LOCATION: OTTAWA, ON
ISSUE/SOURCE: Government financial support for the air sector
Date: January 12, 2021
- A strong and competitive air transport industry is vital for Canada’s economy and the well-being of Canadians. The Government of Canada understands the significant impact the COVID-19 pandemic is having throughout the air sector.
- In response to the pandemic, the Government of Canada has put in place a number of financial support measures, such as the Canada Emergency Wage Subsidy; the Business Credit Availability Program; and, the Large Employer Emergency Financing Facility, to assist all sectors of the economy, including air transportation.
- For the air sector, the Government of Canada 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.
- Funding of up to $191.3 million for provinces and territories was also announced to ensure continuity of essential goods and services to remote fly-in communities.
- Most recently, through the Fall Economic Statement, the Government of Canada announced an additional $1.1 billion in financial support for the air sector through a series of targeted measures designed to support regional connectivity, critical infrastructure investments and the continued operation of Canada’s airports.
- The Government is also engaging with Canada’s major air carriers regarding potential options for financial assistance. As part of this process, the Government will ensure Canadians are refunded for flights cancelled due to COVID-19.
- The Government is working to securing the necessary program authorities and approvals with some funding becoming available in Spring 2021.
- 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 of Canada, over and above the economic measures announced to date.
- On November 8, 2020, the Minister of Transport announced that the Government would be engaging with air carriers to develop a package of support to help them address the challenges of the pandemic. The Minister was emphatic that carriers receiving support would be required to refund passengers for travel cancelled due to the pandemic, and would also focus on ensuring regional connectivity and Canada’s aerospace sector. Federal officials are now engaging with the carriers regarding this initiative.
- This commitment was repeated in the Fall Economic Statement, which also included the following specific measures:
- Up to $206 million over two years, starting in 2020-21, to the Regional Development Agencies for a new Regional Air Transportation Initiative to support regional air transportation;
- Additional funding of $186 million over two years, starting in 2021-22, for the Airports Capital Assistance Program to support small and regional airports in making critical investments in health and safety;
- Up to $500 million over six years, starting in 2020-21, to support large airports in making critical investments in safety, security and transit infrastructure;
- Extension of $229 million in additional rent relief to the 21 airport authorities that pay rent to the federal government, with comparable treatment for Ports Toronto, which operates Billy Bishop Toronto City Airport to support continued operations of Canada’s major airports; and
- $65 million in additional financial support to airport authorities in 2021-22 to help manage the financial implications of reduced air travel on airports.
- Earlier support for the air sector in the face of COVID-19 included:
- The announcement on March 30, 2020, that rent would be waived for the remainder of 2020 for the airports that pay rent to the federal government, with equivalent treatment for Billy Bishop Toronto Centre Airport;
- On August 6, 2020, the Government announced new measures to support essential air access to remote communities, including establishing a $75 million funding program as part of the federal contribution for the first six months and maintaining these essential services through an investment of up to $174 million over 18 months, if needed; and
- In April 2020, the Government announced $17.3 million in funding to support northern air carriers.
- Apart from the above-mentioned measures, air sector stakeholders can also benefit from non-sector-specific measures, such as the Canada Emergency Wage Subsidy, the Business Capital Availability Program, and the Large Employer Emergency Financing Facility.