Sunday, November 08, 2020

Canada ready for talks on aid to airlines, which could include loans

By Steve Scherer

OTTAWA (Reuters) - Canada is ready to start talks with major airlines this week about financial assistance to the hard-hit sector that could come in the form of loans or other support, Transport Minister Marc Garneau said on Sunday.

The government is drafting a package of measures for Canadian airlines, airports and the aerospace sector, Garneau said in a statement, confirming an exclusive story last week by Reuters.

“As part of this package, we are ready to establish a process with major airlines regarding financial assistance which could include loans and potentially other support to secure important results for Canadians,” Garneau said.

He said it would ensure that regional communities would retain their connections to the rest of Canada, the world’s second-largest country by area, and added that “strict conditions” would come with any aid.

Garneau also said Canada would not spend “one penny of taxpayer money on airlines” until Canadians received refunds for flights that were canceled due to the coronavirus pandemic.

While several countries, including the United States and Australia, have offered billions in direct emergency support to their airlines, Canada has not.

Air Canada AC.TO and WestJet, the two main carriers, and transport unions have been pleading for help for months as passenger demand cratered.

Air Canada has already laid off around 20,000 workers, about half its workforce. According to the Canadian Airports Council, Canadian passenger traffic from April through August was down 92% from the same period in 2019.

“The air sector cannot respond to these challenges on its own, given the unprecedented impacts on its operations,” Garneau said.


Airlines must refund customers for cancelled flights before they get federal aid, Garneau says

ERIC ATKINS TRANSPORTATION REPORTER
PUBLISHED NOVEMBER 8, 2020

Transport Minister Marc Garneau says airlines must refund customers' money for flights cancelled in the COVID-19 pandemic before the carriers receive any federal government aid.

The government is readying a long-awaited package of financial bailouts for Canadian airlines, airports and the aerospace industry, which have seen customer demand and traffic plunge owing to fears of catching the deadly virus, border closings and travel quarantines. Negotiations are to begin this week, and will include a requirement that customers get their money back for cancelled flights, Mr. Garneau said in a statement.

Canada’s airlines have, in most cases, collectively hung on to billions of dollars in fares for flights that never happened, offering credits instead and angering thousands of customers. The carriers face financial straits as about 90 per cent of flights have been grounded, while some, including Porter Airlines, have suspended all service.

On Sunday, Mr. Garneau signaled airlines that want government help will have pay back customers. “Before we spend one penny of taxpayer money on airlines, we will ensure Canadians get their refunds,” he said in the statement, without elaborating.

“Wow,” said John Gradek, who teaches aviation leadership at McGill University. “That’s putting a line in the sand, isn’t it? He’s making a definitive statement in terms of what has to be done.”


The Canadian Transportation Agency has received about 8,000 complaints from airline customers since mid-March, when airlines cancelled most of their flights and governments closed borders and issued stay-at-home advisories. Most carriers have added a few flights since the spring, but cancellations continue amid low demand owing to a resurgent virus and travel restrictions.

Canada’s borders are closed to most non-essential travelers, and those who enter are required to self-isolate for 14 days.

“We have heard from many Canadians who have been negatively affected,” Mr. Garneau’s statement said. “When the unprecedented pandemic broke out in the spring, Canadians who had already booked travel ended up stuck with vouchers for trips they could not take instead of getting refunds. They found themselves in a situation where they have given thousands of dollars in interest-free loans to airlines.”

He said the government will ensure Canadians and regional communities retain air connections to the rest of Canada, and that air carriers maintain their status as key customers of Canada’s aerospace industry.

“Any assistance the government of Canada provides will come with strict conditions to protect Canadians and the public interest,” the statement said.

Mr. Garneau was not available on Sunday for an interview.

WestJet Airlines Ltd. recently broke ranks with its rivals, offering refunds to some customers who paid for flights that were cancelled because of the pandemic. The refunds will take as long as nine months to arrive, and do not apply if the customer cancelled. “We will evaluate this afternoon’s statement from the government of Canada and will await greater clarity on what support for the aviation sector might include,” WestJet said in a statement on Sunday.

Air Canada has said it has provided more than $1-billion in refunds where required by law, in Europe and the United States, but generally offers credits for cancelled domestic flights. It has about $2.4-billion in prepaid fares, according to its most recent financial report. The airline had more than $9-billion in liquidity as of June 30, but has been spending about $16-million a day to keep operating, and posted a loss of $1.7-billion in the second quarter. (Air Canada is scheduled to report its third-quarter results on Monday morning.)

An Air Canada spokesman declined to comment on Sunday, and pointed to a statement by the National Airlines Council of Canada, an industry group that said it welcomed the government’s efforts to stabilize the industry but did not address the question of refunds.

The statement quotes Mike McNaney, head of the group, as saying: “Airlines are struggling to remain viable because of the economic chaos created by COVID-19.”

Mr. McNaney could not be immediately reached by phone on Sunday.

Montreal-based leisure airline Transat AT Inc., which has $564-million in non-refunded fares, said the government aid will help it reimburse customers, and it is eager to learn about the package. “Most of our foreign competitors have received massive aid from their governments many months ago,” spokesman Christophe Hennebelle said.

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