Council representing Canada’s major airlines writes to new finance minister just after she is sworn in to request pandemic recovery help

Canada’s airlines wasted no time issuing a request for help from the new federal finance minister. They wrote to Chrystia Freeland Thursday, two days after she was sworn into her new job, asking for help to kick-start the aviation sector.

“Our members are doing all they can to maintain operations and remain viable in
the face of a 90% to 95% drop in revenue, with no clear time frame for recovery,” wrote Mike McNaney, President and Chief Executive Officer of the National Airlines Council of Canada. The council represents Canada’s two largest carriers – Air Canada and Westjet – as well as Air Transat.

He pointed out tens of thousands of people have been laid off, countless flights grounded this summer, and communities have been cut off from airline service.

At the same time, McNaney argued government COVID-related policies are hurting Canada’s airlines. “The various travel, border and quarantine measures implemented in the earliest days of the pandemic are still in affect, with no time frame on when this will change,” he wrote.

Canada has closed its borders to most foreign travellers. The government continues to advise against non-essential travel outside the country. Even within Canada, Atlantic provinces have restricted their borders to Canadians coming from outside the region.

McNaney calls that “Stage zero” of the recovery. He said elements of reopening are in place. He pointed to the federal “Flight Plan” released last week as an example. That plan assembled a host of measures put in place to slow the spread of the coronavirus.

Sectoral financial asssitance

Those measures have helped contribute to a drop in air travel in the range of 75% this summer in Canada.

“If it is the federal government’s conclusion that aviation will remain at Stage Zero, we must reexamine the government’s decision to not provide sectoral financial support to aviation,” wrote McNaney. “And we need to move beyond the current Large Employer Emergency Financing Facility (LEEFF) if the industry is to survive and play the critical role it needs to play in Canada’s eventual economic recovery.”

That financial support takes many forms, according to the council:

• Loans, loan guarantees, or subsidies,
• Recognition “that revenue has fallen beyond the means of even the most extreme cost cutting measures to address,”
• Recognition that recovery will take years,
• Minimizing the long-term debt airlines are taking on, and
• Benchmarking Canadian help along the lines of what carriers have received in Europe and the United States.

READ: the request for help from Canada’s airlines to new Finance Minister Chrystia Freeland.

Political risks

The issue of financial help for airlines carries political risks for Freeland and the federal government. Ottawa has announced a handful of programmes targeted at maintaining flights to small and remote communities. Otherwise, it has steered clear of propping up the industry.

Part of the reason for the reticence could be the issue of refunds. When the pandemic hit in March, the largest airlines cancelled flights but didn’t automatically refund passenger fares. Instead, they generally offered vouchers for future travel. That decision has raised the ire of thousands of travellers.

“Toying with people’s finances during a pandemic is immoral, and refusing refunds when you’re unable to render the services for which your customers paid is illegal,” wrote Jesse Jocko James on Twitter.

Transport Minister Marc Garneau has said he is trying to balance the rights of travellers with a desire to keep the industry solvent.

Quebec stepping up

Quebec’s minister of consumer protection is vowing to protect consumers whose trips were cancelled.

“There are thousands of Quebeckers bought a trip and didn’t go,” Simon Jolin-Barrette told the Committee on Citizen Relations Wednesday.

“They have the right to get their money back,” he said. He pointed out airlines and travel agencies are offering credits and vouchers not covered by provincial law. “We have to find a way to make sure Quebeckers who bought trips are reimbursed or receive real compensation. Because we find ourselves in a situation when Quebec consumers are financing the airlines.”

Jolin-Barrette said roughly 60% of travellers from the province have cancellation insurance; often through their credit cards. But he accused them of refusing to compensate passengers. He called the issue his department’s top priority.

There is also the question of whether Canadians want their border reopened. Ottawa and Washington have extended widespread border closure with little public opposition. At home, a poll of Atlantic residents last week found more than 75% opposed reopening the region’s borders to other Canadians.

McNaney is undeterred.

“We have proposed that Canada utilize the same approach as the European Union and begin to re-start international service with select targeted regions,” he wrote. “Similarly, we believe that within Canada we need to obtain alignment across provinces to end quarantine measures in order to re-open domestic air service.”