The National Airlines Council of Canada (NACC) representing major Canadian airlines (Air Canada, Air Transat, Jazz Aviation LP and WestJet), wrote today to Canada’s newly-appointed Finance Minister Chrystia Freeland, requesting the development of a support plan for the country’s aviation industry.
The council warns that if the state does not provide a support program for the airline companies, Canadian airlines will move beyond the current Large Employer Emergency Financing Facility to maintain the survival of aviation industry.
According to the council, Canada’s aviation industry remains at stage zero as far as economic recovery, with no time frame on when they will move forward. NACC says that if the federal government’s conclusion that aviation will remain at stage zero, they must reexamine the government’s decision to not provide financial support to aviation.
“Several months into the COVID-19 pandemic, the impact on major Canadian airlines, our employees, and the communities we serve has been devastating. Tens of thousands of employees have been laid off,
service has been reduced or eliminated, and billions of dollars in aircraft are parked as carriers continuously try to rationalize service and fleet size,” wrote the council.
Canadian airlines are struggling to maintain operations and remain viable in the face of a 90% to 95% drop in revenue, without a clear time frame for recovery. They are continuing to invest millions of dollars in ongoing cleaning, sterilization and operational procedures in response to the pandemic.
“However despite the extensive work undertaken by industry and governments to adopt global best
practices and despite the careful movement forward in other countries to re-open aviation on a targeted
basis, in Canada we remain at Stage Zero. The various travel, border and quarantine measures
implemented in the earliest days of the pandemic are still in affect, with no time frame on when this will
change,” said NACC in the letter.
Canadanian government has not agreed to accept international re-opening, yet. NACC also criticizes the state for not achieving a consistent approach within Canada concerning quarantine and travel measures for domestic flights.
Canadian Airlines’ Support Principles
The NACC’s letter includes a number of principles it believes should be followed in developing an industrial approach that:
• Provides support to the Canadian airlines in the form of loans, loan guarantees or direct assistance to maintain financial liquidity.
• Ensures assistance is provided on an industry-wide basis and does not distort the competitive landscape of the sector or discriminate against any carrier.
• Recognizes the industry has already initiated wide scale reductions in operating costs and capital
expenditures, and that revenue has fallen beyond the means of even the most extreme cost cutting measures to address.
• Recognizes recovery is going to be a multi-year process and ensures government financial terms reflect the potential lengthy downturn in industry revenue.
• Recognizes the level of debt the Canadian airlines is already accumulating, and ensures assistance is on terms that minimizes the medium and longer-term impact high debt levels will have on the sector’s
• Benchmarks assistance in Canada against similar programs provided in the European Union
and the United States.
“Our members look forward to working with Minister Freeland in her new responsibilities. While we would have preferred that our first letter to the Minister did not move immediately to policy requirements, the devastating impact of the pandemic on our industry, and the reality that there is no clear timeframe for when government will allow aviation to move forward, requires us to urgently look at sectoral support for airlines”, said NACC President and CEO Mike McNaney.
“Canada’s major carriers impact every sector of the economy, in every region of the country, in communities large and small. If aviation is to remain at Stage Zero for an indeterminate time period due to government policy, we need to begin work now on measures to sustain the industry.
While the federal government has put forth non-sectoral support programs for all industries, those programs were not designed in the context of a specific industry remaining at Stage Zero, with no indication of when it can methodically re-open” concluded McNaney.