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Canadian airline group “disappointed” with Liberals’ tax update

A group representing the Canadian aviation industry is disappointed that the federal government did not include a financial aid package for the ailing sector in its fall economic update.

The Liberal government announced hundreds of millions of dollars in spending aimed at helping regional airlines and airports, including waiving rental payments for small and medium-sized airports.

However, the government has stopped releasing a much anticipated financial aid package to Canadian airlines, something the industry has been asking for months.

The chief executive of the National Airline Council of Canada – an industry group that represents Air Canada, WestJet, Air Transat and Jazz Aviation – said it was “quite disappointed” that the government has not yet presented a financial aid plan for the ailing sector.

“We were hoping to see a plan, aviation path, and concrete government action that recognizes that a sound aviation sector is critical to our overall economic recovery,” said Mike McNaney, CEO of NACC, in an interview .

“What we have is a statement the government has made several times over the past few months that it is working on a lawsuit.”

Ottawa has announced that it will provide a financial aid package to the Canadian aviation industry, but only if airlines provide refunds to passengers whose flights have been canceled due to COVID-19. The government also wants airlines to open their books to the government, protect certain flight routes, and not cancel orders for Canada-made aircraft, according to a report in Globe and Mail.

The government reiterated its plan in its 237-page budget update.

“The government is setting up a financial assistance process with major airlines,” the government said. “As part of this process, the government will ensure that Canadians are reimbursed for canceled flights.”

Nearly $ 700 million in rent relief and capital investments are on the way to airports over a six-year period. Additional support of around US $ 206 million to regional aviation, including smaller airlines, will be provided through a new “Regional Aviation Initiative” overseen by development agencies.

The story goes on

McNaney said the airlines were hoping the government would address the industry’s liquidity issues and release a national rapid test plan that would ease travel restrictions.

The government is currently exploring ways to improve the Large Employer Emergency Financing Facility (LEEFF), which airlines like Air Canada are likely to qualify for. However, McNaney said the program’s terms are not working for the aviation industry. LEEFF offers loans of $ 60 million or more to large companies with cash problems, but has an interest rate that increases from five percent in the first year to eight percent – well above the typical private sector lending rate.

“We were looking for low-interest loans and loan guarantees. The LEEFF program does not fall into that category, ”he said. “This was a missed opportunity.”

John McKenna, president of the Air Transport Association of Canada, said the plan did not provide meaningful support to the injured industry.

“The Air Transport Association of Canada is very disappointed that the government has not yet shown any real interest in helping Canada’s aviation sector,” he said.

“There was absolutely nothing in yesterday’s financial update that could help airlines of any kind.”

The COVID-19 pandemic, subsequent border closings, and quarantine restrictions have created crater-like demand in the global aviation industry. The number of passengers has dropped by almost 90 percent. Air Canada and WestJet, the country’s two largest airlines, have cut capacity, suspended dozens of routes and laid off thousands of employees.

At the same time, many passengers have received no refunds for canceled flights. The Canadian Transportation Agency received 8,000 complaints between mid-March and late August, most of which are believed to be related to refunds. Passengers have also filed a handful of proposed class action lawsuits and three petitions collecting more than 100,000 signatures demanding reimbursement from customers.

With files from the Canadian press

Alicja Siekierska is a Senior Reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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