Canada’s Airports See Air Sector Package as a First Step

OTTAWA, ON, December 3, 2020 Canada’s airports are ready to work with the federal government to implement the air sector relief measures announced in the November 30th Fall Economic Statement. It’s a positive first step, according to the Canadian Airports Council (CAC).

“While it is good to see the air sector get direct attention in the Fall Economic Statement, what was announced on Monday appears to fall short of what Canada’s airports and our industry partners need to endure COVID-19,” said CAC president, Daniel-Robert Gooch. “While we are still seeking additional detail on what was announced, we do know more will be required to ensure airports are able to endure the difficult period ahead.”

While the government announced measures to support airports and regional air service, the Canadian Airport Council is concerned that not all major issues have been addressed yet, including federal plans for rapid antigen screening at airports.

“Our current priority is to restore consumer confidence and open up safe air travel in time for next summer,” Gooch explained. “This requires rapid antigen screening at airports and a path to reduce quarantines. We have three to four months to get it right for our communities and tourism partners to participate in the recovery of travel and tourism we expect to start seeing in other northern countries next summer. It is not realistic to wait for Canadians and international travellers to be vaccinated:  it could take years before some parts of the world are immunized.”

Aviation was one of the most severely affected sectors from the pandemic, with passenger traffic cratering to only 10 to 15 percent of what it was in 2019. Unlike many other countries, most of Canada’s airports are not subsidized by government. With few passengers and little revenue, the system is broken.  Employment in the sector as a whole has been slashed by 50 percent or more. While airports remain open to support the regular commuting of essential workers like nurses, shipments of food, air ambulance, forest fire suppression and other essential services, the revenues that support these services come from passengers.

The Fall Economic Statement did provide deferrals and waivers for airport ground rent at 22 airports.  However, this was primarily for just one year in which low revenues mean little to no rent would have been due for most of these airports in 2021. Calculated as a charge on revenue, airport rent serves as a form of dividend airport authorities pay to the federal government, which continues to own these community assets. After 10 months of deep financial losses, multiple years of rent waivers are required for these airports to arrest the precarious financial situation they are in.

Strong Canadian communities need strong Canadian airports, and they are feeling the pain.  In June, Air Canada suspended flights to 30 Canadian communities and in October, WestJet eliminated service to four Atlantic Canada cities. Without government intervention, additional route cancellations are likely, and some communities fear it will be difficult to get air service back.

“Suspended air routes not only affect people’s ability to travel, but severely impacts inbound tourism and trade,” said Gooch. “The effects could linger for years after Canadians are ready to travel again in great numbers.”

“The challenge early on was convincing government that the air sector required its own relief measures, over and above what was done for businesses in general,” he continued.  “It took an industry-wide push to get the government to see it the same way.  We are grateful for the efforts of our partners in the industry, including air carriers, air sector workers and members of Parliament in drawing attention to the urgency of the situation.”

In the months leading up to this announcement the Canadian Airports Council developed recommendations to the federal government that include:

  • Implementing a nationally consistent and globally aligned rapid antigen screening program at airports to reduce or eliminate quarantine restrictions and restore consumer confidence in air travel.
  • Extending a multi-year moratorium on ground lease rents at the eight busiest airports until business has recovered.
  • Eliminating rent for the 14 small airports, which has never raised more than $15 million in government revenue.
  • Providing interest-free loans or direct operational support for airports.
  • Increasing annual Airports Capital Assistance Program (ACAP) funding for very small airports to $95 million for at least five years.
  • New funding for safety and security related infrastructure at airports not eligible for ACAP, to maintain safe infrastructure, pay for COVID-19 adaptations, and implement new federal regulations projected to cost more than $350 million

The Fall Economic Statement included increases to ACAP funding and a $500 million in infrastructure funding for safety, security and transit, which are positive developments for those airports in a financial position to meet their portion of the funding investment these programs will require.

“I think at this stage it is fair to say that airports received some, but not all of what they need,” Gooch concluded. “In normal times, this may have been enough, but these are not normal times.  We still need to be sure that the government is giving airports meaningful support to provide Canadian with the mobility and access to essential goods and services.”