NEW YORK: Air Canada has agreed to pay a $4.5 million settlement with the US government over delays in reimbursing passengers for flights canceled or changed during the Covid-19 pandemic, American officials said Monday.

The agreement, still pending legal approval, shows that transport authorities are "holding airlines accountable by ensuring that they treat passengers fairly," the US Department of Transportation said in a statement.

Of the $4.5 million agreed upon, $2.5 million will be used to refund passengers who purchased a nonrefundable ticket for a flight to or from the United States that they then decided not to take.

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The remaining $2 million would be paid to the US Treasury.

The deal marked the agency's aviation protection division's highest settlement amount with an airline.

In the future, Air Canada also pledged to "refund airfare to passengers who purchase non-refundable tickets to or from the United States whose flights are cancelled or significantly changed by the carrier."

Current US regulations do not mandate airlines refund passengers who chose not to travel due to the pandemic.

But the Treasury plans to issue new guidelines to address protections for consumers who are unable to travel due to government restrictions.