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Air Canada ready to refund flight cancellations in exchange for bailout: union

Click to play video: 'Air Canada agrees to refund flights not taken during pandemic in exchange for bailout' Air Canada agrees to refund flights not taken during pandemic in exchange for bailout
In exchange for a potential government bailout, Air Canada has agreed to refund passengers for flights cancelled during the COVID-19 pandemic. As Sean O’shea reports, some say the airline should not have been able to use refunds as a bargaining chip – Mar 4, 2021

Unifor’s president says that a poised agreement between Air Canada to refund customers who have had their flights cancelled or postponed due to COVID-19 will be in exchange for a loan, not a bailout.

Speaking to Global News on Thursday, Unifor president Jerry Dias said that the issue of customer refunds were among many others that were dealt with.

“We’re talking large money. We’re talking a loan, not a bailout,” said Dias.

Read more: Air Canada to pause Rouge operations, cut 80 employees amid new COVID-19 travel rules

News of the refunds was first reported by the Toronto Star on Wednesday.

Global News has confirmed comments made in the Star’s article by Dias, who said Air Canada had “absolutely agreed” to Ottawa’s demands that the airline repay customers who weren’t reimbursed for their plane tickets.

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When Dias later spoke with Global News, he said that the loan they were going to take on was originally that of $7 billion, which would be paid back with a one per cent interest rate per year over a period of 10 years.

“But based on the time that this has gone on, this [$7 billion ] should now be the floor — not the ceiling,” he added.

In an emailed statement to Global News, a spokesperson for the Finance Ministry confirmed that the government is “in discussion” with airlines on “potential additional financial assistance.”

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Trudeau says COVID-19 case counts, presence of variants being looked at with Canada-U.S. border restrictions – Feb 28, 2021

“We remain committed to supporting airlines and air sector workers during this unprecedented and difficult time for the industry,” the statement said.

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“Any further taxpayer support will prioritize refunding Canadians for cancelled flights; retaining and reinstating regional routes in Canada; and protecting jobs across the air sector. We continue to emphasize this in our ongoing conversations with the airlines.”

However, Air Canada spokesperson Peter Fitzpatrick told Global News there is “no update,” and pointed to a Feb. 12 news release regarding the negotiations.

In the release, Air Canada said it is “encouraged with the constructive nature of discussions that it has had with representatives of the Canadian government with a view to securing financial support to help ensure the competitiveness of Air Canada and the Canadian airline industry.”

Read more: Air Canada, Transat deal up in the air as deadline passes

Air Canada said if successful, the airline would be expected to “take into account” policy considerations set out by the government which include requiring airlines to provide ticket refunds for flights postponed or cancelled in relation to the COVID-19 pandemic.

“While discussions are advancing, there can be no assurance that such discussions will lead to the completion of definitive agreements with the Government of Canada on sector financial support on terms acceptable to Air Canada,” the release reads.

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‘Profoundly troubling’

Gabor Lukacs, founder and president of Air Passenger Rights, told Global News that he is “concerned and troubled that compliance with the law is used as a bargaining chip.”

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“The law has been and remains that when an airline cancels a flight for whatever reason, it must refund passengers in the original form of payment,” he said. “Air Canada has been delinquent in fulfilling its obligations to passengers and the federal government has been aiding and abetting Air Canada in misappropriating passengers’ money.”

Lukacs said Air Canada stating that it would refund passengers in exchange for some form of bailout is “profoundly troubling.”

Read more: How a B.C. airline passenger refused a travel voucher on a cancelled flight and got her money back

“Airlines have to be brought to compliance,” Lukacs said. “And I’m disappointed that the government is even negotiating with the airlines about compliance instead of governing.”

He said ultimately, it is an issue with enforcement.

“It seems that Canada is reaffirming the existence of a two-tier legal system, one law for the average Joe, another set of laws for large corporations,” he said.

Lukacs said his organization — Air Passenger Rights — estimates around 3.9 million Canadians are waiting on refunds from the various airlines, and around $3.9 billion is at stake.

However, he said that is an estimate, adding it is “very likely much more.”

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