Coronavirus: Airline customers struggle to get refunds amid pandemic

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Coronavirus: Travel companies not issuing refunds
WATCH: Consumers across Canada are complaining that travel companies including airlines are not issuing refunds for flights travelers can’t take because of the pandemic As Seán O’Shea reports, companies are issuing credits for future flights instead – Apr 10, 2020

Feeling a side-effect of the ongoing coronavirus crisis, Phyllis Paroshy puts it bluntly.

“There are thousands of consumers who are being robbed of what is rightfully theirs,” said the would-be traveler from the outdoor courtyard of her Guelph, Ont., condominium.

Paroshy described her growing frustration with a travel company and Air Canada. She says even though she won’t be able to take the tour she booked with Insight Vacations to eastern Europe in late May because of COVID-19, Paroshy can’t get her money back — a total of almost $5,000.

“I was stunned to find out I was not entitled to a refund, I was only offered a credit,” she told Global News in a television interview.

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Her story is similar to hundreds, possibly thousands, of Canadian travellers.

When the COVID-19 virus began spreading from country to country in March, airlines and tour operators began cancelling flights and tour bookings.

By the time governments warned against unnecessary travel or had virtually closed their borders to visitors, operators had already informed most of their customers their trips would not be going ahead.

But instead of offering to repay consumers their money, travel companies have generally offered credits for future travel within the next two years.

“Two years is a long time,” said Paroshy.

“Companies can go bankrupt, whether it’s tour companies, insurance companies — any of them.”

In normal times, if a company like an airline or tour operator can’t provide a pre-paid service, they repay the customer.  But not in the COVID-19 era.

“Airlines are trying to steal the public’s money,” said Gabor Lukacs, founder of Air Passenger Rights, a non-profit Halifax-based consumer group focused on air travel issues.

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“The government is misleading the public. The laws and the regulations with respect to airlines have not changed whatsoever,” Lukacs told Global News in an interview.

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Lukacs said travel companies are relying on a statement by the Canadian Transportation Agency (CTA) published on its website as a justification for offering credits instead of refunds.  The CTA regulates the transportation industry in Canada.

In its statement, the CTA said: “On the one hand, passengers who have no prospect of completing their planned itineraries with an airline’s assistance should not simply be out-of-pocket for the cost of cancelled flights. On the other hand, airlines facing huge drops in passenger volumes and revenues to take steps that could threaten their economic viability.”

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Proposed class action lawsuit against airlines

The CTA concludes that “generally speaking, an appropriate approach in the current context could be for the airlines to provide affected passengers with vouchers or credits for future travel, as long as these vouchers or credits do not expire in an unreasonably short period of time (24 months would be considered reasonable in most cases).”

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Lukacs, a frequent critic of the agency, has challenged the CTA in the Federal Court of Appeal over the statement, which is being cited by some travel operators refusing refunds.

“The federal regulator issued an unlawful statement with respect to vouchers which has no basis whatsoever in law. It is being used by airlines and the travel agency and the insurance industry to mislead passengers to believe they have to accept vouchers,” he said.

Some travel insurance companies have denied insurance claims and argue that an airline’s willingness to provide future travel proves the consumer has not suffered a loss.

Paroshy had her insurance claim denied, after both the travel operator and Air Canada refused to give refunds.

At age 75, she says a future credit for travel does not hold much value.

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“I don’t know if I’ll be healthy or fit enough in the next two years to travel. I certainly wouldn’t want to take any chances if the virus is still out there,” she said.

Paroshy bought and paid for her travel to Europe last November, well before the first cases of COVID-19 were reported.

Now, in a world of lockdowns, business closures, and great uncertainty, Paroshy and many consumers like her have other, more pressing priorities. A refund, not a credit, is preferred.

How to get it?

Lukacs recommends travellers make a case with their credit card company and insist on a chargeback. He says he is aware of many successful outcomes in the last month.

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“Credit card issuers have a legal obligation to reverse charges when the consumer does not receive the goods they paid for,” he said.

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