Air Canada

Trump Europe travel ban poses challenge for Air Canada

An Air Canada Boeing 787 lands at Vancouver International Airport in July 2019 (photo: Brett Ballah).

A decision by the President of the United States to ban travel from Europe for 30 days will have a knock-on effect for Canada’s largest airline, Air Canada, which has built a business of connecting passengers from the U.S. to Europe through its Canadian hubs.

Donald Trump announced Wednesday that, starting travel between Europe and America would be suspended to confront the threat posed by the global Covid-19 pandemic.

“After consulting with our top government health officials,” Trump said in a nationally-televised address, “I have decided to take several strong but necessary actions to protect the health and well-being of all Americans.

“We will be suspending all travel from Europe to the United States for the next 30 days. The new rules go into effect Friday at midnight.”

The ban would also apply to Canadians who have been in Europe in the 14 days before going to the U.S., according to a statement released Wednesday evening by the Department of Homeland Security.

At the same time, the President said the restrictions would not apply to the United Kingdom or to U.S. citizens and permanent residents. He had already restricted travel from China and other affected countries to the U.S.

The move is a blow to Air Canada, which has built a sizeable business connecting passengers from the U.S., through its Canadian hubs – notably Toronto and Montreal – on to European destinations, called the International Transit Strategy.

“We expect to see year over year revenue growth in the U.S. transborder market,” said Lucie Guillemette, Air Canada’s Chief Commercial Officer, in an investor call in February. That growth came despite the ongoing grounding of the Boeing 737 Max forcing the airline to juggle schedules and the earliest indications of the Coronavirus then affecting traffic to China.

“In the last seven years, the strategy has delivered very strong results and has been a key component of our profitable international growth.”

Airlines around the world have slashed schedules due to the pandemic. Air Canada has already suspended flights to China and Italy. United has slashed international and domestic flights, and QANTAS has grounded all but two of its giant Airbus A380 aircraft as a result of falling traffic.

Domestically, there are indications Covid-19 is having an impact on traffic within Canada.

Alberta Premier Jason Kenney gave an indication of the impact on Westjet in remarks to reporters as he boarded a flight in Calgary.

“Reduction in spending amongst energy companies will affect everything from the hospitality sector, of course tourism, you can see this here at this airport,” he said, motioning to a largely empty terminal.

“Westjet, a great Alberta-based company. I spoke to Ed Sims the [Chief Executive Officer] yesterday. Their loads and cash flow are down dramatically.”

In response to the crisis, Westjet plans to cut 12% of its capacity from the schedule, and has frozen hiring, discretionary spending, and is offering employees voluntary unpaid leave. Sims expects route cuts to hit all aspects of the airline’s operations.

“While many actions have been taken to protect the health and safety of our guests, our teams and our business, significantly weakened demand across the network requires us to protect the financial well-being of the WestJet Group of Companies,” he said in an e-mail to employees.

Both Air Canada and Westjet have announced special aircraft cleaning as a result of the pandemic, as well as reserving the right to refuse travel to people who appear ill.

“In response to market demand and extensive quarantine decisions, we’ve temporarily suspended or reduced service to more impacted areas such as the People’s Republic of China, Hong Kong, South Korea, and Italy,” said Air Canada CEO Calin Rovinescu in an e-mail to passengers Wednesday. “We will continue to adapt our schedule and route network as developments unfold.”

Air Canada and Westjet have each relaxed change and cancellation fees as a result of the outbreak, as well as more thorough cleaning of their aircraft to prevent the spread of the virus.

Categories: Air Canada, Westjet