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CTA Says Airlines Not Required to Refund Passengers

UPDATE- As mentioned by one of the comments below, please note that the CTA’s position is not legally binding, it is what they are “saying” at the moment. The problem is even though the law might say passengers are entitled to a refund, the airlines are trying to find a loophole around the law, which is creating an issue. So the point of this post is for me to propose a win/win compromise so that we do not have to involve the government to regulate this.

Yesterday, CBC reported that the Canadian Transportation Agency (CTA) said that “airlines are not required to refund passengers for flights cancelled due to the COVID-19 pandemic or other reasons outside an airline’s control.

So there we have it. It will be up to the airlines to decide whether they want to refund passengers or not for a cancelled flight. The CTA took a stance this issue (see updated notes at the top). So I thought I’d share my pros and cons from each perspective and offer a possible compromise solution.

Arguments for the airlines

The reality is that airlines are loosing a lot of money because travel has decreased drastically. I already wrote a post about airlines cutting employees across the board. Sunwing, which was missing from my previous list, have now laid off 1,500 employees.

Airline companies need some cash flow to keep their business afloat and constantly refunding tickets is not sustainable. If airlines go bankrupt, nobody wins in the long-run.

Arguments for the passengers

There is a very simple argument here. If airlines cancelled the flight, even if it is for conditions out of control, passengers do not want to pay for services that were not rendered.

Compromise

Here’s my compromise:

  • Airlines do not have to refund pre-paid tickets but should waive re-booking fees. Put a limit on the number of times they waive the re-booking fee to prevent abuse, but factoring in future possible cancellations if this crisis drags on.
  • Allow passengers to book another flight within the next 18 months (instead of just 6-12 months from now) without incurring a price difference. The argument is that if I paid $800 for a flight, I don’t want to be paying an additional $400 for changing my flight date because it cost more to fly at that time. Had it be $1,200 ($800 + $400), I may never have booked that flight at that price in the first place.
  • The price difference only kicks in if it is a different route.

The Result

This ends the argument of refunds to passengers, so that airlines can maintain their cash flow. In return, airlines give a little more flexibility to passengers without worrying about incurring additional fees (i.e. price difference) for changing their flight during this time. BUT! Airlines have a limit to the number of times we can re-book (discretionary) to prevent abuse of the system.

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