Air Canada

Aviation on ‘verge of collapse’ in Atlantic Canada

Air Canada suspends all service from Sydney and Saint John and suspends four additional routes

Cuts come against a backdrop of anger at the airlines over the issue of refunds for passengers whose flights were cancelled due to COVID

aviation atlantic canada
An Air Canada CRJ sits on the tarmac at Sydney Airport in July 2020 (Twitter/@flyYQY).

Aviation in Atlantic Canada is on the ‘verge of collapse’ according to the area’s airports after a new spate of flight cancellations by Air Canada in the region.

Airports were advised of the cuts Tuesday. Air Canada is withdrawing from Sydney, Nova Scotia and Saint John, New Brunswick. That leaves both airports without scheduled service. It is cutting service on another four routes in the region.

“This is a massive blow, absolutely catastrophic to Cape Breton Island.” said Mike MacKinnon, the Chief Executive Officer of J.A. McCurdy Sydney Airport. “Our airport has been repeatedly slashed by air service cuts ever since the pandemic began and now this announcement, on top of the recent WestJet route suspensions is effectively the final nail in the coffin for air service to/from our community for the foreseeable future.”

Before the pandemic, Sydney had air service to Halifax and Toronto. Now, it’s down to nothing.

“This is the third major round of cuts to air service for our region in the last six months,” said Derrick Stanford, president of the Atlantic Canada Airports Association and chief executive of Saint John Airport. “Service has been whittled down to an unsustainable level for our airports. Our industry cannot survive and operate in these conditions, and we are seeing the worst-case scenario playing out here today.”

“The second wave of COVID-19 infections is piling added pressure on a sector on the verge of collapse,” the ACAA said in a release.

Cuts in a time of anger

The cuts take effect in January. They are on top of 30 route cancellations and eight station closures Air Canada announced in June. Most of those cancellations affected Atlantic Canada. Likewise, Westjet has withdrawn most of its services from the region.

Passenger traffic in the Atlantic provinces has been decimated by government policies restricting travel into the region. While the area briefly enjoyed a so-called ‘Atlantic Bubble’ allowing travel within the region, the pandemic’s resurgence has led to the bubble’s collapse.

Air Canada’s announcement came against a backdrop of anger and frustration playing out almost 1,000 km to the west. In Ottawa, the Commons Transport Committee heard Tuesday from consumer groups. They hammered the airlines and regulators over the issue of refunds for cancelled flights.

Airlines, with the exception of Westjet, have generally refused to refund passengers their fares when flights were cancelled because of COVID-19. Instead, they have issued vouchers for future travel for most passengers. The issue is the subject of at least two lawsuits.

“The airlines have to issue those refunds,” said Gabor Lukacs. He’s the founder of Air Passenger Rights and a fierce critic of airlines and regulators on the issue of refunds. “Those airlines may need some help down the line, but there’s no sign the airlines are on the brink of bankruptcy. If the airlines are in the position of being unable to issue refunds, as opposed to unwilling, there are proper procedures in this country for dealing with that.” One of those measures includes seeking bankruptcy protection.

Lukacs estimates airlines are holding more than $3.8 billion in non-refunded fares. That would translate to upwards of three million affected passengers. “The exact numbers belong only to the airlines,” he said. “And they should be producing that data.”

Conservative MP Doug Shipley called the figures “mindboggling.”

Conditional aid for airlines

Canada’s Transport Minister has made refunds a condition of any federal help. Marc Garneau made the announcement a month ago, but talks since then have been mired in secrecy.

“They’ve announced they’re going to do a deal,” said Ian Jacks, the Vice President of Public Affairs for the Canadian Automobile Association, one of the largest tour and travel organizations in the country. “We will quite possibly be moving onto a one-year anniversary of the first people having their money disappear into an airline’s coffers and not getting it back after a cancellation before we start seeing any cheques issued.

“The situation has quite simply dragged on for too long,” he said.

“The law has been, and remains, that a passenger has a fundamental right to a refund,” Lukacs told the committee.

And being in financial difficulty is not an excuse, he said.

“Even if they were in financial distress,” Lukacs continued, “it does not mean they can pick and choose which creditors they are paying first. Passengers’ money and airfares paid in advance is often money held in trust.”

Tuesday’s developments are more signs of the financial stress facing Canada’s aviation industry. Airlines argue they have to reduce service because they can’t afford planes to fly empty. When airlines pull out, airports lose most of their revenues. That’s why airports in Atlantic Canada say the aviation industry is on the verge of collapse.

Over the summer, Atlantic Canada lost 3.7 million passengers compared to a year ago. And the fall has seen conditions deteriorate further.

But still, somehow, aviation staggers on.

“YSJ is still here, still operating for private air service and medical emergencies,” said St John airport’s Derrick Stanford. “We’re looking forward to Air Canada’s return – as well as the return of all our airline partners and passengers – so that YSJ can continue to serve our business and leisure travellers and contribute to our region’s recovery and economic growth plans.”

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