Canadian Transportation Agency Drafts New Air Passenger Refund Regulations

On December 18, 2020, the Minister of Transport directed the Canadian Transportation Agency (CTA) to draft regulations requiring air carriers to provide refunds in certain situations outside of their control (such as weather, COVID-19 in certain situations, medical emergency, security threat, and war or political instability). According to the Minister, the objective of the directive was to fill a gap in the legislation. After a series of consultations, the CTA published the proposed Regulations Amending the Air Passenger Regulations. These regulations seek to regulate refund requirements for cancellations or long delays caused by situations such as bad weather, a security incident or another global pandemic.

The current regime requires carriers to provide alternative travel arrangements following uncontrollable delays of three hours or more or uncontrollable cancellations. Large carriers (those that have transported at least two million passengers during each of the past two years) must provide alternative arrangements themselves or with a partner carrier within 48 hours from the end of the disrupting event. If unable to do this, large carriers must provide alternative arrangements operated by another carrier.

Under the proposed regulations, if a carrier (both large and small) cannot provide alternative arrangements within 48 hours from the original departure time, the carrier must provide the passenger with the option of a refund or the alternative arrangements described above. A passenger would be able to choose a refund any time before being provided with the alternative arrangements. The refund would include all unused add-on services, including seat selection and checked luggage fees.

The proposed regulations mandate that the carrier must provide the refund to the original form of payment to the person who originally purchased the ticket (not necessarily the passenger) within 7 days for tickets purchased by credit card, and within 20 days for tickets purchased by all other forms. The purchaser may also accept a travel voucher or credit, as long as the purchaser is informed of their right to a refund, the credit is worth more than the ticket, and the credit does not expire. The purchaser is required to confirm in writing that they have foregone the right to a refund and chosen the alternative form. The proposed regulations would be enforced by the CTA. Failing to comply with the regulations could lead to enforcement action and administrative monetary penalties.

The proposed regulations are not yet in force and are subject to the approval of the Governor in Council. The CTA is in the process of analyzing the input received from interested parties following the publication of the proposed regulations and hopes to finalize them as soon as possible.

For more information, please contact a member of our Aviation Group.

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