COVID-19: What does the future of the Canadian airline industry look like?


With news of staff and service changes at Canada’s two largest airlines struggling to stay afloat during the COVID-19 pandemic, experts say the future of the country’s airline industry is uncertain unless the federal government intervenes.
WestJet on Friday announced a wide range of service and staffing cuts, with the cut of 1,000 employee positions due to layoffs, time off, time off and reductions in hours.

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Hundreds of domestic and international flights on the airline’s current schedule are also being canceled.

WestJet said the catalyst for the major changes was new COVID-19 testing requirements implemented by the federal government on Jan. 7 which experts say will only further devastate the already struggling industry.

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Air Canada also reportedly put an unknown number of its employees, mainly in Atlantic Canada, on “off duty” status Friday, according to the International Association of Machinists and Aerospace Workers. Air Canada did not respond to Global News’ request for comment on the decision.

“It’s a crisis,” aviation consultant Rick Erickson said on Friday.

“We were in crisis before. I think we have now stepped into another new solar system of crises.

Erickson said he “can’t understand” why the federal government has yet to step in with some kind of airline relief package.

“At some point we have to ask ourselves: how much more can they reduce? Since they didn’t get five cents from internationals – no sort of bailout from the federal government, ”he said.

“While all of their competition, we have seen that each of the major operators that come to Canada with international services has received some form of government assistance.

Trudeau says talks are underway between Ottawa and Canadian airlines

Trudeau says talks are underway between Ottawa and Canadian airlines

Dr Jacques Roy, professor of transportation management at HEC Montreal, said the airline industry – like many others – is suffering more than most other sectors of the economy from COVID-19.

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Roy said there are currently two major pressures on the industry: airlines wanting restrictions relaxed, so there aren’t as many disincentives for travelers; and the provinces want the federal government to do more to stop travel within and outside the country and, in some cases, across provincial borders.

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He said there was no strong sense of urgency earlier in the pandemic, which he said was because the federal government believed airlines like Air Canada, WestJet and Air Transat had cash reserves they could draw on.

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Now, however, there is great pressure to intervene.

“What the government needs to do now is look at the numbers and see how much money it needs for next year,” he said.

Roy admitted that it would not be easy to come up with an adequate backup plan that is sustainable, and pointed to bailouts for airlines in the United States, which companies quickly destroyed and needed more.

The federal government has also said one of the contingencies of an airline back-up plan would be to reimburse travelers whose trips were canceled at the start of the pandemic.

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Prime Minister Justin Trudeau said on Friday that the Liberals had given nearly $ 1.5 billion to Canadian airlines, through the wage subsidy and “other measures.”

“We know the industry is extremely affected by the COVID-19 pandemic,” Trudeau said.

“People shouldn’t be traveling, and that’s of course a direct challenge for airlines to deal with.

“However, at the same time, we made it clear that we expected people to be reimbursed. We expect regional roads to be protected.

“We’re expecting certain things from the airline industry and these discussions of how we’re going to make sure people are protected while we are providing supports are going on.”

Click to play video 'The airline industry is increasingly frustrated with the change in government COVID-19 guidelines'

Airline industry increasingly frustrated by changing government guidelines on COVID-19

Airline industry increasingly frustrated by changing government guidelines on COVID-19

In the case of Air Canada alone, Roy said reimbursing passengers would likely cost the company more than $ 1 billion. He also said the federal government needs to be careful when giving relief funds to industries where it is possible that senior business leaders can pocket significant sums of what is distributed.

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“I can understand why the government is taking so long, but at the same time it has to do something,” Roy said, adding that air travel in Canada is essential because the country is so big.

“We have to maintain a certain level of service in Canada,” he says.

“If it gets to the point where the airlines are unable to meet the fixed costs they face… if it gets to the point where they can’t survive, then I think the federal government really needs to step in.

Erickson said the federal government needed to establish a more standardized COVID-19 travel testing program, and said the current rules were introduced and implemented over a short period of time, causing confusion among officials. potential travelers and fewer of them on planes.

“How did I go about taking my test? What was acceptable as a test result? Could I be in Cairo and have a doctor come to my hotel to test me and go to the airport with this sheet of paper, would that work? I don’t know, ”Erickson said.

“There were no criteria defined during the overall deployment of the program. As a result, the passengers say, “No, I’m not going”. ”

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Any federal relief package will need to be “real and sustainable” and recognize the important role the airline industry plays in the Canadian economy, Erickson said.

“The benefits that Canadian carriers bring to our national, provincial and local economies are significant,” he said.

“And my fear now, more than I have had at any time during this pandemic situation, is that Canadian carriers are going to be so financially cornered that they will not be able to recover to the same extent. that international carriers who have received a lot of support from their governments – they will not be able to level the playing field in the future.

“As a result, hundreds of millions, if not billions of dollars of economic activity will not occur in Canada, nor from air carriers owned or based in Canada.

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