Travel booking company FlightHub Group Inc. reached a $5 million settlement with the Competition Bureau of Canada after an investigation into the company’s marketing practices. The Competition Bureau began a formal investigation into the Montreal-based company in 2018.
The Competition Bureau says FlightHub made millions in revenue from charging hidden fees and misled consumers about the costs and terms associated various services.
Among other practices, FlightHub allegedly increased prices after consumers selected a flight and actively concealed fees it charged for seat selection, the Competition Bureau says.
In addition to the $5 million penalty for FlightHub, two company directors, Matthew Keezer and Nicholas Hart, have agreed to pay penalties of $400,000 each, the agency says.
FlightHub was granted creditor protection by the Quebec Superior Court in May 2020, a factor the Competition Bureau says it took into account in reaching the settlement.
In a statement FlightHub acknowledged it has reached an agreement with the Canadian Competition Bureau, “that resolves all concerns related to certain representations on its platforms and paves the way for the company’s emergence from its ongoing Companies’ Creditors Arrangement Act (CCAA) restructuring process.
“FlightHub remains today the only fully Canadian owned and operated major OTA. The company has served millions of satisfied Canadian customers over the past decade and takes great pride in having Canadians trust it year-after-year with repeat travel purchases. FlightHub was therefore surprised when the Bureau notified the company of concerns relating to certain representations made on its former platforms.
“The impact of the COVID-19 pandemic on FlightHub’s business operations left it with no alternative but to file for protection under the CCAA in May 2020. Rather than allocating its scarce resources towards litigating the allegations brought forward by the Bureau, the company decided to negotiate a settlement that will facilitate a swift emergence from CCAA, for the benefit of its creditors, employees, suppliers and, most importantly, its customers. This agreement is not an admission or acceptance by FlightHub of any conclusions made by the Bureau.
“Many Canadians are relying on us to be around and fully operational when the time comes for them to rebook future travel plans using value from previously cancelled tickets”, says Christopher Cave, the company’s CEO. “Failure to reach an agreement would have likely resulted in asset liquidation and ceasing of operations. It was imperative for the company and its directors to avoid this scenario at all costs.”
“While FlightHub believes that it was singled-out for providing market standard OTA services and offerings, it has, nonetheless, recognized the importance of the Bureau’s mandate and has fully cooperated with the Bureau to help pave the way to establishing a new industry standard for selling travel products online. FlightHub understands that the Bureau’s vision is to be at the forefront of the digital economy and welcomes the opportunity to collaborate with the Bureau in developing and applying uniform best practices across the travel industry. FlightHub looks forward to the day when the Bureau will ensure that all OTAs meet the same standards in terms of transparency and customer experience.”
Finalizing the agreement with the Canadian Competition Bureau was the last major issue to resolve prior to emergence from our ongoing restructuring process said Cave. “With this matter now resolved, we can look forward to building a strong company that offers Canadian consumers the best online travel shopping experience.”