Airlines

Transport Minister ties government help to passenger refunds

Marc Garneau says discussions will begin this week on government help for major airlines and airports.

Canadians “rightly angered” by job losses and service cuts, says minister.

government help refunds
The domestic departures area at Vancouver International Airport October 26, 2020 (photo: Brett Ballah).

Canada’s Transport Minister is tying government help for airlines to refunds for passengers whose flights were cancelled because of the COVID-19 pandemic. Marc Garneau is promising discussions beginning this week on a package of supports for Canada’s struggling airlines.

“Before we spend one penny of taxpayer money on airlines, we will ensure Canadians get their refunds,” said Garneau in a rare Sunday statement.

The issue of refunds has been a flashpoint for airlines in Canada. In March and the following months, as the impact of the pandemic was felt, airlines cancelled thousands of flights. But instead of refunding passengers their money, the airlines offered vouchers for future travel.

The policy outraged countless affected passengers who took to social media to vent their anger. The voucher policy is the subject of at least one class action lawsuit. It is also the target of hundreds of complaints to Canada’s transportation regulator.

“When this unprecedented pandemic broke out in the spring, Canadians who had already booked travel ended up stuck with vouchers for trips they could not take instead of getting refunds,” said Garneau. “They found themselves in a situation where they have given thousands of dollars in interest-free loans to airlines.”

Talks on help to begin this week

The minister has come under increasing political and public pressure to help the industry and passengers left with unwanted vouchers.

In the past, Garneau has stuck largely to a policy of non-interference. In May, Garneau told the Commons his priority was the health of the airlines. “I understand the frustration of people who wanted to be refunded,” Garneau said in response to questions from Opposition MPs. “But we have to understand now that airlines are experiencing very tough times right now because airlines have lost 95% of their revenues.”

This week, he revealed the aviation sector has received more than $1.3 billion in emergency wage subsidies.

But Sunday’s statement was the minister’s clearest indication yet of how he intends to proceed. “The air sector cannot respond to these challenges on its own, given the unprecedented impacts on its operations,” said Garneau.

Government help, Garneau indicated, could take the form of loans or other measures, such as taking an ownership stake. On top of refunds, help would be conditional on maintaining or restoring regional services, the minister indicated.

“Regional connectivity is important to Canadians travelling now and in the future,” said Garneau. “We will ensure Canadians and regional communities retain air connections to the rest of Canada, and that Canadian air carriers maintain their status as key customers of Canada’s aerospace industry.”

Government help also coming for airports

Without addressing the refund issue directly, airlines said they were encouraged by the government’s position.

“We are encouraged by the government’s decision to work with carriers to try and stabilize the sector,” said Mike McNaney President and CEO of the National Airlines Council of Canada.

Privately-owned Westjet said they needed more details before deciding how to proceed.

“We will evaluate this afternoon’s statement from the Government of Canada and will await greater clarity on what support for the aviation sector might include,” Westjet said in a statement. “As we determine how to proceed in the best interests of our guests, our people and the communities we serve, we won’t be making any further comment.”

Last month, Westjet announced it would reverse course and offer refunds to all passengers whose flights were cancelled. It has, however, dropped service to five communities in Quebec and Atlantic Canada as part of its COVID measures.

Air Canada has also cut regional flights and offered refunds to targeted groups. In June, Air Transat’s CEO, Michel Leblanc, tied refunds to government aid.

Supports will also be offered to airports and the aerospace sector, the minister indicated, though no specifics were mentioned.

Regional airports said last week they are running out of money. They have asked for at least $180 million in operating support for small airports. Larger facilities have called for rent deferrals, low-interest loans, and funding for capital projects. Overall, the Canadian Airports Council says its members are on track to lose $4.5 billion in revenues this year and next.

Reopening air travel

Airports and airlines are pushing for ways to reopen air travel. A handful of COVID testing pilots are either under way or set to launch in the coming weeks. They are seen as a way of ending Canada’s 14-day quarantine period on international travellers and reestablishing confidence in the sector.

“In addition to financial support, a federal testing strategy for aviation is critical to ensuring the industry is able to safely restart, address regional travel restrictions and international border measures, and ensure aviation is able to play the central role it must play in Canada’s eventual economic recovery,” said McNaney.

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