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Finance committee  First, let me take a step back. Airline policies don't matter, because they can't override the law. The law has been that you have to refund passengers, full stop. Unfortunately, the federal government failed to enforce that law. In terms of policies, in some ways Air Canada was the worst offender, in that they made a false proposition that if you bought a so-called non-refundable ticket, then they can just pocket your money and give you no service in return.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  I don't have the exact figures in front of me, but I can give you what I remember. I don't remember the number of refunds. As I understand it, the refunds are going to be funded from a $1.4-billion unsecured loan at an interest rate of 1.211%.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  It's hard to predict. We are not through this pandemic yet. What we have seen historically is that unsecured loans tend to become grants. I could easily see that once the public outrage over the $6-billion bailout to Air Canada subsides, once it's no longer in the news headlines, the government may quietly just write it off, so having some form of legislation that states these loans cannot be written off certainly would help to alleviate those concerns.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  The biggest concern we have is that those issues, such as ensuring job security and regional connectivity, which are undoubtedly important, are put on the same footing as the legal right of passengers to a refund. A refund is a non-negotiable absolute legal right under the law, while regional service, if it is not profitable, is a discretionary matter.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  That's right. There are no assets that could be seized if those amounts are not paid back.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  I don't purport to be an expert in competition law; however, I am aware of how some of its aspects affect passengers and airlines. My understanding is that the Competition Bureau doesn't have the tools to deal with, for example, predatory pricing, which happens when a large airline tries to effectively strangle a small airline by engaging in undercutting prices, even below cost.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  Currently, people are very upset. The experience described by your constituents is not a one-off, unique, isolated incident; it is an experience that we estimated millions of passengers have experienced. Any kind of bailout to the corporation, any kind of financial support, is facing very significant social opposition, not only because it's not necessarily good use of taxpayers' money but also because the airline and travel industry has squandered the public goodwill and consumer confidence.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  Knowing how many refunds have been issued is more difficult. When we appeared before the transport committee in December, our very conservative estimate was that there were about $3.89 billion worth of refunds among the Canadian airlines owing to 3.89 million passengers. As with every other estimate, this is based on data that we interpolate, because you may remember that Air Canada outright refused to provide numbers when they were asked by another House of Commons committee.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  It's an interesting idea, but it would, again, make consumers pay for what should be the airlines' responsibility. I would much prefer to see the system that already exists in Quebec's Consumer Protection Act. Section 256 says that for any kind of future service being paid for by consumers, the monies paid by consumers have to be kept in a trust account, and the airline is deemed to be the trustee.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  Passengers do experience significant problems, given that they're getting refunds from Air Canada directly. For example, when passengers used their vouchers to try to get a ticket, and the second ticket was cheaper, we have reports that passengers are being told that they are only going to refund their cheaper ticket but not the difference between the two tickets.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  Passengers are not supposed to be paying any extra fees for getting their refunds. Those demands by travel agents are legally unfounded. The potential benefit for Air Canada of giving refunds to travel agents is that in some cases there are deals whereby some of the commission is being paid in one way or another.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  With respect to the issue of competition, the deal between Air Canada and Air Transat would have significantly decreased competition over transatlantic routes and sun destinations. In terms of the data, for the medium-concentration to high-concentration market, this would have resulted in higher airfares and consumers paying more money.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  Thank you for the question. The very first thing the government should have done was to declare and enforce passengers' fundamental right to a refund. This happened in the United States on April 3, 2020, when the U.S. Department of Transportation issued an enforcement notice. In the European Union, it happened first around March 18, 2020.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  It is difficult to understand the logic behind the government's failure to enforce passenger rights. The problem is a long-standing one, but the pandemic has brought the systemic issue to the forefront. The Canadian Transportation Agency, which is the federal body that's supposed to enforce passenger rights, has, over the past six to eight years, turned from an independent regulator into effectively a lapdog of the industry.

April 15th, 2021Committee meeting

Dr. Gábor Lukács

Finance committee  From a taxpayer perspective, which I believe is of interest to this committee, the primary concern about the deal is that taxpayers end up funding the refunds for passengers instead of Air the Canada shareholders who reaped the profits. It was a pleasure to listen to the other witness today about how much even a few tens of thousands of dollars can buy and how much difference it can make in the lives of people who direly need assistance.

April 15th, 2021Committee meeting

Dr. Gábor Lukács