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 were offered far less cash than what they believe they're owed, and they think Air Canada is using the backlog at the agency as leverage.

The CTA, an independent body that helps 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 in Edmonton.

She was floored when she received Air Canada's settlement offer last week: $225 cash or a $400 travel voucher — far less than her $1,483 claim 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 clause — rather than wait out the CTA backlog.

Air Canada told CBC News it pays full compensation for legitimate claims and recently started offering 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 northwestern Ontario, was delayed overnight by 14 hours. She said Air 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 payout for a flight delay of at least nine 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 it and filed a complaint with the CTA in April.

Last week, Air Canada sent Smith an email stating that "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 passengers and cover any necessary accommodation for flight delays of three of more hours that 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 17 involved 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'

CTA spokesperson Vincent Turgeon told CBC News that passengers are free to settle with their airline at any time.

But consumer advocate and lawyer John Lawford said Air 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 spokesperson Peter Fitzpatrick told CBC News in an email that the settlement offers were designed to reduce the CTA backlog and 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.

Shafik Bhalloo, a lawyer and associate professor at Simon Fraser University's Beedie School of Business in Vancouver, said it'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 passenger Scott 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 compensation for flight delays under six hours. Last year, the airline rejected O'Donnell's claim and blamed "bad weather" — which he disputes.

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 offer to $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 questioned Air Canada's strategy of increasing an offer 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.

The CTA says it recently revamped its complaints process to make it more efficient. The federal government has proposed new rules to strengthen passenger compensation rights that could take effect next year.