WestJet cuts ‘just the vanguard’ if federal government fails to provide aid to airlines: experts

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As Canada grapples with a second wave of the novel coronavirus pandemic, experts say the airline industry needs government help quickly, if it is to recover.On Wednesday, WestJet announced it would “indefinitely” suspend flights across Atlantic Canada and to Quebec as the COVID-19 outbreak continues to wreak havoc on the travel industry.








WestJet cuts more than 100 flights to Atlantic Canada as pandemic makes service ‘unsustainable’

WestJet cuts more than 100 flights to Atlantic Canada as pandemic makes service ‘unsustainable’

In total, more than 100 flights to the region will be “wiped out”. WestJet says that equates to almost 80%. 100 of its carrying capacity in Atlantic Canada.

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Ed Sims, President and CEO of WestJet, said the lack of travel demand “combined with national quarantines means that, unfortunately, we can no longer maintain our full Canadian service network.”

Robert Kokonis, president of AirTrav Inc., said WestJet’s announcement was just a “precursor” to “much more terrible news to come” regarding Canada’s aviation industry if the federal government did not not intervene soon.

“We’re going to see unravel what took our nation’s major carriers not years, but decades to build, and it’s all going to unravel in a matter of months,” he told Global News. “It will have a huge impact on jobs, the interdependent ability of our carriers to connect Canada to the world unless we do something.

“So today’s announcement is just the vanguard, unless we do something quick.”

Read more:

Porter Airlines of Toronto extends flight suspension until December 15

Additionally, WestJet is not the only airline in Canada to report struggling as the pandemic continues.

On Tuesday, Porter Airlines of Toronto announced it would extend its flight suspension until December 15.

In a press release Sunday, Air Canada said it had agreed to revise terms with Transat AT – Air Transat’s parent company – to pay $ 5 per share for the company.

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The new deal marks a sharp drop from the $ 18 per share originally promised in the takeover bid.

Kokonis said the industry would not be able to recover without help from the federal government.

“We have seen $ 123 billion in aid provided by governments around the world directly to the airline industry,” he said. “We haven’t seen any in this country.”










WestJet executive calls for federal support after company cuts flights and jobs


WestJet executive calls for federal support after company cuts flights and jobs

“So unless the federal government thinks we can rebuild the industry in a year or two, they’re dreaming.

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The federal government created the Large Employer Emergency Funding Facility (LEEFF), which provides loans to large employers starting at $ 60 million. However, Kokonis said the proposed interest rates – at 6% the first year and 8% the following year – were “not sustainable” for Canadian air carriers.

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Earlier this month, three unions representing thousands of the country’s airline workers asked the government for $ 7 billion in aid for the industry.

Kokonis, however, said the airlines are not looking for bailouts, but rather “loan guarantees” at an “attractive interest rate” of around one or one and a half percent.

He said the industry also needed government support to test for the virus.

“We need support loans [and] government support for rapid testing, ”he said. “We’re not looking for grants, we’re not looking for free money, we’re not looking for bailouts.”

A monopoly in the Canadian airline industry?

Ambarish Chandra, associate professor of economics at the University of Toronto, told Global News that WestJet’s cut in services means the country’s other major airline, Air Canada, could monopolize domestic and international routes.


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WestJet cuts jobs and flights to Atlantic Canada


WestJet cuts jobs and flights to Atlantic Canada

This means Canadians may have less choice over who they want to fly with once the pandemic is over.

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“I’m sure it’s disappointing for travelers and for people who want a choice and people are going to see reduced service in their communities,” he said.

“But, you know, you can understand why WestJet is making these decisions and why, you know, other airlines are making these decisions.

Read more:

The future of the Canadian aviation industry

A “new normal”

Airline pilot Dominic Daoust said he was “not surprised” by WestJet’s announcement.

“This news that we receive today, I think is a reminder of the state of the industry,” he told Global News. “And unfortunately, I think that tells us that things are going to get a bit worse for the industry before they get better.”

However, Daoust said he was “optimistic” that things will improve.

“I think eventually the airline industry will restart,” he said. “Before all of that, you know, if you go back a year ago, the airline industry in Canada and around the world was really booming.

Daoust said that before the COVID-19 epidemic, there was a shortage of pilots, the frequency of roads was increasing and demand was high.

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Lethbridge family demands cash refund after WestJet cancels flight due to lack of demand


Lethbridge family demands cash refund after WestJet cancels flight due to lack of demand

“Now this pandemic has struck, and it all kind of stopped,” he said. “And now we have to weather this storm.”

He said that until there is some sort of “drastic change” in the pandemic, or the government “is ready to subsidize airlines to get them restarted,” the industry will have to wait.

However, Daoust said he believes the demand for travel “is still there,” adding that once a treatment or vaccine is developed to treat COVID-19, he is confident the industry will start to bounce.

Read more:

WestJet cuts more than 100 flights to Atlantic Canada as pandemic makes service ‘unsustainable’

But it’s still not clear what exactly that will look like.

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Kokonis said he doesn’t think the industry will return to what it was before the pandemic, adding that Canadians will likely see a “new normal”.

“We’re going to see a permanent downsizing across the industry as some carriers around the world go bankrupt,” he said. “We hope we don’t see this in Canada.”


Click to play video 'WestJet cuts more than 100 flights to Atlantic Canada as pandemic makes service' unsustainable '







WestJet cuts more than 100 flights to Atlantic Canada as pandemic makes service ‘unsustainable’


WestJet cuts more than 100 flights to Atlantic Canada as pandemic makes service ‘unsustainable’

He said that over the next three years, carriers with lower costs and focusing on leisure travel “will likely do better.”

The long-haul, premium travel market will likely be the slowest to recover, he said.

“But it’s gonna take at least five years, I think, to get back to what we were [in] 2018, [or] 2019, ”Kokonis said. “But even at that, we’re going to see systemic and lasting changes spill over into our industry.”

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Chandra said parts of the industry may never recover.

“There’s reason to believe that business travel in particular might never recover, as many employers might find that, you know, online or Zoom meetings just as well as face-to-face meetings. face to face, ”he said. “They may decide not to send their employees to trade shows, conventions, meetings with clients or site visits because they realize that (they) are not needed, at least not. in the preceding figures. ”

He said these are all things the government should take into consideration when deciding whether it is appropriate to bail out the airline industry.

– With files from Alexander Quon of Global News and the Canadian Press

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© 2020 Global News, a division of Corus Entertainment Inc.



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