Canada’s airports estimate up to 100,000 aviation employees have been laid off
Airports detail hundreds of millions in needed pandemic relief over the next five years
Canada’s airports are asking Ottawa for hundreds of millions of dollars in pandemic relief and “time is truly of the essence.” The Canadian Airports Council made the plea in a letter sent to the Finance and Transport Ministers last week, ahead of a budget update expected this fall. Western Aviation News obtained a copy of the letter.
Since March, airports have watched the bottom fall out of their bottom lines. The pandemic decimated air travel around the world, hobbling airports that rely on passenger revenues. Canada’s Airports expect to lose as much as $4.5 billion in revenue this year and next.
Airports are right now finalizing their budgets for the coming year. “They are doing so without any insight into how active a partner the federal government is going to be to help them navigate the coming year,” reads the CAC’s letter.
“We’ve been talked about lots,” said Daniel-Robert Gooch in an interview. He’s the President of the Canadian Airports Council, a national airports advocacy based in Ottawa. “We’ve been told we’re a priority for seven months.”
While there’s been lots of talk, there’s been little action.
“It’s clear that this is a government that wants to help individuals and not companies,” he said, “but [that] hasn’t quite squared with the fact that those individuals will need to have jobs.”
Half of on-airport jobs gone
The Council estimates half of all airport jobs have disappeared since March. Across the country, that adds up to 100,000 people. The total includes pilots, flight attendants, baggage handlers, and ground crews. But it also includes airport hotel staff, servers, air traffic controllers, cooks, customer service personnel, and janitors. The list goes on.
To keep planes moving, the CAC has suggested a number of ways to prop up airport finances. First would be to forgive federal land lease payments for the eight largest airports in the country for the foreseeable future. The CAC also recommends eliminating land lease charges forever for the next tier of airports. Last year, these payments to the federal treasury amounted to $415 million. Ottawa has forgiven the lease payments this year. But since leases are tied to airport revenues, the payments wouldn’t have amounted to much in 2020. Barring a major turnaround, they won’t generate much next year, either.
“We want to see rent relief but we want to make sure that the government understands – particularly for the smaller airports – it’s not enough,” said Gooch.
A debt march
Not enough because airports have to spend millions to keep their facilities up to code. Since 1995, the federal government has spent $785.9 million to help fund capital projects at small airports. That works out to an average $31 million a years spread over more than 100 airports. The CAC is asking for $95 million per year for the next five years.
As an example, Gooch points to one of his smaller airport-members.
“They’ve been running through their cash reserves simply to keep the doors open,” said Gooch. “They told me earlier this year that they were bleeding about $250 thousand a month. The wage subsidy … was giving them $50 thousand a month. So they’re still bleeding $200 thousand a month. And they’re using their cash reserves that they would have used to pay for a runway project that the federal government could help with.”
Once the cash is gone, who will pay the bills? One option is to pile on more debt – airports expect to add $2.8 billion in debt over the next 18 months. Another more extreme scenario is to apply for bankruptcy protection.
“There’s a bit of a debt march going on,” said Gooch.
Government ‘fully seized’ with the issue
“We are fully seized with the issue of how hard the air sector has been hit because of COVID-19,” wrote Livia Belcea, the Press Secretary to the Minister of Transport, in an e-mail.
Gooch takes heart from a brief mention of aviation in its most recent Speech from the Throne. In it, the government touted unspecified support for regional aviation.
“We are closely following the difficult and unprecedented situation that has unfolded from the heath crisis we are all living through, and that is having a particular impact on this critical sector of the Canadian economy,” wrote Belcea. “We have made it a priority to find solutions that will ensure airlines sector is on sound footing when the economy recovers. During this important recovery phase of the pandemic, any additional measures relating to air travel will be announced in due course.”
Airports, however, are running smack dab into that “due course” right now.
Setting their budgets
This fall, the non-profit authorities that govern airports are setting their budgets for next year. In the absence of pandemic relief, many airports have already cut staff and cancelled capital projects.
On top of that, airports are trying to raise cash any way they can. On Monday, Halifax International joined Toronto and Winnipeg in raising airport improvement fees. The AIF, charged to departing passengers, will increase from $28 to $35 starting January 4.
“We have very few options to deal with a financial crisis of this magnitude – it’s unlike anything we have experienced in 20 years of managing the Halifax airport,” said Joyce Carter, the airport’s President & Chief Executive Officer. “Our only options to generate more revenue in this environment are through additional borrowing and fee increases, and we can’t continue to borrow our way through this crisis with no end in sight.”
To avoid further increases that could cripple aviation’s meagre recovery, the CAC is also turning up the heat on another front: direct subsidies.
“If we got increased money for [Airport Capital Assistance Programme] and rent relief,” said Gooch, “government would probably feel like they’ve done a great service to the industry and we would be not that much better off for the next few years than we are now.”
A fight for survival
Then there’s that as-yet-unspecified regional travel programme.
“We are committed to providing assistance to Canada’s air sector, so that it may continue to serve every region across our country,” said the government’s Belcea.
“We don’t know what that is,” said Gooch. Meetings at the ministerial and bureaucratic level have yielded no firm answers. “Nobody can tell us what’s being looked at there. We have seen regional connectivity deteriorate. There was a lot of attention to Air Canada’s withdrawal from certain markets. And that really should have been seen as an indication that the air carriers needed to retrench.”
Communities such as Bathurst, New Brunswick and North Bay, Ontario now find themselves without network airline connections, thanks to the pandemic. And the fear is a decade’s worth of growth is being wiped out.
“The fear that we have is that permanent structural damage is happening now,” said Gooch. “There seems to be a sense that ‘we don’t have to pay attention to this right now, because people don’t want to travel right now.’ But the fear that we have is that when Canadians are ready to travel again, the air service options, the affordable options, the competition, the range of destinations, the regional connectivity, will all have deteriorated.”
How much pandemic relief do airports need?
The Airports Council is loath to put a precise dollar figure to the pandemic relief it’s asking for. Much of that is because there’s so little certainty around what the fall and winter will bring. Beyond that, it’s anyone’s guess.
A simple calculation based on available data shows the request is easily in the hundreds of millions over several years.
It’s a big ask.
But on the flip side, the largest airports have been funding their own operations and capital programmes for almost 30 years. That has saved the treasury untold billions.
Gooch notes that when Ottawa started devolving airports to local authorities in the 1990s, it promised to guarantee the viability of the air transport sector. “Well, if ever there was a time for the government to step in and play that role, it’s now.”
Editor’s note: In an earlier version of this article, Daniel-Robert Gooch was quoted as saying “It’s a bit of a death march going on.” After publication, Gooch contacted Western Aviation News to say he’d misspoken and meant in fact to say “debt march” and regretted his choice of words. Out of respect to the tens of thousands of people killed in death marches during war, the Holocaust, slave trading, and revolution, we have agreed to change the quote.
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Categories: Canadian airports and cities