Transport Committee on Dec. 8th, 2020

[Dr. Gábor Lukács]

That's quite accurate. I would think of this as more of a kind of pyramid game, where they take the money and perhaps use it to operate flights of previous passengers, but don't deliver services to these passengers.

[Gerald Soroka, Conservative, Yellowhead, AB]

Then this would easily tie right into the fact that airlines should be compensating passengers with money as opposed to a voucher, then.

[Dr. Gábor Lukács]

This truly speaks to refund. I would like to stress that compensation is not the same as a refund. Compensation is for inconvenience of your not getting there on time. We are talking here about simply giving passengers back their own money that they paid for services that were never delivered.

[Gerald Soroka, Conservative, Yellowhead, AB]

Yes, I can understand that.

Ms. De Bellefeuille, I've heard from people that were on a trip. It got cancelled halfway and they had insurance, yet the insurance companies weren't compensating them for any of the interruption to their trip, or anything like that, because the airline gave them $600 back. Is it true that, as long as they got a little bit of money from an airline, the insurance companies were off the hook?

[Sylvie De Bellefeuille]

Indeed, there have been difficulties with the insurers. Several of them consider travel credits as a reimbursement. They therefore refuse to reimburse consumers on the grounds that they received compensation that, in their opinion, is satisfactory. Of the two sides, the consumers lose out.

[The Chair, Liberal, Vance Badawey]

Thank you.

Thank you, Mr. Soroka.

We're now going to move on to the Liberals with Ms. Jaczek for five minutes.

Ms. Jaczek, the floor is yours.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you, Chair, and to all the witnesses for your excellent presentations.

Certainly, with situation we're in now, we're all absolutely clear that refunds are necessary. My constituents are telling me that very clearly.

We also know that pandemics have been predicted by public health officials for years. Those of us in the GTA were very conscious of the SARS pandemic, and, in fact, the spread of that through air travel. That's a given. There will be more pandemics in the future. I think it's really important for us as legislators to get things like the air passenger protection regulations right.

Mr. Jack, I would ask you to perhaps elaborate a little. Is there a model from another jurisdiction that could be very helpful to Canada going forward? You mentioned the United States. Could you be more specific as to how their regulations are worded and how they work?

[Ian Jack]

There are several jurisdictions around the world that have fairly clear black and white language. None of them are perfect. The U.S. law applies to domestic flights, not international flights. It doesn't cover everyone. There's no reason we can't simply right this in Canada. I think Mr. Lawford had a couple of interesting suggestions that the government should be considering for us going forward. We need to come up with a way to make sure that this doesn't happen again.

Unfortunately, and you referenced SARS and past pandemics, we've also seen predictions that COVID won't be the last pandemic. This could happen to us again. We all hope it doesn't, but it could. We have to make sure that we have proper refund provisions in place and that we close this loophole.

When people were looking at the legislation and the regulations in the APPR, they said we might have a hurricane somewhere and an airport might have to shut down for two days, so it wouldn't be fair to penalize the carrier in that case, because they would be doing their best to get people home. That's what the APPR says: make your best efforts to get people home again.

Unfortunately, nobody had thought about a pandemic shutting down airspace and then people not wanting to travel for months and months, even if the airspace were theoretically open. That's the world that we sadly live in now, and we need to take care of that for the future.

[The Chair, Liberal, Vance Badawey]

Ms. Jaczek.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

I've heard that WestJet and Air Canada are currently actually providing some refunds. Ed Sims, the president and CEO of WestJet, wrote an op-ed in the Financial Post last week and said that this was occurring.

Madame De Bellefeuille, are you aware of some of these refunds? How are they being processed? Is it really happening, and is it a good step forward?

Could you tell us your experience?

[The Chair, Liberal, Vance Badawey]

Ms. De Bellefeuille.

[Sylvie De Bellefeuille]

Thank you for your question.

Personally, I haven't heard from consumers in connection with WestJet. I read in the newspapers, like everyone else, that WestJet had announced that it was going to reimburse its customers. For us, this is obviously a step in the right direction. What we would like is for other airlines to do the same.

[The Chair, Liberal, Vance Badawey]

Ms. Jaczek.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Mr. Charbonneau, do you have any experience with these apparent refunds that are occurring?

[Jacob Charbonneau]

Yes, of course.

WestJet did announce that it would voluntarily refund the airline tickets, but within six to nine months. That's a very long time. So the refunds haven't started yet.

On the Air Canada side, to my knowledge, the tickets that are refunded include those for European flights. That said, the refund policy that has been applied is not necessarily the one prescribed by law. Air Canada will reimburse European passengers who have purchased a ticket for one of its flights, not Canadian passengers. However, under European law and regulations, it is the destination and origin of the flight that matters, not the place where the ticket was purchased.

[The Chair, Liberal, Vance Badawey]

Ms. Jaczek.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Chair, how long do I have?

[The Chair, Liberal, Vance Badawey]

You have another 30 seconds.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

I would simply say to my colleague Mr. Kram, it's most unfortunate that you've never visited Yukon. My daughter was there for four years. Air North provides an excellent service. Make sure you get there.

[The Chair, Liberal, Vance Badawey]

Thank you, Ms. Jaczek; and thank you, witnesses.

We're now going to move on to Mr. Shipley for five minutes.

Mr. Shipley, the floor is yours.

[Doug Shipley, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Thank you, Chair, and to all for joining us today.

My questions are going to be predominantly directed towards Mr. Lukács, but if anybody else has any more information, I'd be more than happy to have them jump in and add some.

I hear a lot about people needing refunds on tickets. I haven't heard the number yet. I've heard that how many complaints and calls have come in.

Do we know the total number of customers who still have flight tickets that haven't been refunded? What is the total number that we're looking at out there?

[Dr. Gábor Lukács]

We have estimates based on financial data published by those airlines that are publicly traded, and as such, they have public financial reports. Air Canada currently holds about $2.3 billion in advance ticket sales. Projecting that to the entire Canadian airline sector, we estimate that about $3.87 billion is outstanding. A very conservative estimate would mean that corresponds to about 3,870,000 passengers who are affected.

The exact numbers are available only to the airlines themselves. They should be producing that data to the committee.

[Doug Shipley, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Thank you for that information. That is mind-boggling. That's even more than I thought it was going to be.

Just to clarify, because that's a very large number, that's not customers. Could that be almost divided in half because we're looking at two-way tickets?

[Dr. Gábor Lukács]

No, that could not be divided by half, because when you do the calculations, if you look at StatsCan data, without taxes, an average ticket ranges between $200 and $300, depending which quarter you look at. You also add taxes to that, so the estimates for a one-way ticket, on average, would be about $500 or less. A round-trip ticket would be $1,000 or less.

Then you divide $3.87 billion by $1,000, and that's how you get 3,870,000 passengers.

More data is in the airlines' hands, and you certainly have the power to subpoena that data in this committee.

[Doug Shipley, Conservative, Barrie—Springwater—Oro-Medonte, ON]

That's a tremendous number. You seem to have a lot of information, so you probably will have this.

What percentage do Canadian consumers represent of that number of over three million? Do we have any idea?