Air Canada has agreed to pay $4.5 million US to the U.S. Department of Transportation for extreme delays in providing refunds to thousands of consumers who had their flights either cancelled without notice or significantly changed during the pandemic.
Through its Office of Aviation Consumer Protection (OACP), the agency had been seeking $25 million US from the airline after receiving more than 5,000 complaints from customers who were flying either to or from the U.S. on Air Canada flights.
According to the agency, the airline took anywhere between five and 13 months to issue refunds for cancelled flights.
For cross-border flights, airlines are supposed to make credit card refunds within seven days, rising to 20 days for tickets bought with cash.
The U.S. Transportation Department said it allowed more time for refunds last year because of the surge in cancelled flights, provided an airline was making an effort to return the money. However, it said that Air Canada had failed to make a good-faith effort to process its refunds more quickly.
In a statement issued Monday, the agency said the fine is the largest ever assessed against an airline by the OACP.
The fine shows the department is “holding airlines accountable by ensuring that they treat passengers fairly when flights are significantly changed or cancelled,” deputy secretary Polly Trottenberg said in the statement.
“The Department is committed to protecting airline consumers and ensuring that all passengers receive the timely refunds to which they are entitled,” she said.
Of the $4.5 million, $2.5 million will go to refunding customers who have yet to be reimbursed. The remaining $2 million will go to the U.S. Treasury.
While both sides have agreed to the settlement, the agreement is now pending approval by the administrative law judge presiding over the case, according to the Transportation Department.
Air Canada did not immediately reply to a CBC News request for comment on the agreement.
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