The U.S. Department of Transportation has fined Canadian leisure airline Air Transat more than half a million dollars after its Office of Aviation Consumer Protection found that the Montreal-based carrier “subjected thousands of consumers to extreme delay in making refunds available” during the pandemic.
In a consent order issued by regulators on Wednesday, Air Transat was ordered to pay $525,000 in civil penalties for failing to pay cash refunds for flights it had cancelled at the outbreak of the pandemic in early 2020.
The DOT said Air Transat would be credited $85,000 for refunds it had issued to passengers who had voluntarily cancelled their flights despite holding nonrefundable tickets.
In March 2020, Air Transat suddenly stopped issuing ticket refunds for flights it had cancelled and instead started giving out credit vouchers that could only be used for a future Air Transat flight.
Air Transat wasn’t alone in refusing to issue refunds at the start of the pandemic, and a number of carriers adopted similar strategies to avoid or at least delay haemorrhaging cash as travel restrictions virtually grounded airlines around the world.
The DOT decided to open an investigation after receiving 150 complaints from Air Transat passengers who had been denied a refund for cancelled flights between the United States and Canada.
Air Transat wasn’t able to say exactly how many passengers had been impacted by his refund policy change but the DOT assessed that thousands of disrupted customers were subjected to “extreme delay” in receiving refunds they were owed under U.S law.
The airline stopped issuing refunds on March 18, 2020, and only reinstated issuing refunds for flights it had cancelled on November 20, 2020. Even after that date, however, there were many affected customers who still had credit vouchers in April 2021.
In response to the DOT investigation, Air Transat argued that its pandemic-era refund policy was a “measured and justifiable approach to an extraordinary and unprecedented crisis.”
The airline furloughed roughly 96% of administrative staff, pilots and cabin crew, and around 30% of its pre-pandemic workforce have not returned to work for the airline. Air Transat also argued that it did not enjoy government bailouts, unlike its U.S. rivals.
The DOT has launched investigations into a slew of airlines which adopted similar refund policies during the pandemic. British Airways was found to have deliberately disabled a refund form on its website for affected customers, resulting in a $1.1 million fine by regulators earlier this year.
Will they also fine American Airlines? Only got a credit that expired before we could use it! They received a lot of money very quickly at the beginning of the pandemic from the government. In Canada, airlines had to wait for over a year before they could get loans from the government with a very high interest rate!