Estimated reading time 11 minutes, 37 seconds.
Canada’s aviation and aerospace industries, faced with mounting economic uncertainty in the face of the continued spread of COVID-19, are pressing the federal government to ensure that the industry and its thousands of jobs are protected.
Skies spoke on March 13 with the leaders of the Aerospace Industries Association of Canada (AIAC), the Air Transport Association of Canada (ATAC) and the Canadian Business Aviation Association (CBAA).
ATAC president and CEO John McKenna told Skies that it is “derailing” Canadian aviation overall. “I have a number of members who are not going to survive if this goes on much longer than a couple of weeks.”
He said he was writing directly to Prime Minister Justin Trudeau, Finance Minister Bill Morneau and Transport Minister Marc Garneau in a bid to ensure that the aviation sector gets some of the protection promised in the stimulus package. “It can’t be a promise; it has to be hard cash — soon!”
Pointing out that there had been a “very generous” federal stimulus package in response to 9/11, “but it was only for a short time,” McKenna agreed that insofar as Canada is concerned, COVID-19 would have a more serious impact.
“We need . . . help or air transport services in Canada might not be the same in two weeks time,” he reiterated. “These are companies that cannot afford to wait six months.”
Jim Quick, his counterpart at AIAC, said the organization had sent a special update to its members as well as a survey to collect information on the impact the virus was having. “This information will be used to help assess what, if any, additional measures we will recommend to the federal government,” AIAC said, asking for member feedback by noon on March 17.
“We had responses right away,” Quick told Skies. “People are telling us how, potentially, their businesses are being impacted. Most companies now have travel bans in place. We saw a dramatic decline in membership’s participation as early as the Singapore Air Show (Feb. 11-16). Individually, companies are making decisions on, first of all, how do they protect their people.”
On the vulnerability of smaller companies, Quick said that obviously depends on their resources. “Larger companies have their own challenges; they have more people to protect. I wouldn’t put one group in front of the other in a situation like this. Larger companies tend to have more resources so you automatically turn to those groups who don’t have those type of resources.”
AIAC is “pretty much in daily contact” with the government through Innovation, Science and Economic Development Canada, the department most involved with industry. Its minister, Toronto-area MP Navdeep Bains, has held the industry portfolio since his re-election to Parliament in 2015 and is generally well-respected in the aviation sector.
“We are making sure . . . that as they are making policy decisions going forward, they’re fully apprised of what’s happening to the aerospace industry,” said Quick.
A key element of AIAC’s lobbying effort is ongoing meetings with politicians and senior bureaucrats. “We’re bringing in sectors of our industry, like small business, for example . . . to give them an opportunity to make their case directly.”
Anthony Norejko, president and CEO of the CBAA, said that while many corporate members have already limited non-essential travel, the increased constraints on available commercial seats is resulting in more use of business aircraft by senior executive or leadership teams for whom travel is essential. “I think it’s because people can recognize that you can control the variables,” he told Skies.
There’s also the well-documented fact that commercial carriers may not clean their aircraft as frequently or as thoroughly, a viewpoint upheld by various operators’ statements that they were stepping up their efforts.
“A lot of our operators, by the very nature of flying a [business] aircraft like that, it’s sort of like it’s your personal property,” said Norejko. “So anyone with a sense of ownership looks after them and nine times out of 10 . . . they’re almost always kept super clean, super shiny, and that extends to the interior as well.”
He also said that the CBAA had shared with its members a notice to commercial carriers and aircrews from the Centers for Disease Control and Prevention (CDC) in Atlanta, Ga., about how to deal with, among other things, passengers with virus symptoms “and what you are going to do about the aircraft even if you don’t show symptoms but just want to return and refresh the aircraft for the next flight. A prudent business aviation operator … can apply the same lines of thinking.”
Prime Minister Justin Trudeau said last week that the government is preparing a fiscal support package to help the public and businesses hit hardest by the virus outbreak. A previously-announced $1.1-billion package would, among other things, waive the waiting period for employment insurance and put in place flexible arrangements for meeting Canada Revenue Agency obligations.
The government is urging Canadians to avoid non-essential foreign travel and is planning enhanced COVID-screening of all airport arrivals. “We’ll continue to evaluate what we can do and how we can keep Canadians in security,” Trudeau said. “We won’t close the door on any idea.”
Canada Border Services Agency said at least two international airports apparently were not prepared for more intensive screening on the weekend. There were several published reports on March 14 and 15 about the absence of screening at Toronto. One passenger arriving in Ottawa from Florida told Skies on March 15 that “absolutely nothing was mentioned about self-quarantine by anyone at the airport or by the airline.”
Morneau told reporters March 13 that while $10 billion in the extended “stimulus package” would be available through the Business Development Bank of Canada, details would not be unveiled until sometime before he was scheduled to table the government’s latest budget. However, a shutdown of parliament until April 20 now means the budget is postponed to an unspecified date.
Another move to support business is the Bank of Canada’s unscheduled reduction of its overnight rate target to 0.75 per cent, its lowest in two and a half years. “Lower interest rates will help to support confidence in businesses and households,” Bank governor Stephen Poloz said during a news conference with Morneau. “The main fundamental that has changed since our last decision is that oil prices have continued to move lower and are showing signs of persisting.”
With the U.S. in particular isolating itself against the spreading virus by limiting and in many cases banning international visitors — a move which has prompted at least United and Delta airlines to request federal support — Canadian aviation is feeling the fallout from the growing uncertainty.
WestJet has frozen hiring and is offering employees voluntary leave as it reacts to economic uncertainty. The Globe and Mail reported the Calgary-based airline is ready to cut international seat capacity by 60 per cent and domestic flights by 40 per cent. Furthermore, a representative for WestJet’s flight attendants said the union is ready for the airline to lay off more than 50 per cent of its cabin crew staff.
Air Canada released a statement on March 16 that it is withdrawing its current 2020 financial guidance in the face of continued COVID-19 uncertainty. The airline said that while the situation presents “unprecedented challenges,” it has the necessary financial resources in place to weather the storm.
“These deep strengths enable us to fully focus our immediate attention on both the safety and well-being of our customers and our employees and on mitigating the financial impact of the virus,” said Calin Rovinescu, president and CEO of Air Canada. He also called for government assistance for Canadian airlines, “whether through forbearance of taxes, landing fees and other charges that form part of the aviation burden in Canada or otherwise until the industry stabilizes.”
Norejko said that COVID-19 and the oil-price drop mentioned by Poloz (the result of a spat between Saudi Arabia and Russia), coupled with any uncertainty about the effectiveness of the government’s responses so far, had combined to put “a lot of pressure” on the Canadian economy.
Additionally, operators in general must still deal with the issue of sending crews for recurrent training. “Nine times out of 10, that takes place in the United States,” Norejko pointed out. “Can I send my crews? Never mind the duty of care obligation that a business has to face when sending employees on travel — now you’re faced with, ‘My gosh, can I actually get these people back?’ If you had to frame what is the concern that is most expressed to date, it is this state of indecision, of flux, and what we’re trying to do as an association is provide the most relevant information that helps operators make the best decisions that we can at this time . . . These are sensitive times for sure.”