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An Air Canada Boeing 737 Max 8 lands at Toronto Pearson International Airport on March 13, 2019. (Photo: Chris Helgren/Reuters)

Air Canada seeks dismissal of US$26M fine from US over unpaid refunds

An Air Canada Boeing 737 Max 8 lands at Toronto Pearson International Airport on March 13, 2019. (Photo: Chris Helgren/Reuters)

Air Canada is seeking the dismissal of the US Department of Transportation’s (DOT) US$25.5-million fine over the airline’s alleged failure to provide prompt refunds after cancelling flights amid the COVID-19 pandemic dismissed.

In a 46-page motion filed Wednesday, the Montreal-based airline presented a series of arguments against the fine, including that the facts relied upon by the agency are insufficient to legally establish violations.

Air Canada says its refund policy complied with the US transportation department’s refund regulations and its conditions of carriage. It says the DOT relied on non-legally binding directives in an industry letter and has not conducted a “thorough well-reasoned analysis”.

A gate agent waits to assist travellers at Air Canada check-in terminals at Pearson airport in Toronto on March 16, 2020. 
(Photo: Cole Burston/Bloomberg)

It also contends that the enforcement complaint fails to demonstrate that the airline’s refund policy caused or was likely to cause substantial harm that could not be reasonably avoided.

A DOT administrative law judge will rule on the “notice of enforcement proceeding” issued by the department two weeks ago, where its aviation consumer protection agency said Air Canada “unlawfully failed to provide timely refunds” for flights between the United States and Canada that were cancelled or significantly changed.

The agency said it received more than 6,000 refund complaints since March 1, 2020, and has notified Air Canada multiple times over the past year of its view that the airline’s stance “lacks merit”.

Air Canada vowed at the time to “vigorously challenge the proceedings”.

An Air Canada craft on the tarmac of the Pearson International Airport in Toronto, Canada (Photo: Bloomberg)

“Although the COVID-19 crisis and the resulting government restrictions/border closings are completely unprecedented and beyond Air Canada’s control, Air Canada responded and continues to respond in a manner that complies with all applicable DOT and CTA (Canadian Transportation Agency) regulations, as well as health and safety requirements imposed by applicable US and Canadian federal and/or state agencies,” said the filing.

Spokesman Peter Fitzpatrick has said the airline has refunded more than $1.2 billion to eligible customers with refundable fares whose travel was impacted by COVID-19.

Air Canada refused to refund non-refundable tickets until it received a financial package in April from the Canadian Government worth up to $5.9 billion, including up to about $1.4 billion in an unsecured credit facility to refund these tickets.