Flight Hub Reaches $5 Million Settlement With Competition Bureau of Canada

Flight Hub Reaches $5 Million Settlement With Competition Bureau of Canada

February 24, 2021 ctn_admin

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.

In addition to a $5 million penalty for FlightHub Group Inc., two company directors have agreed to penalties of $400,000 each after the Competition Bureau concluded that the online travel agency charged customers hidden fees, authored positive customer reviews to promote its services, and made numerous false or misleading claims about its prices and other flight-booking services, the Competition Bureau said.

The penalties are part of a settlement registered today with the Competition Tribunal, which prohibits FlightHub and directors Matthew Keezer and Nicholas Hart from making any further false or misleading claims. These include claims about the price of flights, as well as the cost and terms associated with cancellations, rebooking and seat selection.

FlightHub is also required to remove any online reviews of its services that were posted by or on behalf of the company but appeared to be from genuine customers. As part of its investigation of FlightHub’s marketing practices, the Bureau reviewed thousands of consumer complaints, seized documents at the company’s Montreal headquarters, and obtained a Temporary Consent Agreement to protect the public while the investigation was ongoing.

The Bureau concluded that FlightHub made millions in revenue from charging hidden fees, and misled consumers on FlightHub.com and JustFly.com about the costs and terms associated with a range of services, including:

Seat selection terms and fees

FlightHub actively concealed fees that it charged consumers for seat selection. FlightHub gave the impression that consumers could reserve their seats by selecting specific seats on a seat map, but FlightHub did not secure the selected seats for many consumers.

The price of flights

FlightHub promoted false or misleading pricing information on the websites and in emails, and at times increased prices after consumers selected a flight.

Flight cancellation and rebooking terms and fees

FlightHub gave the impression that consumers could obtain cancellation and rebooking rights at no cost, when in fact consumers were charged additional fees. FlightHub gave the impression that consumers had more extensive cancellation and rebooking rights than was actually the case.

Obtaining and using “travel credits” for future flights

FlightHub gave the impression that consumers could cancel a flight in return for credit on any future flight, when in fact the “travel credit” could be subject to important restrictions and additional costs. In some cases, after a consumer agreed to cancel a flight in return for a travel credit of a specific value, the value later decreased. In reaching today’s settlement, the Bureau took into account that FlightHub is insolvent and was granted creditor protection by the Quebec Superior Court in May 2020.

The associated penalties will be treated as unsecured claims in any plan of arrangement to be filed by FlightHub under the Companies’ Creditors Arrangement Act (CCAA). All other terms of the settlement are binding on FlightHub and the two directors for a period of 10 years, regardless of the outcome of the CCAA proceedings.

The settlement (consent agreement) will be available shortly on the Competition Tribunal‘s website.

“We have pursued this case relentlessly to ensure that Canadians would be protected against any further deceptive marketing by FlightHub and its directors. Cracking down on deceptive marketing in the online marketplace is one of the Bureau’s top priorities, and we’ll continue to do everything in our power to stop it,” said Matthew Boswell,
Commissioner of Competition

FlightHub put out the following message:

FlightHub, a leading online travel agency (OTA), 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”, said 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 this 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.”