Air Canada

No timeline on Canadian aviation restart plan

Advertisements

Minister says Canadian officials are working on a plan to safely restart air travel once the pandemic abates, but declines to lay out a timeline

The Air Canada A220 retrojet. The airline has been vocal in demanding a restart plan from the federal government (Air Canada).

Canada’s Transport Minister told reporters Tuesday his government is working on a plan to restart the country’s aviation industry, but declined to give a timeline for implementation.

“I know it’s frustrating for many industry players and operators, because it’s really been hard,” said Omar Alghabra.

He is facing increasing pressure from the airline industry to lay out his vision for an industry restart. For more than a year now, capacity and passenger numbers have been a fraction of what they were before the pandemic.

“After over 14 months of restrictions, Canadians – who we know are eager to travel – want and deserve clear guidelines,” said Air Canada President and Chief Executive Officer Michael Rousseau last week. “They want to know when they will be able to travel internationally again and under what protocols. They are seeing other countries, articulate clear and safe plans, and they want to hear what Canada’s plan will be.”

“I understand the anxiety and the sense of urgency,” said Alghabra. “And we want to restart, we want to see a gradual and a safe restart of the travel sector. And we are working with, with stakeholders in the sector on what that’s going to look like the challenge that continues to be is the timing.”

Alghabra said work is going on behind the scenes to develop a plan. It includes health authorities, airports, and airlines, he said.

“We need to obviously prepare for it,” he said. “We need to standardize it and coordinated with with like minded countries around the world. So there’s discussion about what a vaccine certificate would look like. What are the thresholds? What are the testing regimes that need to stay in place, etc etc? And that work is ongoing as we speak.”

Advertisements

Details of airport funding plans

Alghabra made the comments as he announced details of a plan first announced in the fall, to support airports. Specifically, he released a list of 22 airports eligible for financial aid. They include airports in every provincial capital, other mid-sized airports, and a pair of municipally-owned facilities. They will share in a $64.8 million fund “to help maintain operations and mitigate the risk of airport insolvency.”

Airports will receive funding based on their 2019 revenues. For example, Edmonton International, the largest airport in the group, had $231 million in revenue in 2019. It should receive $6.1 million in funding. The airport welcomed the money.

“We’re going to carefully review the criteria and programs before we can comment on how we may be eligible to access these aid programs and what level of funding we may receive,” said Steve Maybee, the Vice President of Operations and Infrastructure at Edmonton International Airport. “We hope the funding will support 50-50 cost sharing on our key safety projects at EIA. We’ll continue to collaborate with the government on a national approach to testing to support the safe recovery of travel in a timely manner.”

Regina, which had $28 million in 2019 revenues, should receive $2.6 million.

Canadian aviation operates under a user-pay model. That means the collapse in passenger numbers due to COVID-19 cut deeply into industry revenues.

The government left airports in Toronto, Montreal, Calgary, and Vancouver off the list. They are the four largest hubs in the country, and collectively, lost $1.2 billion in 2020. Toronto reported Tuesday further losses of $127 million in the first quarter of 2021. The airport handled only 1.1 million passengers over the first three months of the year.

Alghabra also confirmed almost $490 million is left to spend in a fund set up to help pay for critical airport infrastructure. Ottawa has already spent $100 million from the fund to help pay for a new train station at Montreal International Airport.

Further action will be required

The association representing Canada’s largest airlines welcomed the funding.

“Today’s announcement provides further details on programs that were announced last year and provides support that is required as the sector continues to reel from the impact of the pandemic,” said Mike McNaney, President and CEO of the National Airlines Council of Canada in a statement. 

“Further action will be required,” he said. “Following the example of other countries such as the United Kingdom, and as vaccination rates increase rapidly in Canada, the most effective step the government must now take is to work with the sector to develop and launch a clear recovery plan for aviation and travel.”

Airlines say it wouldn’t take a lot of time to restart operations from a technical and staffing point of view. But passengers will need time to make plans and buy tickets. As it is, airlines are not forecasting demand beyond a month at a time right now.

“Establishing the parameters for the safe restart of the sector, and clearly conveying a plan to the public, is essential if we are to continue to effectively support public health and Canada’s overall economic recovery in communities large and small across the country,” said McNaney. “Countries that properly plan will not only safely restart aviation and their overall economy, they will take jobs and investment from countries that do not.”

Cautious optimism

Airlines do see some reason for optimism, as vaccination rates increase, even as Canada finds itself in the middle of a vicious third wave of the pandemic.

“We are optimistic about the continued vaccine rollout in Canada and around the world,” Air Canada Chief Operating Officers Lucie Guillemette recently told analysts. The airline lost $1 billion in the first quarter and is counting on a travel restart to boost its fortunes. “We have seen relative demand strength in Canada, despite inter-provincial travel restrictions and lockdown measures. Specifically, domestic transcontinental long-haul markets continue to show the greatest strength, followed by gains in key intra-West markets.

“Once a critical mass of Canadians is vaccinated and the number of COVID cases begins to flatten,” she said, “we anticipate restrictions and lockdown measures will begin to be lifted. We expect this will lead to an increase in domestic travel demand.”

Guillemette pointed to the United States, which has seen traffic rebound since February. On Tuesday, the Transportation Security Administration screened more than 1.6 million passengers, more than double the number in early March. Still, the number of passengers was a third less than in 2019. Passenger numbers in Canada on the same day were down 91%.