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Emails raise questions about regulator’s independence amid COVID-related flight refunds

Correspondence hints at cozy relationship between airlines and CTA that is supposed to regulate them.

PHOTO: (Yuki Iwamura/AFP/Getty Images)

Canada’s airline regulator, the Canadian Transportation Agency, at one point said that vouchers for future flights would be OK as compensation for flights cancelled during the COVID-19 pandemic. That’s different from what happened in other countries, where full refunds were mandated.

Newly revealed correspondence between the federal government and the Canadian Transportation Agency (CTA) at the start of the pandemic is raising renewed questions around the regulator’s independence.

Gabor Lukacs, president of advocacy group Air Passenger Rights, said the behind-the-scenes communication between executives, civil servants and the quasi-judicial body shows how officials crossed “some red lines.”

“Transport Canada was not just discussing some broad policy questions; they were actively involved with pushing the CTA on Air Transat’s behalf,” he said.

Unredacted emails show senior officials spoke with the agency’s top brass about pressure from airlines to let them avoid passenger refunds for trips cancelled because of COVID-19.

“They will request that we officially let them to (sic) provide vouchers to passengers instead of providing them cash because they literally do not have enough cash to give refunds,” Transport Canada director general of air policy Colin Stacey told then-senior agency director Marcia Jones on March 18.

“Have you heard anything about this? Are you available to discuss?”

The transportation agency falls under the purview of Transport Canada, and regular communication between them to keep the minister briefed on relevant matters is an established practice, a spokesman for the department said.

“Such discussions do not impact or hinder in any way CTA’s independence or arm’s length relationship with Transport Canada. For example, it would not be uncommon for the agency to inform the department of an upcoming announcement or for the department to ask factual questions about announcements to be in a position to inform the minister,” Simon Rivet said in an email Tuesday.

The emails show CTA chairman Scott Streiner, Transport Canada deputy minister Michael Keenan and then-transport minister Marc Garneau’s chief of staff Marc Roy spoke aboutΒ an upcoming statement on refunds.

Days later, the CTA posted a “Statement on Vouchers” establishing that airlines could generally issue flight credits or vouchers to customers whose flights had been called off due to the pandemic, instead of reimbursing them.

Section 39 of the CTA’s code of conduct states that “members shall not communicate with political actors or officials of other federal departments and agencies … regarding a matter that is, was, or could be before the agency.”

Roy, who no longer works as a federal staffer, declined to comment.

The CTA’s statement on March 25, 2020, that vouchers rather than refunds constitute a “reasonable approach” toward out-of-pocket passengers sparked public backlash and thousands of complaints to the transportation agency.

During his tenure atop the department, Garneau repeatedly stressed the regulator’s independence. On May 28, he told a special committee on the pandemic that “the Canadian Transportation Agency is a quasi-judicial body that operates at arm’s length from Transport Canada” and the federal government as a whole.

NDP transport critic Taylor Bachrach said the unredacted emails “directly contradict” that picture.

“It’s a troubling view into the way in which the government was putting pressure on the CTA and doing the bidding of the big airlines at a time when they should have been standing up for Canadian passengers,” he said Tuesday in a phone interview.

Cozy relations alleged

Bachrach called the revelations “disturbing” and said Canadians would be “shocked and disappointed” to learn of the nexus among industry, government and regulator.

Asked about the issue in the House of Commons on Tuesday, Transport Minister Omar Alghabra said the Liberal government “was there to help Canadians with their refunds” as well as struggling airlines and aviation workers.

A previously disclosed letter from March 22, 2020, shows that then-Transat CEO Jean-Marc Eustache asked the agency to confirm that “no refunds to passengers are required.”

The statement on vouchers, he said, would pre-empt complaints and lawsuits amid thousands of flight cancellations at the outset of the pandemic and also allow credit card companies “to deny customer chargeback claims.”

Eustache’s letter followed an email and extended phone conversation between another Transat executive and then-senior agency director Marcia Jones on the same topic four days earlier.

“I had a long call this evening and have a better understanding of the concern,” Jones told Streiner in a March 18 email.

The Association of Canadian Travel Agencies also wrote to the regulator asking it to help them with ‘prevention of credit card chargebacks.”

Transat spokesman Christophe Hennebelle said in December the goal of the correspondence was to fully inform the agency of a rapidly evolving situation and seek guidance on new transportation legislation.

The travel agencies association said it wanted to “buy time to get organized” until more information about the pandemic emerged, with agents caught between airlines, cruise companies and hotels on the one hand and consumers on the other.

The disclosure of the correspondence comes more than eight months after advocates and opposition MPs said emails between the Transport Department and the CTA around passenger refunds threw into question the regulator’s impartiality.

Emails tabled with the House of Commons transport committee in May revealed that senior officials last spring were in frequent contact about the agency’s public stance on flight vouchers, which airlines cited repeatedly to justify withholding reimbursement for passengers.

Consumer rights advocates have said laws in most provinces entitle customers to reimbursement for service never rendered.

The CTA has said it administers federal rules and does not comment on provincial laws.

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