Canada to pay $12.5 billion to US to settle lawsuit over Canadian airline

Canadian airlines and some of their US owners face a potential lawsuit after being accused of ripping off customers by overbooking flights and overcharging for them.

The lawsuit filed Tuesday by Canadian airlines against the United States’ Federal Aviation Administration (FAA) and its subsidiary the Federal Aviation Authority (FAAA) was filed in the US District Court in the Northern District of California.

It is the first time Canadian airlines have sued the US over the same allegations, the lawsuit said.

According to the lawsuit, United Airlines (UAL) and Delta Air Lines (DAL) allegedly overbooked flights on flights to the United Kingdom for nearly two years, forcing Canadian airlines to pick up the tab for overbookings.

Canadian airlines then refused to fly to the UK, leaving passengers stranded and inconvenienced, the suit said.

United Airlines overbooks its flights in order to maximize profits.

Delta Air Line operates by a different model and flies to its destination from airports in New York and Chicago. 

“This was the first case in which a foreign airline has brought suit over domestic airline overbookage charges, and it is the most significant lawsuit in the history of the aviation industry,” United Airlines spokesperson Jennifer Loughlin said in a statement to CBC News.

“The airlines were overbookers and they overcharged for flights, and they should not have been,” she added.

The US complaint, which was filed last month in California, alleges that in April 2015, the two airlines agreed to “immediately” refund all flights booked for less than 48 hours.

United was the only carrier in the market to agree to do so, and Delta agreed to do the same in November 2015.

“We agree to pay the alleged overbook fee of approximately $12,500 per day, which would be equivalent to about $7,000 per day for a 24-hour period.

It would have been more than enough to cover the cost of airfare to and from New York,” United said in its lawsuit.

Delta said it was pleased with the settlement and the US’s willingness to settle.

“Delta has cooperated fully with our investigators and has offered to provide documents and evidence, which we believe will assist the parties to complete their investigation,” it said in an emailed statement.

The case is expected to be heard in January.

Read more from CBC Canada:Canada’s airlines accused of overbooketing in US The airline industry has faced accusations of overcharging customers and overbook travel for years.

Canadian Airlines has been the target of more than 30 lawsuits in the United State since 2003.

It has been accused of violating antitrust laws by overstating ticket prices in the U.S. and overstocking flights in the Canadian market.

“It is not the case that Delta Airlines oversold its flights, but that it did so to its own advantage and to the detriment of its competitors,” the lawsuit says.

“It also contends that Delta did not follow the rules of its industry.”

The airline industry is in the midst of a major transition as airlines are losing customers to airlines in Europe and Asia, with many companies in the business of flying and cargo shifting to low-cost carriers.