Air Canada gets government financing - officially offering refunds

Air Canada and the Government of Canada have reached a financial support agreement, providing our national airline with $5.9 billion in debt and equity financing.



In exchange for the financial package, Air Canada has made the following commitments:

  • Resuming service for nearly all regional communities where service was suspended because of the COVID-19 pandemic

  • Maintaining employment at levels which are no lower than those at April 1, 2021

  • Completing its orders of 33 Airbus A220 aircraft (manufactured in Quebec) and 40 Boeing 737 Max aircraft

  • Restricting certain expenditures, and restricting dividends, share buybacks and senior executive compensation

  • In addition, the carrier will not retract travel agency commissions on those refunded fares

  • Offering the option of a full refund to the original form of payment for eligible customers who purchased non-refundable fares but did not travel due to the COVID-19 pandemic



The last $1.4 billion chunk of financing is intended to support the provision of refunds for cancelled flights. Air Canada can withdraw at an annual interest rate of 1.211% to process customer refunds .



Air Canada is extending a refund option to all eligible customers with tickets for travel dates on or after February 1, 2020 and who purchased their ticket before April 13, 2021.



Refunds are available to those who either had a flight that was cancelled or who voluntarily cancelled their flight themselves, regardless of the reason. Customers can request this refund online until June 12, 2021.



To refund your Air Canada flight, take a look at their new mini-site dedicated to processing customer refunds.



Customers can use a simple online form to request a refund for their affected flights. Even if they had already previously received a travel credit, an Air Canada Travel Voucher, or an Aeroplan points refund with a 65% bonus, you can now renege on that option and get the full refund that you were originally due.



With the government’s backing, Air Canada’s refund policy is now very generous:

  • Flights within the eligible booking period that were cancelled by the customer themselves can be refunded

  • Flights for which refunds had been previously denied can now be refunded

  • Flights for which a travel credit, Air Canada Travel Voucher, or Aeroplan points refund with a 65% bonus had already been processed, can now be reneged and refunded

  • All packages booked through the tour operator Air Canada Vacations can now be refunded

  • Flights booked with travel agencies that are no longer in business can also be refunded - all travel agencies and agents will be allowed to keep commissions earned


Encouraging Travel & Flexibility into 2022

On top of this, Air Canada has also revised its booking policies for all future travel.


From here on out, if your Air Canada flight is cancelled or rescheduled by more than three hours, Air Canada will now offer all customers the choice of receiving a refund, an Air Canada Travel Voucher or the equivalent value in Aeroplan Points with a 65% bonus.


This new policy will certainly provide future travellers more certainty and flexibility, so you can book future travel with greater confidence.



What about other Canadian Airlines?

The federal government is still negotiating with other airlines about potential relief packages.


"The precise shape of an agreement will depend on the specific needs of each airline." Deputy Prime Minister and Finance Minister Chrystia Freeland said last week.


In October last year, WestJet announced it would start a 6- to 9-month process of refunding passengers with refundable and non-refundable tickets for flights cancelled by the airline during the pandemic. Passengers with non-refundable tickets who cancelled their flights on their own are not yet eligible. I'm sure there's more news to come in this saga.


Conclusions

Some have argued that it's the Canadian taxpayers who will be footing the bill for their own refunds here – even though the $1.4 billion credit facility is expected to be repaid within seven years’ time.


Time will tell how much of that repayment happens and how much of it gets forgiven – but I think realistically, this is as good of an outcome for Air Canada, and a hopeful glimpse at how else Canada will support our crucial airline industry. As Canada's Ricky at Prince of Travel said last week - this news is as good as we could’ve hoped for.


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