Class Action Against Airlines Over Vouchers Instead of Refunds
It did not take long for the lawsuits to come in. We wrote a post a few days ago about the Canadian Transportation Agency saying that airlines are not required to refund passengers. This has become a heated topic because there is a legal argument to be made that airlines should be refunding passengers for cancelled flights.
Legal Issues
For the purposes of this post, I think it’s best to keep it short with regards to the legal rights of each side. In short, passengers are arguing that the law entitles them to a full refund for a cancelled trip not under their control. While airlines are arguing that the cancelled trip was not in their control either, so they should not have to offer a refund, but a voucher for future travel or waive rebooking fees.
Regardless of who is right or wrong, it will eventually be up to the judges to decide. So let’s leave the legal issues to the courts.
Financial Issues
From a financial perspective, let’s talk about the passengers first. With so many people losing their jobs, every dollar becomes that much more important. So it is understandable for passengers to want a full refund rather than a voucher because they need cash right now. There are probably other people who are happy to change their flight to a later date, as they were intending to fly anyway. Either way, everyone has a different financial situation, and they need to act in their own personal interest.
But since this is a travel blog, I want to talk more about the perspective of the airlines. Air Transat’s vice-president of human resources and corporate affairs, Christophe Hennebelle, pretty much sums up what I want to say, the situation “has placed an extraordinary burden on the industry, which puts its very existence into question.” It sounds a big extreme, but there is no question that airlines are losing a lot of money at the moment, considering that they are laying people off at an extraordinary rate. If this keeps up, are airlines going to be around after all of this?
I still believe that there needs to be a balance somewhere between both sides. Passengers are entitled to some form of compensation, but I would like to see airlines to survive. It’s not easy to start a new airline.
Proposal
So once again, I stand by the proposal that I introduced in a previous post. Here is an expansion of my idea. The one thing that I did not account for is the people who desperately need the full refund because they are short of cash to pay bills.
- I propose that airlines do not refund pre-paid flight. Instead, they give passengers the option to re-book their flight to a later date while waive re-booking fees. However, airlines can put a limit on the number of times they waive the re-booking fee to prevent abuse, but factoring in future possible further cancellations if this crisis drags on.
- Allow passengers to book another flight within the next 18 months minimum (instead of just 6-12 months that we are seeing) without incurring a price difference.
- The price different is a big deal to me because if I paid $800 for a flight, I don’t want to be paying an additional $400 for changing my travel date because it cost more to fly at that time. Had it be $1,200 ($800 + $400) in the first place, I would not have paid for that flight.
- I would only accept that airlines charge the price difference it is a different route is being booked.
- Lastly, continue to offer an alternative dollar for dollar amount voucher for future travel date (minimum 18 months before expiry).
The goal of my proposal is that airlines get to keep their cash. In return, passengers are offers more flexibility to change their flight, without necessarily incurring additional costs, unless they change their route or abuse the system. I think it’s a win / win. I rather not see one of the two sides lose.
Airlines Going Forward
Passengers and airlines are going to do their part to fight for their personal interests. But when reflecting back, we often hear or read about Canadians unhappy about the Canadian airline industry because Air Canada almost has a monopoly. Even though WestJet, Porter and Sunwing have some market share, there is a wide gap with Air Canada.
Part of me is hoping that we see some mergers and acquisitions to consolidate some of the smaller airlines to form bigger ones. After all, what do you prefer?
- 1 major airline and lots of small ones; or
- 3 major airlines and very few smaller ones.
Please share your thoughts in the comment section below!
I recently went through this dance with Westjet yesterday after they informed me that the return portion of a round trip (outbound previously cancelled a week ago) was cancelled an i would receive travel bank credit. Unfortunately there was no credit placed in my travel bank. I messaged them and they were insistent that i confirm that I want to cancel in order to receive the travel bank I refused, and held firm that as per their email, they cancelled so they owe me a refund. I raised the issue of charge back amend they threatened me with fraud charges.I asked to be offered to rebook at a future date, same city pairs and they insisted I have to cancel and get credit first. I then called them, and they tried to bait me into saying I was canceling on their recorded conversation. I refused and advised since they cancelled i want them to rebook me for specific dates, 6 months out. Surprisingly the fare was less, so i now hold a confirmed seat in 6 months and $275 of travel credit. the latter of which will likely become worthless when the airlines seek creditor protection.
Thanks for sharing your story with us Brandon. Hope you do end up going on your trip!
Class action is not the resolution that I want. I would opt out and sue directly. They would only end up having to pay about 1-2% in a class action settlement.
Good point Gene.
We all be paying for this. Air Transat is offering a voucher for 24 months which in my opinion is very reasonable
We’ll be flying soon. The worst thing is airlines going under and then there’s no competition and no option to fly.
Yes, I think 24 months is a reasonable voucher, even more than the 18 months that I was recommending!
I booked an Air Canada flight via Flighthub and they provided a flight credit for the same airline until February, 2021 however Flighthub charge a $50.00 fee for this which I find very tasteless. Shame on you Flighthub!
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You have a travel credit in the amount of $$$ that can be applied towards a purchase of a new booking.
Upon rebooking with us, if a credit is applicable, depending on the airline fare rules and your ticket restrictions, an airline change fee will be collected by the airlines as well as any difference in fare if the new ticket is more expensive.
That’s a little trickier with Third Party booking sites, cause now it’s between you and them rather than airlines 🙁
What do you think if everyone tries to use their vouchers to rebook their trips during Christmas or other peak dates if airlines say customers don’t need to pay fare difference ?
I propose instead to remove transferability, combinability and loss of residual value restrictions from the vouchers. I would also propose allowing unsed portions of the vouchers to be refunded after a certain period like 24 months.
Good point. But I think it works both ways. The re-booked flight cause be cheaper or more expensive. So no refund if it is a cheaper price, but no added cost if it is a more expensive flight, which would probably offset each other anyway.
I didn’t push the issue and took the voucher credits with the belief that things will go back to normal at some point. Some people who have lost some or most of their income may NOT want a credit given that they are worried about mortgages, car payments etc.They may be holding thousands of dollar in credits (like I am right now) but no way to pay their bills. I believe the airlines should offer some incentive like a 20% bonus for those who take a travel voucher but a refund SHOULD be available for those who need it.
Thanks for sharing your point of view FM!