Air Canada offering cash or vouchers to settle compensation claims it says are baseless

Air Canada is reaching out to selected passengers, offering to settle their compensation cases currently stuck in a huge backlog with the Canadian Transportation Agency (CTA).

But several passengers told CBC News that they wereoffered far less cash than what they believe they're owed, and they think Air Canada isusing the backlog at the agency as leverage.

The CTA, an independent body thathelps resolve disputes between airlines and passengers, says it has a backlog of more than 61,000 cases and that passengers must wait more than 18 months for a resolution.

If passengers settle early with Air Canada, they must drop their case with the CTA.

"These alternative offers, in my view, are a way to try and pressure people into accepting less than what they deserve," said Samantha Smith, a university student inEdmonton.

She was floored when she received Air Canada's settlement offer last week: $225 cash or a $400 travel voucherfar less than her $1,483claim for a flight disruption last year.

"It was insulting," Smith said. "I felt very angry and just really dismayed."

CBC News interviewed five passengers who said Air Canada made settlement offers for less than what they believe they're owed. Even so, two said they agreed to a settlement which included a confidentiality clauserather than wait out the CTA backlog.

Air Canada told CBC Newsit pays full compensation for legitimate claimsand recentlystartedoffering lower sums or travel vouchers to wrap up customers' cases it deems baseless.

Sticking with the CTA

Smith said she believes her case is valid.

In June 2022, her flight from Toronto to Thunder Bay, in northwesternOntario, was delayed overnight by 14 hours. She saidAir Canada told her at the time it would cover her hotel stay.

Smith submitted a claim for $483 for hotel and incidentals, plus the mandated $1,000 payoutfor aflight delay of at leastnine hours that's within an airline's control.

Air Canada responded by email that the delay was an "unforeseen operational constraint" and warranted zero compensation. Instead, it offered her a "goodwill" $700 travel voucher. Smith chose not to take itand filed a complaint with the CTA in April.

Last week, Air Canada sent Smith an email statingthat "timelines to resolve [CTA] complaints are expected to be lengthy" and invited her to immediately settle her case via an online platform.

When she went online, Smith was offered the $400 voucher or $225. Air Canada told CBC News this week that she can also still pocket, on top of the offer, the initial $700 goodwill voucher. That was news to Smith, who said vouchers won't cover her expenses, so she'll continue her CTA case.

"I think I am angry enough about what's happened, and it doesn't feel fair," she said.

Under federal regulations, airlines must compensate passengersand cover any necessary accommodationfor flight delays ofthree of more hoursthat are within their control and not required for safety reasons.

Since the rules took effect in 2019, passengers have flooded the CTA with complaints that they've been wrongly denied compensation. The agency says that about 82 per cent of the 12,600 complaints it has received since July 17involved compensation for flight disruptions.

Nearly half of all flight delays in 2022 were deemed the responsibility of an airline, according to data from Transport Canada.

'Kind of unconscionable'

CTAspokesperson Vincent Turgeontold CBC News that passengers are free to settle with their airline at any time.

But consumer advocate and lawyerJohn Lawford saidAir Canada shouldn't be meddling with the CTA process.

"It's really kind of unconscionable," said Lawford, executive director and general counsel of the Public Interest Advocacy Centre in Ottawa.

"It's an abusive use of an offer to try to get consumers to agree to something just because there's delays and they may be desperate to get their money back."

He said he believes Air Canada's motive is "to reduce their liability over all the claims because there are thousands and thousands."

Air Canada responds

Air Canada spokespersonPeter Fitzpatricktold CBC News in an email that the settlement offers were designed to reduce the CTA backlogand better manage the airline's resources.

He said the offers, which customers are free to reject, have generated lots of positive feedback, allow customers to swiftly negotiate a settlement and mainly involve claims Air Canada deems illegitimate.

"Those being offered the opportunity to negotiate ... do not have a valid ... claim, in our opinion," Fitzpatrick said.

WATCH | Airlines face tough questions about lack of compensation:

Canadian airlines face tough questions about lack of compensation after flight delays

2 years ago

Duration 2:51

Canadian airlines are facing growing frustration from passengers who say they are being unfairly denied compensation for delays and cancellations sometimes without even finding out why. Now calls are growing for federal regulators to impose tougher fines on airlines that skirt the rules.

ShafikBhalloo, a lawyer and associate professor at Simon Fraser University's Beedie School of Business in Vancouver, saidit's common practice for companies to try to quietly and quickly settle customer disputes.

"Why not do what they are doing?" he said. "They do not have to waste money on defending the complaint."

Also, if passengers take the voucher offer, that guarantees the airline more business, Bhalloo said.

Passenger gets counter-offer

Air Canada passengerScott O'Donnell, who was offered a settlement deal, said he also believes his claim is valid.

O'Donnell was delayed close to four hours when flying from his home in Edmonton to Toronto in December 2022.

If Air Canada was responsible, he would get $400 the mandated compensationfor flight delays under six hours. Last year, the airline rejected O'Donnell'sclaim and blamed "bad weather" which hedisputes.

Last week, Air Canada made him an offer: $100 cash or a $200 travel voucher. When O'Donnell clicked the"decline" button online, Air Canada upped the offerto $150 cash or a $400 voucher.But he declined again.

"If I accepted a really cheap offer, I'd be letting them off the hook too easily," he said. "I think they need to be held to account."

O'Donnell also questionedAir Canada's strategy of increasing anoffer after a passenger rejects the initial one.

"Somebody might just easily take that first offer and run with it" without knowing they could get a better deal, he said. "I think that's very misleading."

Air Canada's Fitzpatrick said it's clear from Air Canada's website that passengers can negotiate, as it calls its settlement system a "dispute resolution platform."

Passenger Samantha Smith, who chose to ignore her offer and never clicked the "decline" button, says she had no idea she could possibly negotiate a better deal.

"That's news to me," she said.

TheCTA says it recentlyrevamped its complaints process to make it more efficient.The federal government has proposed new rulesto strengthen passenger compensation rights that could take effect next year.