Financial Aid for Canadian Airlines- A Strategic Approach

11 January 2021

Joseph Sparling, President & CEO

The coronavirus pandemic has caused aviation demand to take more than a forty year backslide and, as a result, airlines are incurring record losses. Governments have stepped up with broad based short-term business assistance but the airline industry, in particular, is still struggling and asking for more aid to be directed specifically to the airline sector.

In Canada, airlines were not subsidized at all forty years ago, (setting aside the fact that Air Canada was government owned), so why do we need so much help now? The answer is that airlines have responded to the huge growth in travel demand during recent years by acquiring new aircraft, starting new routes, and entrepreneurs, eager to respond to new demand, have started new airlines. This growth in capacity simply cannot be unwound overnight, nor should it be unwound completely because, as a nation, we need to keep our domestic communities connected and we need to keep Canada connected with the rest of the world.

The airline industry has been critical of government(s) for not providing more aid. Canadian carriers who operate internationally have observed that they are operating at a disadvantage to foreign carriers, many of whom are heavily subsidized by their governments and/or operate at a lower cost structures resulting from lower fees and taxes in their countries. Domestically, while there seems to be general acknowledgement that it is in the public interest to ensure that air service to remote and other regional communities is assured, as an industry, we have not been effective in reaching out to government with a unified voice and with a plan to see our way through the pandemic without placing a massive financial burden on taxpayers.