As the federal government prepares to impose additional restrictions on international travel, the aviation industry is warning its long-term survival is at risk if the government doesn’t step in soon with a sector-specific financial aid package.
Industry representatives and union leaders painted a bleak picture of the state of the industry Thursday as they pleaded with MPs on the House of Commons transportation committee for direct aid for airlines and other air sector businesses.
Mike Mueller, senior vice-president of the Aerospace Industries Association of Canada, said Canadian businesses in the civil, defence and aerospace sectors have lost over 40 per cent of their revenue due to reduced international travel caused by COVID-19.
Almost all companies are reporting various levels of shutdowns, and over 50 per cent have laid off employees, he said.
“While the government’s emergency measures have been appreciated and helpful — they’re just not enough,” said Mueller.
Mueller warned that Canadian companies would struggle to compete in the future with businesses from countries like France, the U.S., and Germany — which have spent billions of dollars on bailouts for airlines and related companies.
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“The future is bleak for aerospace if its leading customers — the airlines — can’t buy its products and services,” said Mueller. “The effects of COVID-19 have cascaded throughout the supply chain.”
Industry leaders didn’t offer a specific sum of money they want from the government in new aid for the sector.
Pilot positions lost
Rob Giguerre, chief executive officer of the Air Canada Pilots Association, said his union represents 700 fewer active pilots than it did before the pandemic. Hundreds of pilots have been furloughed, laid off or chosen to retire. Those who are still flying are taking home an average of 65 per cent of their salary, Giguerre said.
Air Canada, which cut its staff by 20,000 workers in June, is burning through almost $15 million each day even as passenger levels remain at 10 per cent of pre-pandemic levels, Giguerre said.
“The airline is smaller today than it was when I started my career as a pilot in the 70s,” Giguerre said.
Air traffic controllers are also suffering, said Doug Best, executive director of the Canadian Air Traffic Controllers Association. He said 100 air traffic controllers had received layoff notices from NavCanada, the not-for-profit corporation that operates Canada’s civil air navigation system.
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Best warned that a “brain drain” could occur if those highly-skilled workers, who are in demand around the world, end up leaving the country for jobs abroad.
Industry woes worsened in recent weeks when the federal government introduced a new requirement that all travellers seeking to enter Canada provide proof of a negative COVID-19 test taken 72 hours before departure.
That new rule had an immediate impact on bookings, with airlines reporting at least 50,000 travel reservation cancellations in the two weeks after it took effect.
Calgary-based WestJet laid off staff and slashed routes after the testing requirement was announced. Montreal-based Air Transat announced Wednesday it was suspending all flights out of Toronto because travel restrictions and other measures had negatively impacted bookings.
Prime Minister Justin Trudeau indicated this week that additional travel restrictions are being considered as concerns rise about the emergence of new, highly transmissible variants of the coronavirus first identified in the U.K., South Africa and Brazil. Those measures could be announced as early as Friday.
One of the options under consideration is mandatory hotel quarantines for incoming travellers — an additional burden that experts say would serve as a major disincentive for leisure travel. At the moment, incoming travellers must quarantine for 14 days but can do so at their own homes.
Giguerre said the government needs to take a “thoughtful” approach to any additional measures, and be mindful of any “unintended consequences” that further reductions in travel could have on Canada’s ability to import goods, many of which come via the cargo holds of passenger jets.
“While public health measures may be required to fight the pandemic, further restrictions — without direct government financial aid — are sure to take an already precarious airline industry and devastate it,” he said.
Support contingent on ticket refunds, Ottawa says
A spokesperson for Deputy Prime Minister Chrystia Freeland said the government is committed to supporting Canadian airlines and workers.
Kat Cuplinskas said the sector had received over $1.5 billion through the Canada emergency wage subsidy. The federal government also announced $1 billion in support for airports and smaller airlines in its fall economic update.
Any further support, Cuplinskas said, would be dependent on the airlines refunding cancelled flights, restoring regional routes cut to reduce costs and protecting jobs across the sector.
“Maintaining a vibrant, competitive Canadian air sector and Canadian airlines is a priority,” Cuplinskas said.
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While $1.5 billion through the wage subsidy may seem like a lot, International Association of Machinists and Aerospace Workers in Canada (IAMAW) representative Derek Ferguson said the wage subsidy hasn’t worked as well as the government intended.
Ferguson, whose union represents many different types of air transport workers including security screeners, said most employers didn’t top up the extra 25 per cent of the subsidized wage, as the government had requested. He also said many employers only used the wage subsidy to pay active workers after laying off many staff, and that changes to the program made last summer made the program cost-prohibitive for many employers.
Ferguson said 10,000 IAMAW workers are currently out of work.
“Any support must be worker-centric,” said Ferguson. “If there are no workers left in this industry when the pandemic eases, then there will be no industry.”