With news of staff and service changes at Canada’s two biggest airlines struggling to stay afloat during the COVID-19 pandemic, experts say the future of the airline industry in the country is on shaky ground unless the federal government steps in.
WestJet announced Friday a wide range or service and staffing cuts, with toughly 1,000 employee positions being eliminated through layoffs, furloughs, unpaid leaves and reductions of hours.
Hundreds of national and international flights on the airline’s current schedule are also being cancelled.
WestJet said the catalyst for the major changes is the new COVID-19 testing requirements implemented by the federal government on Jan. 7 which, according to experts, are only going to further devastate the already hurting industry.
Air Canada also reportedly put an unknown number of its employees, mainly in Atlantic Canada, on “off-duty” status on Friday, according to the 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 Friday.
“We were in crisis before. I think we’ve now taken a step into another new solar system of crises.”
Erickson said he “can’t understand” why the federal government hasn’t yet stepped in with some kind of relief package for the airlines.
“At some point we have to ask: how much more can they cut? Given that they have not received five cents of international — any kind of a bailout circumstance from the federal government,” he said.
“Whereas all of their competitors, we’ve seen every single one of the major operators who fly into Canada with international services have received some form of government assistance.”
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 because of COVID-19.
Roy said there are two major pressures impacting the industry right now: the airlines wanting restrictions to be loosened, so there aren’t as many deterrents for travellers; and provinces wanting the federal government to do more to stop travelling in and out of the country, and in some cases, across provincial borders.
He said there wasn’t a strong sense of urgency earlier on in the pandemic, which he believes is because the federal government believed airlines like Air Canada, WestJet and Air Transat, had reserves of money they could draw on.
Now, though, the pressure is on to step in.
“What government has to do now and look at the numbers and see how much money they need for the next year,” he said.
Roy admitted it’s not going to be easy to come up with an adequate relief plan that will be sustainable, and pointed to bail-outs given to airlines in the U.S., which the companies quickly burned through, and needed more.
The federal government has also said one of the contingencies to a relief plan for airlines would be that they reimburse travellers who had trips cancelled in the early days of the pandemic.
Speaking Friday, Prime Minister Justin Trudeau said the Liberals have given close to $1.5 billion to Canadian airlines, through the wage subsidy and “other measures.”
“We know the industry is extremely hit hard by the COVID-19 pandemic,” Trudeau said.
“People shouldn’t be travelling, and that of course is a direct challenge for the airline industries to manage.
“Though, at the same time, we’ve made it very clear that we expect people to be reimbursed. We expect regional routes to be protected.
“We expect certain things from the airline industry and those discussions about how we’re going to make sure people are protected as we offer supports are continuing.”
In the case of Air Canada alone, Roy said reimbursing passengers would likely cost the company upwards of $1 billion. He also said the federal government has to be cautious when giving relief money to industries where it’s possible that top executives of companies could pocket large sums of what’s doled out.
“I can appreciate why the government is taking so much time but at the same time, they have to do something,” Roy said, adding that air travel in Canada is essential, as the country is so big.
“You have to maintain a certain level of service in Canada,” he said.
“If it gets to the point where the airlines are not able to face the fixed costs they have to face… if it gets to the point where they just cannot survive anymore, then I think the federal government really has to step in.”
Erickson said the federal government needs 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, which led to confusion among prospective travellers and fewer of them boarding planes.
“How did I go about getting my test? What was acceptable as a test result? Could I be in Cairo and have a doctor come to my hotel and test me and I would go to the airport with that piece of paper, would that work? I don’t know,” Erickson said.
“There was no criteria laid out with the overall rollout of the program. As a result, passengers are saying, ‘Nope, not going.'”
Any relief package from the federal government would have to be “real and tenable” and will recognize the important role the air sector plays in Canada’s economy, Erickson said.
“The benefits that Canadian carriers bring to our national provincial, local economies is substantive,” he said.
“And my fear now, more than I’ve had at any point during this pandemic situation, is that Canadian carriers are going to be so badly skewered financially, they won’t be able to recover to the same extent as the international carriers who’ve received a good deal of support from their governments — they won’t be able to be able to play on any kind of a level playing field going forward.
“As a result, hundreds of millions into billions of dollars of economic activity are not going to be occurring in Canada, not occurring to Canadian-owned or based air carriers.”View link »