COVID-19: Federal support = reimbursement?

To the point It should be imperative that a travel provider receiving public subsidy during the COVID-19 pandemic reimburse its clients.

Travel credit or refund: the debate Acceptance of public support measures should lead to reimbursement of travel

Travel credit or refund: the debate

Since the COVID-19 pandemic, the travel industry has been particularly affected.

At the beginning of March 2020, most travel providers (airlines, hotels, travel agencies, cruises…) were offering a full refund to customers who had their trip cancelled.

Also, most of these travel providers even offered adjustments for non-impacted, yet non-refundable trips.

However, in view of the extent of the crisis and the impact on cash flow, a reversal was initiated: that ofoffering a travel credit rather than a refund.

Initially understandable because of the stakes involved, this recourse to travel credit is increasingly contested:

Class action lawsuits have been filed against travel providers, including airlines
The insurance companies consider that the travel credit corresponds to a reimbursement
Chargeback policies are also adjusting
Canadian Transportation Agency supports travel credit
The Office de Protection des Consommateurs is gradually going back on its announcements, seeing no doubt an issue for the Fonds d’indemnisation des clients des agents de voyages (FICAV)

Here, everyone passes the buck: to the detriment of consumers, who are also taxpayers.

The problem is that the travel credit was introduced by travel providers – especially airlines – in order to make it easier for them to offer their customers the best possible service:

to protect jobs
to ensure a less difficult recovery at the end of this pandemic COVID-19

However, this argument can no longer hold today with the measures taken by the various governments to help companies and the airline industry.

Elsewhere in the world, we are beginning to see institutional support for consumer-taxpayers, notably in the United States and the European Union.

Acceptance of public support measures should lead to reimbursement of travel

Today, Air Canada announced its intention to take advantage of the Canada Emergency Wage Subsidy for the benefit of its 36,000 employees across the country.

As a result, Air Canada is cancelling the layoff it announced on March 30, which affected 50% of its workforce (approximately 16,500 employees).

As a reminder, the
Canada Emergency Wage Subsidy
is a measure that provides eligible employers with a wage subsidy of 75% of wages for up to 12 weeks, retroactive to March 15, 2020.

We should see other companies in the sector announce that they want to benefit from this public subsidy such as Air Transat, Porter, Sunwing, or WestJet.

And that’s not counting the other measures that will undoubtedly be taken to specifically help the tourism or airline industry.

Thus, as soon as a company benefits from a public subsidy to cover one of its primary expenses, namely the salaries of its employees, the travel credit argument can no longer hold.

And that’s sort of what’s happening in the United States and the European Union and what should happen in Canada.

It is therefore time, now that public subsidy measures have been put in place and benefit the travel industry, that the various institutions representing consumer-taxpayers make a clear decision in favour of reimbursement and not a travel credit.

The Canadian Transportation Agency (CTA) in particular must now act as its counterparts in the United States and the European Union have done. Remember, the CTA had prided itself on having stood up for the travelers.

In May 2018, the Canadian Transportation Agency (CTA) began developing the Airline Passenger Protection Regulations to establish airline obligations to passengers, including minimum compensation and minimum standards for treatment of passengers in certain circumstances.

It is time for the CTA to act.

And on the side of the travel providers, in particular the airlines, the first to reimburse their customers rather than offering them a travel credit will undoubtedly be the big winners at the end of the crisis with the consumers-taxpayers!

What do you think about it? Come and discuss it in the milesopedia community.