Canadian airline group 'disappointed' in Liberals' fiscal update

Alicja Siekierska
·4-min read

A group representing the Canadian airline industry says it is disappointed that the federal government did not include a financial relief package for the battered sector in its fall economic update.

The Liberal government unveiled hundreds of millions of dollars in spending aimed at supporting regional carriers and airports, including waiving rent payments for small and medium-sized airports.

But the government stopped short of releasing a highly-anticipated financial aid package for Canadian airlines, something the industry has called for for months.

The chief executive of the National Airline Council of Canada – an industry group that represents Air Canada, WestJet, Air Transat and Jazz Aviation – said it is “quite disappointed” that the government has yet to provide a financial aid plan for the ailing sector.

“We had hoped to see a plan, a path forward for aviation and tangible action by the government that recognizes that a sound aviation sector is critical to our overall economic recovery,” NACC CEO Mike McNaney said in an interview.

“What we have is a statement that the government has made several times over the past several months that it is working on a process.”

Ottawa has said it will provide a financial aid package for the Canadian airline industry, but only if airlines provide refunds to passengers whose flights were cancelled as a result of COVID-19. According to a report in the Globe and Mail, the government also wants the airlines to open their books to the government, protect certain flight routes, and refrain from cancelling orders for made-in-Canada planes.

The government reiterated its plan in its 237-page fiscal update.

“The government is establishing a process with major airlines regarding financial assistance,” the government said. “As part of this process, the government will ensure Canadians are refunded for cancelled flights.”

Rent relief and nearly $700 million in capital investments are en route to airports over six years. About $206 million in further support is bound for regional aviation, including smaller airlines, via a new “regional air transportation initiative” overseen by development agencies.

McNaney said that airlines were hoping the government would address the industry’s liquidity issues as well as release a national rapid-testing plan that would ease travel restrictions.

The government said it is exploring options to enhance the Large Employer Emergency Financing Facility (LEEFF), a program that airlines such as Air Canada could likely qualify for. However, McNaney said the terms and conditions of the program don’t work for the airline industry. LEEFF offers loans of $60 million or more to large businesses facing cash problems, but comes with an interest rate that jumps to eight per cent from five per cent after the first year — far above typical private-sector lending rates.

“What we’ve been looking for is low-interest loans and loan guarantees. The LEEFF program does not fall into that category,” he said. “This was a missed opportunity.”

John McKenna, the president of the Air Transport Association of Canada, said the plan provided no meaningful assistance to the hurting industry.

“The Air Transport Association of Canada is very disappointed that the Government has yet to show any real interest in helping the Canadian air transport sector,” he said.

“There was absolutely nothing in yesterday’s Financial Update to help air carriers of any type.”

The COVID-19 pandemic, subsequent border closures and quarantine restrictions have led to cratered demand across the global airline industry. Passenger levels are down nearly 90 per cent. Air Canada and WestJet, the country’s two largest airlines, have cut capacity, suspended dozens of routes and laid off thousands of employees.

At the same time, many passengers have not received refunds for cancelled flights. The Canadian Transportation Agency received 8,000 complaints between mid-March and the end of August, most of which are believed to be related to refunds. Passengers have also filed a handful of proposed class-action lawsuits and three petitions garnering more than 100,000 signatures that call for customer reimbursement.

With files from the Canadian Press

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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