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.
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.
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.
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!