© Reuters. FILE PHOTO: A passenger plane arrives during a general quarantine amid the spread of the coronavirus disease (COVID-19), at Arturo Merino Benitez International Airport, in Santiago, Chile May 26, 2020. REUTERS/Ivan Alvarado
By David Shepardson
WASHINGTON (Reuters) – The U.S. Department of Transportation (USDOT) said on Monday it had fined LATAM Airlines (OTC:) Group SA $1 million after the airline and its subsidiaries consistently failed to provide refunds in in a timely manner to passengers on US flights.
The department said that since March 2020 it had received more than 750 complaints alleging that LATAM, Latin America’s largest carrier, failed to provide timely refunds after canceling flights to or from the United States. UNITED STATES. The USDOT said it took LATAM more than 100 days to process thousands of refund requests to payment.
LATAM said in a statement that it accepted the $1 million fine under a consent order. He added that the fine was “part of an ongoing USDOT audit of numerous airlines that operate in or within the United States and have been fined for the same reason, delays in refunding unused tickets on flights canceled during the pandemic.”
LATAM has invested $2 million in a new digital platform to process refunds faster and is investing an additional $2 million this year in refund processing efforts.
Due to COVID-19, LATAM has had to cancel more than 1,100 flights a day and has seen refund requests quadruple, the airline told USDOT, noting that it had filed for Chapter 11 bankruptcy and dramatically reduced the size of the company, resulting in the layoff of thousands of employees.
LATAM has issued more than $62 million in refunds since the pandemic began for canceled flights, the company told USDOT.
In January, the USDOT said it planned to seek tougher penalties for airlines violating consumer protection rules, saying they were needed to deter future violations. The USDOT pledged to “deter future misconduct by seeking higher penalties that would not simply be viewed as a cost of doing business.”
USDOT fines for airline consumer violations have often been a fraction of potential penalties. Last year, Air Canada agreed to a $4.5 million settlement to resolve a USDOT investigation into thousands of airline passenger refunds that had been delayed. The USDOT initially requested a fine of $25.5 million.
Air Canada obtained a $2.5 million credit for passenger refunds and paid $2 million in fines.
In November, the USDOT imposed penalties on six other airlines totaling just $7.25 million after agreeing to issue $622 million in refunds to passengers.