A passenger rests on a suitcase in the departures terminal at Pierre Elliott Trudeau Airport in Montreal on Dec. 31, 2019.Graham Hughes/The Canadian Press
The relationship between Canada’s airline watchdog and the travel industry is under scrutiny after the release of e-mails from the early days of the COVID-19 pandemic in which industry executives pressed civil servants to back their position against issuing passenger refunds, days before the regulator did just that.
Disclosed under a Federal Court of Appeal order, a March 22 letter shows then-Transat chief executive officer Jean-Marc Eustache asked the Canadian Transportation Agency (CTA) to confirm, “no refunds to passengers are required.” The statement, he said, would pre-empt complaints and lawsuits amid thousands of flight cancellations at the outset of the COVID-19 pandemic.
“Clarify that the uncontrollable nature of the crisis means that no refunds to passengers are required,” he requested. The clarification would also allow credit-card companies “to deny customer chargeback claims.”
Three days later, the CTA posted a statement that airlines could generally issue flight credits or vouchers to customers whose flights had been cancelled because of the pandemic, rather than reimbursing them.
Mr. Eustache’s letter followed an e-mail and extended phone conversation between another Transat executive and then-senior agency director Marcia Jones on the same topic four days earlier.
“I had a long call this evening and have a better understanding of the concern,” Ms. Jones told CTA chairman and CEO Scott Streiner in a March 18 e-mail.
The Association of Canadian Travel Agencies also wrote to the regulator asking it to help them with “prevention of credit card chargebacks.”
The agency’s statement on March 25 that flight credit rather than refunds constitutes a “reasonable approach” toward passengers left out of pocket by cancelled flights sparked public backlash and thousands of complaints to the transportation agency.
Gabor Lukacs, president of advocacy group Air Passenger Rights, says the behind-the-scenes communication between executives and the quasi-judicial body compromises the agency’s independence.
“The agency clearly acted here to protect the airlines’ financial interests, which was not their job,” he said.
“Making sure the airlines are profitable is far from the agency’s mandate.”
The agency says it regularly holds discussions with stakeholders that fall under its regulatory mandate, such as industry and consumer protection groups.
“The information obtained during those exchanges contributes to a good understanding of the possible impacts of its actions. This does not interfere with the impartiality of the agency,” it said in an e-mail.
Transat spokesman Christophe Hennebelle said the goal of the correspondence was to fully inform the agency of a rapidly evolving situation and seek guidance on new transportation legislation.
The travel agencies association said it wanted to “buy time to get organized” until more information about the pandemic emerged, with agents caught between airlines, cruise companies and hotels on the one hand and consumers on the other.
“We are satisfied that the Canadian government and CTA at the time listened to our concerns and priorities,” president Wendy Paradis said in a statement. The association is not in regular contact with the agency, she added.
The newly disclosed correspondence comes seven months after advocates and opposition MPs said e-mails between the federal Transport Department and the CTA around passenger refunds threw into question the regulator’s independence.
E-mails tabled with the House of Commons transport committee in May revealed senior officials last spring were in frequent contact about the agency’s public stand on flight vouchers, which airlines cited repeatedly to justify withholding reimbursement for passengers.
Mr. Lukacs said the communication revealed little evidence of pressure from government on the regulator, but that the frequent contact between the two indicates a relationship more hand-in-glove than arm’s length.
Sylvie De Bellefeuille, a lawyer with Option Consommateurs, said the CTA’s statement on vouchers – which was revised in April to clarify it did not change airlines’ obligations or passenger rights under carrier-customer contracts – amounted to a “damaging view.”
“It was too limited to not take into consideration that there were other laws that could apply and that could have helped people get their refunds,” she said.
“We don’t know for sure why the CTA made the decision, but it is clear that there has been some pressure from the travel industry in order to accept those vouchers.”
She added that her advocacy group also wrote to the CTA in April, 2020. “We never had answers to our concerns.”
Consumer rights advocates have said laws in most provinces entitle customers to reimbursement for service never rendered.
The CTA has said it administers federal rules and does not comment on provincial laws.
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