Flair Airlines CEO Jim Scott is pictured at the Edmonton International Airport, in Edmonton on Thursday March 5, 2020. As the federal government gears up to roll out relief measures for hard-hit industries, smaller airlines worry they’ll be left out of the largesse. THE CANADIAN PRESS/Jason Franson

Struggling smaller airlines worry federal aid may come too late, if at all

Small carriers worry they may not qualify for the recently announced bailout

As the federal government gears up to deliver relief measures for hard-hit industries, smaller airlines worry they’ll be left out.

Prime Minister Justin Trudeau announced Monday that federal financing will be available to the country’s largest employers to help weather the COVID-19 economic crisis. Loans will start at $60 million for companies with at least $300 million in annual revenues.

Regional carriers, most of which fall far short of that threshold, fear they might go under without a tailor-made support program from Ottawa as border shutdowns and the collapse of global travel continue to choke off demand.

Flair Airlines, an ultra-low-cost carrier based in Edmonton, has reduced its commercial fleet to one airplane since late March. The flight schedule — 16 trips per week — stands at 10 per cent of pre-coronavirus levels after the company lost 95 per cent of its revenue in nine days, CEO Jim Scott said.

“We need a federal airline support package that does not select winners and losers but demonstrates a commitment to a diversified and competitive airline industry accessible to all Canadians,” Scott said in a statement last week.

He cautioned against a bailout that would reinforce a “David and Goliath system dominated by a large-carrier duopoly.”

The $300-million threshold rules out about three-quarters of Canadian airlines from the new relief program, said John McKenna, president of the Air Transportation Association of Canada, which counts 30 smaller carriers as members.

“The outlying communities, the northern communities, they rely on these regional carriers as a lifeline,” McKenna said. “I am happy for the seven or so carriers in Canada who may qualify (but) the government must not forget that the regional carriers offer just as important a service as the large carriers.”

READ MORE: Feds pledge aid, financing for large and medium sized businesses affected by COVID-19

A federal aid package for the territories includes $17 million for northern airlines to help fly food and medical supplies to remote communities. Far-flung areas south of the 60th parallel, such as northwestern Ontario and Nunavik in Quebec, are not covered.

“We want the government of Canada to come out with a plan that treats everyone equitably but fairly,” McKenna said.

Part of the anxiety stems from a lack of feedback, with “radio silence” from Ottawa.

“There’s not even any dialogue with the government. We have no idea what they’re doing,” he said. “When we talk to finance, they say, ‘Something’s coming, we can’t talk about it.”

McKenna has asked the government for $2 billion in loans and loan guarantees for smaller carriers and maintenance and repair operators.

In a letter sent to the prime minister Friday, his association and a dozen other groups including the National Airlines Council of Canada (NACC) — which represents Air Canada, WestJet and Transat — requested relief from various taxes, fees and charges, on top of financial support.

Mike McNaney, head of the NACC, thanked Ottawa on Monday for addressing the “urgent liquidity challenges facing airlines,” but said he needed more details around “timelines and process.”

Most large airlines said it was too early to comment as they review the fine print, though Sunwing applauded the announcement and said it “shows that government has been listening.”

Strings attached to the bridge financing require companies to have already gone unsuccessfully to the banks or the market and demand that recipients open themselves to financial scrutiny and prove their commitment to fighting climate change.

The federal government has also waived the monthly rent paid by airport authorities to Ottawa for the rest of the year, providing support worth up to $331.4 million in ground lease rents from March through December.

At least 20 countries from Norway to New Zealand have announced financial aid specifically for airlines, ranging from equity stakes to loans and grants, sometimes with strings attached that limit dividends and executive bonuses.

Last month the United States rolled out US$25 billion in government aid to pay airline workers and avoid massive layoffs. The assistance includes a mix of cash and loans, with the government getting warrants that can be converted into small ownership stakes in the leading carriers.

The French government has announced at least US$7.66 billion in loans and loan guarantees to rescue Air France, with conditions requiring it to cut carbon emissions in half by 2030 on long and medium-haul routes.

READ MORE: Vancouver airport to lay off 25% of staff as it forecasts years-long decrease in flights

In Germany, the government is in talks with Lufthansa AG for up to US$10.85 billion in aid but demanding a 25 per cent stake in the airline.

Even with planes parked, money continues to bleed as airlines dole out airport fees, leasing payments, and parking and maintenance costs — each plane needs to have its engine run, tires rotated and hydraulics electronics checked multiple times per week.

“We’re a capital intensive industry,” Flair’s Jim Scott said in a phone interview. “Our fixed costs are very high, and we have no revenues to offset it.”

Christopher Reynolds, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Air TravelCoronavirus

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Abbotsford teacher has picture book published with message about kindness

It took Nikki Bergstresser six years to have Seasons of Stone published

Air quality across the Lower Mainland could worsen slightly

AQ health index could see ‘low risk’ gravitate into ‘moderate risk’ from Vancouver to Hope

‘Alien invasion’: Strange webbing creeps in overnight in Agassiz,Harrison

Eerie webbing might be the result of a growth in moth population

BC Green Party announces candidate for Abbotsford South

Former provincial and municipal candidate Aird Flavelle seeks election

Abbotsford’s Haidyn Vermeulen signs with Alberta Golden Bears

Grade 12 Abby Senior student joining Edmonton-based football program in 2021

105 new COVID-19 cases, 1 death as health officials urge B.C. to remember safety protocols

There are currently 1268 active cases, with 3,337 people under public health monitoring

Orange Shirt Day lessons of past in today’s classrooms

Phyllis Webstad, who attended St. Joseph’s Mission Residential School in British Columbia, is credited for creating the movement

Greens’ Furstenau fires at NDP, Liberals on pandemic recovery, sales tax promise

She also criticized the NDP economic recovery plan, arguing it abandons the tourism industry

U.S. Presidential Debate Takeaways: An acrid tone from the opening minute

Here are key takeaways from the first of three scheduled presidential debates before Election Day on Nov. 3

Another death as COVID-19 outbreak at Delta Hospital climbs to 18 cases

Total of 12 patients and six staff in one unit have tested positive for COVID-19: Fraser Health

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

B.C. nurses report rise in depression, anxiety, exhaustion due to pandemic

A new UBC study looks into how the COVID-19 response has impacted frontline nurses

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

National child-care plan could help Canada rebound from COVID-induced economic crisis: prof

A $2 billion investment this year could help parents during second wave of pandemic

Most Read