airbus A220 In China

During its media briefing call yesterday, Airbus talked about the future of the Airbus A220 in China. While the aircraft currently has no customers in the region, Airbus is confident that there is a clear market for the short-haul jet. Let’s find out more about the A220 interest in China.

The A220 has found strong success in North America and Europe but is still catching on in the rest of the world, including China. Photo: Airbus

Coming up

The Airbus A220 family has been quite successful in recent years, bringing over 600 orders and over 150 deliveries. However, most of this success has been restricted to the US, Canada, and European markets, which account for over 60% of orders (including even lessors). Indeed, the only East Asian operator of the jets is Korean Air, which flies 10 A220-300s.

This absence extends to China, the world’s second-largest and rapidly growing aviation market. Currently, China’s domestic market is dominated by narrowbodies like the 737 and A320, with fewer regional jets in action. However, Airbus sees a market for the A220 in the country, with CCO Christian Scherer saying,

“Well there has been expressions of interest for the A220 in China and by the way, a good portion of the fuselage was built in China. So yes there is interest for the A220 in China, particularly in the regions of China that are outside of the mainstream routes.”

Airbus A220-300
China has a diverse aviation market that includes many regional and low-density routes across the country. Photo: Airbus

Considering China plays a substantial role in the manufacturing of the A220 could be another boost for carriers. However, the assembly of the aircraft remains limited to Airbus’ Mirabel facility in Canada and the new line in Mobile, Alabama, in the US.

Potential customers

While most will only be familiar with China’s big three and a handful of other carriers, the country is home to nearly three dozen airlines. This means Airbus has a wide potential market base to choose from, especially for airlines that aren’t centered around the busiest hubs of Beijing, Shanghai, Guangzhou, Chengdu, and others.

However, there could be a potential hurdle to the A220: the COMAC ARJ21. This Chinese-made regional jet carries anywhere from 90 to 105 passengers in a one-class layout, close to the A220-100’s offering. While its range is substantially lower at 1,200-2,000nm (compared to 3,450nm for the A220), the planes can serve similar routes.

The ARJ21 family is fairly close to the A220 in specifications and could prove to be a challenge. Photo: Getty Images

However, for airlines looking to fly longer or thinner (lower demand) routes, the A220 is the superior choice. Considering China’s vast landscape and hundreds of smaller cities, there could be a major market for the efficient aircraft. Moreover, with the domestic market in China bouncing back to pre-pandemic levels, new aircraft orders could be on the horizon.

Production going up

As Airbus sees an aviation recovery come together, the company is ramping up production too. The manufacturer will make six A220s per month in 2022 and 45 A320s monthly by the end of the year. If the A220 sees more orders, this figure could jump to 14 monthly planes by the middle of the 2020s. For now, keep an eye out for new customers for the A220 family.

What do you think about the future of the A220 in China? Let us know in the comments!

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