Passenger refunds for cancellations and delays

Summary#

This Canada Gazette notice (published July 3, 2021) proposes changes to the Air Passenger Protection Regulations to require air carriers to refund passengers when a cancellation or long delay outside the carrier’s control means the carrier cannot complete the passenger’s itinerary within a reasonable time. Practically, the rule would force carriers to offer a cash refund or rebooking when they cannot rebook a passenger on a flight leaving within 48 hours of the original departure time.

What it does#

• Applies to all flights to, from and within Canada, including many connecting and some charter flights.
• Keeps the current requirement that carriers try to rebook passengers, but:
  • If the carrier cannot confirm a seat on a flight leaving within 48 hours of the original departure time, the passenger can choose a refund or rebooking.
  • The 3‑hour delay threshold remains relevant for certain rebooking obligations.
• Defines what must be refunded:
  • The unused portion of the ticket and any unused add‑on services (for example, paid seat selection or extra baggage).
  • If the passenger is no longer at the origin and the trip no longer serves a purpose, the carrier must refund the full ticket and arrange (free) return travel to the point of origin.
• Sets how refunds must be paid:
  • Refunds must go to the person who bought the ticket, by the original payment method unless the passenger agrees in writing to an alternative that is of greater value and does not expire.
• Sets refund timing:
  • Refunds by credit card must be made within 7 days of the carrier’s obligation.
  • Refunds by other methods (cash, cheque, points) must be made within 20 days.
• Adds enforcement measures: administrative penalties are included (up to $25,000 for corporations and $5,000 for individuals for the new listed offences).
• Makes minor wording and consistency corrections in the existing rules.
• The proposed amendments would not apply retroactively to cancellations or delays that happened before the rules come into force.

Who's affected#

• Passengers who buy tickets to, from, or within Canada — especially those with non‑refundable tickets or no travel insurance. They would have a clearer right to get cash back when rebooking within 48 hours is impossible.
• Canadian carriers, both large and small, who will have to pay refunds and update tariffs to meet the new requirements. The government’s analysis estimates industry costs over 10 years.
• The Canadian Transportation Agency (CTA), which enforces the rules and expects fewer refund complaints.
• Some remote and northern carriers may feel the impact more because they have fewer rebooking options and smaller fleets. The proposal applies equally to all carriers; it does not carve out special exceptions based on carrier size.

Why it matters#

• It aims to stop situations where travellers are left out of pocket for flights they can’t use when disruptions are caused by things outside an airline’s control (for example major border closures, widespread travel bans, severe weather).
• For travellers: clearer, faster refunds (including add‑ons) and a deadline for carriers to return money (7 days for card payments, 20 days otherwise). That reduces financial loss and the time and stress of filing complaints.
• For the industry and public finances: the CTA’s analysis estimates total benefits of $46.67 million (present value) versus costs of $46.15 million (present value) over a 10‑year period — a net benefit of about $0.52 million. The biggest share of costs would fall on the largest carriers, though smaller and northern carriers may have higher costs per passenger.
• The changes were drafted after a public consultation that ran from December 21, 2020 to March 1, 2021, and follow a Ministerial direction dated December 18, 2020. The rules are forward‑looking and would not automatically refund past COVID‑era cancellations.