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

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

The new Malahat Skywalk is expected to be completed by this summer. (Submitted graphic)
Malahat Skywalk expected to be complete by this summer

$15-million project will see 650-metre elevated wooden pathway constructed

Tim Schewe
Drivesmart column: It’s the highway’s fault!

One component of Vision Zero (our current road safety strategy) is highway design.

Moira Mercer spent her summer riding her e-bike around Cowichan Lake and beyond, collecting any empties she found along the way. (Submitted)
Lake Cowichan 2020 in review — conclusion

What were your top stories from 2020?

Staff meetings can be difficult when everyone has his own agenda. (Mary Lowther photo)
Mary Lowther column: Garden additions at request of staff

I’ll sow the catnip in flats on the seed table inside

A scene from “Canada and the Gulf War: In their own words,” a video by The Memory Project, a program of Historica Canada, is shown in this undated illustration. THE CANADIAN PRESS/HO - Historica Canada
New video marks Canada’s contributions to first Gulf War on 30th anniversary

Veterans Affairs Canada says around 4,500 Canadian military personnel served during the war

Williams Lake physician Dr. Ivan Scrooby and medical graduate student Vionarica Gusti hold up the COSMIC Bubble Helmet. Both are part of the non-profit organization COSMIC Medical which has come together to develop devices for treating patients with COVID-19. (Monica Lamb-Yorski photo - Williams Lake Tribune)
Group of B.C. doctors, engineers developing ‘bubble helmet’ for COVID-19 patients

The helmet could support several patients at once, says the group

A 17-year-old snowmobiler used his backcountry survival sense in preparation to spend the night on the mountain near 100 Mile House Saturday, Jan. 16, 2021 after getting lost. (South Cariboo Search and Rescue Facebook photo)
Teen praised for backcountry survival skills after getting lost in B.C.’s Cariboo mountains

“This young man did everything right after things went wrong.”

Conservative Leader Erin O’Toole holds a press conference on Parliament Hill, in Ottawa on December 10, 2020. THE CANADIAN PRESS/Sean Kilpatrick
No place for ‘far right’ in Conservative Party, Erin O’Toole says

O’Toole condemned the Capitol attack as ‘horrifying’ and sought to distance himself and the Tories from Trumpism

A passer by walks in High Park, in Toronto, Thursday, Jan. 14, 2021. This workweek will kick off with what’s fabled to be the most depressing day of the year, during one of the darkest eras in recent history. THE CANADIAN PRESS/Chris Young
‘Blue Monday’ getting you down? Exercise may be the cure, say experts

Many jurisdictions are tightening restrictions to curb soaring COVID-19 case counts

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
COVID-19: Provinces work on revised plans as Pfizer-BioNTech shipments to slow down

Anita Anand said she understands and shares Canadians’ concerns about the drug company’s decision

Tourists take photographs outside the British Columbia Legislature in Victoria, B.C., on Friday August 26, 2011. A coalition of British Columbia tourism industry groups is urging the provincial government to not pursue plans to ban domestic travel to fight the spread of COVID-19. THE CANADIAN PRESS/Darryl Dyck
B.C. travel ban will harm struggling tourism sector, says industry coalition

B.C. government would have to show evidence a travel ban is necessary

(Phil McLachlan - Capital News)
‘Targeted’ shooting in Coquitlam leaves woman in hospital

The woman suffered non-life threatening injuries in what police believe to be a targeted shooting Saturday morning

Everett Bumstead (centre) and his crew share a picture from a tree planting location in Sayward on Vancouver Island from when they were filming for ‘One Million Trees’ last year. Photo courtesy, Everett Bumstead.
The tree-planting life on Vancouver Island featured in new documentary

Everett Bumstead brings forth the technicalities, psychology and politics of the tree planting industry in his movie

Most Read