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By David Shepardson
WASHINGTON (Reuters) -The U.S. Transportation Department (USDOT) said on Monday it had fined LATAM Airlines Group SA $1 million after the airline and several affiliates routinely failed to provide timely refunds to passengers for U.S. flights.
The department said since March 1, 2020, it received over 750 complaints alleging LATAM, the biggest carrier in Latin America, failed to provide timely refunds after cancelling flights to or from the United States. USDOT said it took LATAM more than 100 days to process thousands of refund requests to payment.
LATAM, which did not immediately comment Monday, agreed to the $1 million fine and told USDOT “it always acted in good faith, and that it believes a large penalty is inappropriate given the dire circumstances facing LATAM during the pandemic.”
Because of COVID-19, LATAM had to cancel more than 1,100 flights daily and saw refund requests quadrupled, the airline told USDOT noting it filed for Chapter 11 bankruptcy and radically downsized the company, resulting in layoffs of thousands of employees.
LATAM had issued more than $62 million in refunds since the beginning of the pandemic for canceled flights, the company told USDOT.
In January, USDOT said it planned to seek higher penalties for airlines violating consumer protection rules, saying they were necessary to deter future violations. USDOT vowed to “deter future misconduct by seeking higher penalties that would not be viewed as simply 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 claims thousands of air passenger refunds had been delayed. USDOT initially sought a $25.5 million penalty.
Air Canada got $2.5 million credited for passenger refunds and paid $2 million in fines.
In November, USDOT imposed penalties on another six airlines totaling just $7.25 million after they agreed to issue $622 million in passenger refunds.
(Reporting by David Shepardson; Editing by Chris Reese and Stephen Coates)
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