Government financial support for the air sector
LOCATION: OTTAWA, ON
Issue/Source: Government financial support for the air sector
Date: October 22, 2020
Suggested ResponseS
- The Government of Canada is acutely aware of the particularly severe financial situation faced by the air transport industry as a result of the COVID-19 pandemic. We are in continuous contact with the participants in that sector, and are examining potential responses.
- For the air sector, the Government has provided rent relief from March to December 2020 for the 21 airport authorities that have ground leases with the federal government, as well as comparable treatment for Ports Toronto, which operates Billy Bishop Toronto City Airport.
- The Government also implemented the Canada Emergency Wage Subsidy (CEWS) to support employers across all sectors, including airlines and airports, impacted by the pandemic.
- Funding of up to $17.3 million was also provided to the governments of Yukon, Northwest Territories, and Nunavut to support northern air carriers in providing essential goods and services to remote fly-in communities.
- The Government also announced further funding of up to $174 million to ensure continuity of essential air access to remote communities continues through the development of bilateral agreements with provinces and territories in August 2020.
- The Canadian Transportation Agency also implemented temporary exemptions to certain requirements of the Air Passenger Protection Regulations from March 13, 2020 until June 30, 2020.
IF PRESSED
- The Government of Canada recognizes many Canadians passengers are angry because they have received vouchers rather than refunds for cancelled flights, and is sympathetic to their frustration. The Government is encouraged that airlines have recently enacted more flexible and transparent voucher polices; furthermore, some carriers are starting to provide refunds.
- We continue to support solutions that are fair and reasonable to passengers while at the same time not imposing an undue financial burden on air carriers facing significant financial challenges; however, a more comprehensive solution is being developped.
BACKGROUND INFORMATION
- The air sector has been severely impacted by COVID-19, as passenger volumes decreased by 97% as compared to the same period in 2019. The sudden elimination of passenger traffic due to public health restrictions has caused a significant decline in revenue for both air carriers and airport authorities, who have raised serious concerns about their ability to stay afloat during the crisis.
- The impact of COVID-19 on the air transport sector is far more significant than for most, if not all, other sectors of the economy. Due to national and provincial border restrictions, disinclination to travel, and other factors, it is not anticipated that traffic will begin to approach 2019 levels until 2024. The continuing drastic drop in passenger volumes, and limited outlook for recovery is further threatening air transport sector finances, with the result that providers are having to increase fees, undertake further layoffs, and make more cuts to routes and other services. As a result, air carriers, airport authorities and NAV Canada have requested additional support from the Government, over and above the economic measures announced to date.
- The Canada Emergency Wage Subsidy (CEWS) covers 75% of an employee's wages – up to $847 per week – for employers of all sizes and across all sectors who have suffered a drop in gross revenues of at least 15% in March, and 30% in April and May. The program was originally put in place for a 12-week period, from March 15 to June 6, 2020, and it was recently announced that the Government intends to extend the program until June 2021. This program has been accessed by many air transport sector participants, but is not by itself sufficient to address the scale of losses.
- The Business Capital Availability Program, delivered through Export Development Canada and Business Development Canada, provides financial support to Canadian businesses through credit solutions (loan guarantees, commercial loans, etc.). The usefulness of this program is limited, and not all participants would be eligible
- The Large Employer Emergency Financing Facility is available only to the largest air transport sector participants, but has been used by none. The short term focus of the program, combined with rapidly and significantly increasing interest rates has limited applicability of this initiative.
- The Canadian Transportation Agency applied temporary exemptions to certain Air Passenger Protection Regulations (APPR) requirements, which has now ended. However, the Agency has granted air carriers an extension to the required timeline to respond to passenger requests for compensation. Airlines have until October 28, 2020, to respond to all compensation requests that were pending as of March 25, 2020, or submitted between March 25, 2020, and September 29, 2020.