Unlike many other nations, Canada hasn’t provided its airlines and aviation industry with any sector-specific financial support. Now, Airbus CEO Guillaume Faury has criticised the Canadian government’s response to the pandemic. The comments come after Air Canada cancelled an order for 21 Airbus A220.
Airbus interest in Canada
During a virtual conference held by The International Economic Forum of the Americas, Airbus CEO Guillaume Faury told reporters he was disappointed by the Canadian Government’s lack of support for its struggling airlines. According to BNNBloomberg.com, Faury stated,
“We've made it very clear to the government we think we are an important sector and if they want to have aviation growing and performing in Canada, it's important that at these difficult moments airlines and the aerospace industry are supported."
It’s no surprise that Airbus is disappointed by Canada’s lack of support for its airlines. Last month, Air Canada cancelled an order for 12 new Airbus A220 as well as deferring delivery of other Airbus aircraft. The airline has cited financial difficulties as the reason for the cancellation.
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Canadian financial aid
Canada remains one of the only major nations not to offer targeted support for the aviation industry. Reportedly, a sticking point for the government is the lack of refunds on cancelled tickets. Currently, Canadian airlines can still offer vouchers rather than refunds for cancelled flights. Transport Minister Marc Garneau confirmed that unless airlines were willing to offer full refunds, a target loan package would be unlikely.
Intergovernmental Affairs Minister Dominic Leblanc said in an interview that public opinion was against the government writing a blank cheque to save the airlines while so many people feel they should receive a refund. Over 100,000 people have a signed a petition trying to force the government to compel airlines to offer refunds. There are also several class-action lawsuits in place for the same reason.
At the end of November, the government announced it would be prepared to spend up to $980 million on support for Canadian airports. However, it did not specify details nor how it would help airlines.
Support on the way?
However, this doesn’t mean the government hasn’t helped airlines at all. Part of its economic relief package offers wage subsidies for almost all Canadian businesses, including airlines. Since the start of the pandemic, airlines have received over $1.4 billion through wage subsidy to keep people employed and avoid layoffs.
Besides, Finance Minister and Deputy Prime Minister Chrystia Freeland confirmed that a further $1.2 billion has been set aside to help the aviation sector but that more talks were needed to reach a deal. It seems as though ticket refunds are the main point standing in the way of airline’s receiving support. And this isn’t news. The government has been talking about ticket refunds for several months now.
Many hoped that the Fall Economic Statement on November 30th would provide more clarity, but it seems as if both the government and airlines are holding firm to their positions. As such, they appear to be no closer to a bailout than they were months ago.
As air travel starts to pick up again, Canadian airlines may find themselves with no bailout at all. If this is the case, it will be interesting to see the long-term recovery time of Canadian airlines compared to airlines in countries where the governments did provide sector-specific support.
What do you think of the situation in Canada? Do you think the government will provide support or will airlines continue to withhold refunds? Let us know what you think in the comments.