Thank you, Mr. Chair.
Honourable members, my name is John Lawford. I'm the executive director and general counsel at the Public Interest Advocacy Centre, which is a non-profit and registered charity. We provide legal and research services on behalf of consumers, and in particular vulnerable consumers concerning important public services such as airlines, in a field we've been working for over 20 years.
PIAC has heard many complaints from consumers about the lack of cash-free funds for flight cancellations due to COVID-19. Our message is that COVID-19 is an exceptional situation and passengers deserve cash refunds. Consumers and citizens feel, given the circumstances of an unprecedented global panic disrupting all domestic and international travel, and the economic precariousness caused by the pandemic, and larger personal monetary losses suffered by many travellers, that receiving vouchers or any other option besides refunds is inadequate and unacceptable. They are correct.
Consumers know the general rules for normal times. They know that when they purchase a non-refundable ticket that they will not be refunded if they, not the airline, cancel. They know most airlines' policies are to provide only a voucher good for one year if the airline cancels a flight. This buyer-beware situation is not loved, but it is understood.
The federal government has brought airline cancellation and refund practice more into line with consumer desires in normal times with the air passenger protection regulations. The APPRs are a very good thing, but they're too complex to describe here. As you heard from Mr. Streiner, they had not anticipated a global travel crisis on such a scale as now.
Whether there should be a cash refund for all types of tickets, whether airlines or customers cancel the flight for such large-scale and system-wide shutdowns as COVID, and who bears the risk of paying for such a refund protection scheme are legitimate matters for debate. We think there should be some provision made, and we turn to that now.
One contingency plan that could be to have a compensation fund similar to the Ontario travel industry compensation fund. This fund is financed by registered travel agents and travel wholesalers in Ontario and administered by the Travel Industry Council of Ontario. It provides reimbursement for bankruptcy and insolvency of an Ontario registrant or an end-supplier airline or cruise line.
A similar compensation fund could be paid out of a small levy on all airline tickets, whether purchased directly from the airline on a website or through an online or in-person travel agent. It would require an administration and would likely result in a pass-through charge to consumers; but then, there would be a fund for a situation just like COVID.
Another method could be to introduce a formal legal mechanism that mandates that airlines must segregate funds that they receive from passengers for future flights and keep them separate until the passenger actually departs. This is simply keeping the consumer monies in trust until they travel, and it would equitably belong to the customer if travel were cancelled. Terms of this legal trust mechanism could limit it to payouts only in situations like the present, or be more generous.
Our understanding is that both solutions would be opposed by the industry.
However, even if we cannot protect consumers on this scale in the future, PIAC insists that for this crisis, it is only just and reasonable that all Canadians be fully refunded for having had travel cancelled or disrupted by COVID-19—and ignoring the niceties of refundable versus non-refundable or customer-initiated versus airline-initiated cancellation. We note that the transport minister appears to agree with us. Why? Because airlines are going to be bailed out with taxpayer money. The federal government must ensure that passengers get their refunds for flight cancellations because, otherwise, those taxpayers who did not get a refund will bail out airlines and be penalized twice.