15 April 2021, 10:10 a.m.
In March 2020 and throughout the year, travel restrictions announced in response to the COVID-19 pandemic led to widespread flight cancellations. Travellers were left unsure about airlines’ obligations to refund their cancelled flights. This particularly affected those who had purchased non-refundable tickets.
This HillNote provides an overview of an airline’s obligation to provide reimbursements for flights cancelled by the airline in the context of the COVID-19 pandemic.
International Law
International passenger rights for air travel are governed by the Convention for the Unification of Certain Rules for International Carriage by Air (Montreal Convention). However, the Montreal Convention only addresses the issue of delays, not cancellations, and airlines are not liable for damage caused by unavoidable delays.
For its part, the International Air Transport Association states that it does not set policy for airlines regarding flight rebooking, or refunds for trips that have been cancelled due to COVID-19. Instead, airlines must create their own policies in line with local regulations and clearly communicate these policies to their passengers.
The Canadian Transportation Agency
On 25 March 2020, the Canadian Transportation Agency (CTA) issued a Statement on Vouchers indicating that Canadian airlines have no legal obligation to refund customers for cancelled flights, only to ensure that a passenger can complete their itinerary.
The statement also claims that, as Canada’s laws and regulations do not contemplate the long-term disruptions caused by the COVID-19 pandemic, the CTA would “generally speaking” consider vouchers or credits for future travel an appropriate remedy to a cancelled flight. However, it clarified that each case would be judged on its own merit.
Air Passenger Rights, an advocacy group, sought judicial review of the CTA’s statement, claiming that it was misleading and violated the CTA’s own Code of Conduct.
In its May 2020 decision on Air Passenger Rights v Canada (Transportation Agency), the Federal Court of Appeal found that the Statement on Vouchers was not binding, but as the issue was not open to judicial review, it could not proceed any further.
The decision explicitly leaves the door open to legal recourse for passengers claiming that third parties, such as airlines or travel insurers, are misrepresenting the CTA’s statement, or for complaints of bias against the CTA in any specific case.
Federal Regulations
According to media reports, the federal government has made refunds for COVID-19 cancellations a condition of financial support for Air Canada and is currently negotiating similar agreements with other airlines. However, such arrangements would not alter the airlines’ legal obligations.
Acting under a ministerial directive issued on 17 December 2020, the CTA has been mandated to develop new regulations to outline an airline’s obligation to refund passengers for flight cancellations outside of the airline’s control. However, according to a statement by the Minister of Transport, these new regulations will only apply to future flights, not to cancelled flights that would have already occurred.
Currently, the Air Transportation Regulations establish the terms and conditions that air carriers operating in Canada must address in their tariffs. Airlines are required to have a stated policy on flight cancellation, for both domestic and international flights. However, the regulations are silent as to the content of such a policy.
In addition, in the event of a flight cancellation for reasons outside the airline’s control (such as worldwide restrictions due to the COVID-19 pandemic), the Air Passenger Protection Regulations (APPR) require the airline to provide alternate travel arrangements for flights to and from Canada, including connecting flights. However, they do not require the airline to refund passengers.
The APPR were drafted in accordance with section 86.11 (1) of the Canada Transportation Act, which requires the CTA to make regulations respecting, among other things, airlines’ obligations in the case of flight delay, flight cancellation or denial of boarding. The APPR came into force in 2019.
Common Law
Arguments have been made before the courts and the CTA that, even when the cancellation is outside the airline’s control, passengers are inherently entitled to a refund under contract law and according to jurisprudence from the CTA.
For example, the CTA’s Decision No. 28-A-2004 has been interpreted as recognizing a fundamental right to a refund if the airline is unable to provide alternative transportation within a reasonable time (see, for example, the CTA’s Decision No. 313-C-A-2013).
However, cases that might serve as precedent for a common law right to a refund predate not only the unique circumstances raised by the COVID-19 pandemic, but also the APPR themselves. The only exception is the previously mentioned case of Air Passenger Rights v Canada (Transportation Agency), which was inconclusive as the court didn’t rule on the merits of the common law arguments. As such, the question has not been fully tried and it remains unclear what effect, if any, the coming into force of the APPR has had on pre-existing common law rights.
Quebec Provincial Law
Stakeholders have pointed to Quebec’s Consumer Protection Act (CPA) as a possible avenue of redress for passengers. The purpose of this legislation, which does not have a direct equivalent in the Common Law provinces, is to regulate contracts with consumers. This law may apply on a broad basis to contracts between airlines and consumers in Quebec (see, for example, Rosenberg c WestJet [in French]). However, the specific issue of refunds of airline tickets has not been addressed.
Other decisions (such as Doyon-Gascon c Société en commandite Touram inc. (Vacances Air Canada) 2009 QCCQ 16662) found that the CPA applies to travel agents while federal legislation applies to airlines.
Furthermore, the applicability of this provincial law to an issue directly addressed by federal regulations (i.e., the APPR) has not been addressed by the courts. Given the Parliament of Canada’s jurisdiction over aviation, it is possible that the APPR would be found to override the CPA on these issues.
Conclusion
Until there is a court ruling that addresses the issue explicitly, it remains unclear whether Canadian airlines have an obligation to refund passengers for flights cancelled due to COVID-19.
That said, an agreement between the federal government and airlines on this issue may render it a moot point, and new regulations are expected to address the question of airline ticket refunds moving forward.
Author: Alexandre Lafrenière, Library of Parliament
Categories: Business, industry and trade, COVID-19, Law, justice and rights