Canada’s transport regulator is beefing up its passenger rights charter, placing more stringent rules around reimbursement by airlines. Effective Sept. 8, the Canadian Transportation Agency says new regulations will require carriers to either refund passengers or rebook them, at the traveller’s choice, if a flight is cancelled or significantly delayed.

The regulations, which amend Canada’s existing Air Passenger Protection Regulations, will require airlines to offer a rebooking or refund within 30 days if they cannot provide a new reservation within 48 hours of a flight cancellation or “lengthy delay.”

Previously, the passenger rights regime only required refunds for flight disruptions that were within the airline’s control, which excluded situations ranging from storms to unscheduled mechanical issues.

Agency chair France Pegeot says the revision “will close the gap” in the framework that the COVID-19 pandemic revealed.

The new regulatory requirements:

• Require airlines to provide a passenger affected by a cancellation or a lengthy delay due to a situation outside the airline’s control with a confirmed reservation on the next available flight that is operated by them or a partner airline, leaving within 48 hours of the departure time indicated on the passenger’s original ticket. If the airline cannot provide a confirmed reservation within this 48-hour period, it will be required to provide, at the passenger’s choice, a refund or re-booking;

• Identify what costs must be refunded (unused portion of the ticket, which includes any unused add-on services paid for);

• Identify the method to be used for refunds (same as the original payment, e.g., a return on the person’s credit card);

• Require airlines to provide a refund within 30 days.

On Dec. 21, 2020, the Minister of Transport issued a direction giving the CTA the authority to develop new regulations to close this gap for future travel. In a letter accompanying the direction, the minister asked that the CTA design the regulations in a manner that is fair and reasonable to passengers and, to the extent possible, not impose an undue financial burden on carriers that could lead to their insolvency.

Thousands of Canadians have faced a slew of long delays and flight cancellations as airlines and security and customs agencies struggle to handle a staffing shortage amid the recent travel surge, a problem that is expected to continue through much of the next two months – leaving summer travellers without protection from the new rules, which don’t kick in until fall.

“These new requirements provide clarity around timing, cost coverage, method of payment, and deadlines to refund travellers… Whether due to a large-scale cancellation or a small incident, we know that sometimes travel doesn’t go according to plan. These new regulations will protect travellers in these unexpected situations,” said transport minister Omar Alghabra.

Notably, refunds must be the same as the original payment method. That means a credit card purchase could not be reimbursed via cash – or travel voucher, as most Canadian airlines did for nearly a year starting in March 2020 amid hundreds of thousands of cancellations set off by the pandemic.

The new rules don’t go far enough for some.

Critics say mandating a refund or rebooking only if the airline cannot secure another a seat on a plane that leaves within two days of the original departure time fails to serve traveller needs; for example, if a passenger is travelling for a weekend, holiday, or business meeting.

Airlines argue the Air Passenger Protection Regulations, which came into force in 2019, already go too far.

Canadian carriers asked a Federal Court of Appeal panel in April to quash rules that bolster compensation for passengers subjected to delayed flights and damaged luggage.

Air Canada and Porter Airlines Inc., along with 16 other appellants that include the International Air Transport Association, said the passenger rights charter violates global standards and should be rendered invalid for international flights.

Launched in 2019, the legal action states the regime exceeds the Canadian Transportation Agency’s authority. They also allegedly contravene the Montreal Convention, a multilateral treaty, by imposing heftier compensation requirements for flight cancellations or lost baggage.

Ottawa argues that there is no conflict between the passenger protections and the Montreal Convention.

Under the three-year-old federal rules, passengers have to be compensated up to $2,400 if they were denied boarding – so-called flight bumping – because a trip was overbooked, and receive up to $2,100 for lost or damaged luggage. Delays and other payments for cancelled flights warrant compensation of up to $1,000.

The issue came to the forefront after a 2017 incident in which two Montreal-bound Air Transat jets were diverted to Ottawa because of bad weather and held on the tarmac for up to six hours, leading some passengers to call 911 for rescue.

It took on renewed relevance to thousands of Canadians in 2020 as pandemic lockdowns and border closures grounded fleets and prompted mass flight cancellations.