Canadian airlines have been offering credits for cancelled flights during the pandemic instead of refunds

Canada’s Minister of Transport is backing national airlines over frustrated consumers whose flights were cancelled due to the COVID-19 pandemic.

Marc Garneau told a sitting of the House of Commons Tuesday that it is legitimate for airlines to offer passengers a voucher when their flights are cancelled, instead of refunding their money. At least two class-action lawsuits have been launched, challenging the rules.

“My priority as Minister of Transport is the health of our airlines,” said Garneau, “so they’ll be able to rebound after the end of COVID-19.”

“After Air Canada announced the layoffs of 20,000 people,” asked Xavier Barsalou-Duval, a Bloc Quebecois MP from a riding just east of Montreal, “can the minister assure at least that people whose flights were cancelled can be refunded?”.

“I understand the frustration of people who wanted to be refunded,” replied Garneau. “But we have to understand now that airlines are experiencing very tough times right now because airlines have lost 95% of their revenues.”

Both Air Canada and Westjet have slashed flight schedules and grounded aircraft in response to the pandemic as travellers heed government warnings and stay home.

Unions were told over the weekend the airline would have to cut more than 50% of its staff, despite government wage subsidies intended to help businesses weather the pandemic. Flight attendants, for example, have until May 25 to tell the company whether they want to retire, take a leave of absence, a reduced work schedule or face layoff.

Air Canada posted a $1 billion dollar loss in its first quarter, before the full impact of the pandemic was felt, and told an investor meeting it was burning through $20 million per day.

“According to its March financial statements, Air Canada was sitting on $6 billion in cash,” said Barsalou-Duval. Enough, he said, to fund the airline for a year. “Of this six billion, 2.6 billion belong to its customers who have often lost their jobs and who are far from having a year’s worth of cash in hand.”

“These companies still have great expenses and fixed costs,” said Garneau. “They all need assistance.”

Garneau declined to comment on regulators in Europe and the United States forcing airlines to offer passengers refunds for cancelled flights.

The Canadian Transportation Agency is the airline regulator and rules on airline complaints.

While it has not issued any rulings on the matter, the agency has said that offering vouchers for future travel is a way of maintaining competition in Canada’s airline industry during the pandemic.

“Vouchers for future travel can help protect passengers from losing the full value of their flights, and improve the odds that over the longer term, consumer choice and diverse service offerings — including from small and medium-sized airlines — will remain in Canada’s air transportation sector,” the CTA said April 24 in a Frequently Asked Questions post on its website.

Since it is a quasi-judicial body that hears passenger complaints, the minister also declined to comment on the agency’s position.