Airport executives forecast that passenger numbers in 2021 will be even lower than they were in 2020

Recovery could take as long as seven years

Executives at Toronto Pearson International Airport forecast passenger numbers in 2021 will be even lower than the abysmal numbers posted in 2020.

They made the forecast in comments to Members of Parliament Tuesday. The Commons Transport Committee is continuing its study of COVID-19’s impact on aviation.

“We have shuttered 45% of Toronto Pearson,” said Hillary Marshall, Vice President of Stakeholder and Community Relations. “Unfortunately, the worst doesn’t appear to be over and the year has begun with significant additional challenges. These include the emergence of new variants and continued stringent travelling restrictions.”

It could take another five to seven years to recover to 2019 passenger numbers, they warn.

“With these new restrictions that were implemented and announced last week, we expect those numbers to be further reduced,” said Marshall. Last week, the federal government imposed new restrictions on international travellers arriving in Canada. They include forcing arriving passengers to take a COVID test on arrival and pay for a hotel while they wait for the results.

“COVID sucks,” she put it bluntly.

Taking longer

There is a great deal of uncertainty when it comes to any prediction when it comes to COVID. That, as has so often been reported, is having a big impact on the bottom line. Revenues at Pearson were down 65% in the third quarter of the year.

“The recovery is taking longer,” said Marshall. “Airports and air carriers and other participants in our sector are facing incredible challenges financially. And that the investments that we would be making to maintain competitiveness with other global players, we are not able to make right now.”

The government charges airports a fee for the land they sit on. It forgave the payments in 2020 and for many airports for 2021. But the government has only deferred, not forgiven, leases for the four largest airports in Canada this year. Pearson, which makes most of its revenues from passengers and the fees they generate, wants this year’s payment waived.

“We’re still hurting greater than 85%,” said Ian Clarke, Chief Financial Officer of the Toronto Airport Authority. He was referencing his airport’s passenger traffic being down significantly from 2019. “This year we’re probably forecasting lower passenger volume than 2020. In an age when we’re not getting government rent relief or the waver. It doesn’t make sense when we’re going to be worse off than 2020.”

He said all players in the aviation world will have to work hard to convince passengers to travel safely, when the time comes. Pearson will soon launch a pre-departure testing trial in conjunction with the National Research Council. Only Vancouver International Airport has launched a similar pre-departure rapid testing trial. So far, the airport says the trial have returned positive results.

“It is challenging,” said Clarke. “We battling on a number of uphill challenges. As well as the health of our airports and economy, as well as airlines. We’re in for a long road.”

Shared challenges

NAV Canada, the company responsible for air traffic control across the country, shares the bleak assessment.

The agency does not forecast a return to 2019 traffic for another two years. But company Raymond Bohn, who was promoted to president of NAV Canada yesterday, said the recovery date is “likely to be pushed out.”

That translates to losses of about $600 million last year and this year, Bohn told the committee. To make ends meet, NAV Canada has cut 14% of its workforce and raised charges by an average 30%.

It’s also reviewing operations at dozens of airports across the country. Some towers are threatened with closure, despite their airport’s status as international airports.

It all adds up to a political headache for Bohn. Last week, the union representing air traffic controllers warned their members received layoff warnings. That’s despite ongoing operational reviews. Bohn said his agency has not made a final decision around any threatened tower. But he said staff received warnings their jobs may be affected, as part of union procedures.

He insisted NAV Canada will continue to examine possible tower closures, regardless of government support.

“This is part of our normal process,” said Bohn. “To look at what is appropriate in the context. We’ve looked at traffic levels prior to the pandemic, looked at what they will be through the recovery and beyond and want to establish the appropriate level of service.”

Support with care

There have been general calls in Canada’s aviation for government support. While airports are starting to move towards support, negotiations with airlines have sputtered for almost three months.

And Quebec regional carrier Pascan warned against going too far.

“We need a national airline in Air Canada and to improve its international standing,” said Yannick Gagnon, Pascan’s Vice-President and Chief Financial Officer. “But we have to avoid the trap of subsidizing large carriers and forcing them to return to regional routes and engaging in unfair competition with smaller airlines.”

Since March, Air Canada has abandoned or suspended dozens of regional routes. While that has cut communities off from national air networks, it has opened new opportunities for smaller carriers.

Julian Roberts, Pascan’s President and Chief Executive Officer, said his small airline spotted opportunity when the country’s largest carrier pulled out.

“We have 150 employees, we love this business,” Roberts told the committee. “When we saw Air Canada pulled out, even in a pandemic, we were able to turn a profit. For us it was amazing.”