Air Canada says it rejects a claim by the country’s airline regulator that it failed to live up to its rebooking obligations during a labour disruption last summer and it will push back accordingly on a formal penalty it has been handed.

Some 10,000 Air Canada flight attendants walked off the job in August 2025, after their union and their employer did not come to an agreement on a new contract. Ottawa soon ordered them back to work. But, in all, thousands of flights were cancelled in just a few days.

The Canadian Transportation Agency (CTA) announced this week that it was issuing an administrative monetary penalty of $426,000 against Air Canada, after investigating how the airline handled rebooking passengers amid that labour disruption.

The CTA’s website has a list of notices of violations issued by its enforcement officers, including details on related penalties. The Air Canada case appears to be the highest such penalty of the past 12 months, based on the information listed of 37 cases from April 1, 2025, through Monday. The CTA’s administrative monetary penalties totalled $1,429,350 across these cases, according to the website.

The regulator says it reviewed “a targeted sample” of affected customers and found that Air Canada “committed multiple violations” of subsection 18(1.1) of the Air Passenger Protection Regulations (APPR) between Aug. 15 and 20, 2025, saying it didn’t fulfil the requirements for when flights are cancelled for reasons beyond the airline’s control.

‘We will contest it’

Yet Air Canada contends it did what it could to support customers, and that the regulator is not being realistic about what was possible under the circumstances.

“The notice is unfounded in law and we will contest it,” Air Canada told CBC News in an emailed statement, confirming it had received a notice of violation from the regulator.

The CTA said Air Canada has until April 18 to request a review before the Transportation Appeal Tribunal of Canada (TATC).

In its statement, Air Canada said it rebooked 200,000 passengers at that time, during the industry’s busiest season for travel.

“The notice necessarily implies that airlines should be held to a standard which is impossible to achieve,” it said.

The airline further said the regulator “improperly failed to consider the extensive measures we took at the time,” pointing to voluntary policies it enacted to support customers.

“We have filed a notice for review of this notice of violation with the [TATC] on the basis that the CTA is required to take the diligence of airlines and real-world circumstances into account,” the company said.

In 2025, the TATC dismissed a $110,000 penalty against Air Canada.

And in 2024, the tribunal reduced a penalty against the airline from $50,000 to $40,000.