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What if Right sizing means getting rid of a large percentage of the fleet? Should a government help pay the rent or loan payments for underutilized/stored aircraft? I don't how many Westjet aircr

I think it was one of several prerequisites, as was a revised Transat deal.  If the government is to support the industry, it must be based on some kind of sustainable basis going forward. Trying

I have family that is transitioning from CERB as well.  Although they do qualify for EI they took another route.  They got a JOB.  

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WestJet's retreat from Atlantic Canada pushes the federal government into a corner

The industry is asking for loans — but a sector-specific boost could lead to broader demands for help

Fri Oct 16, 2020 - CBC News
by Aaron Wherry

Two hours after WestJet announced on Wednesday that it was curtailing its flights to and from Atlantic Canada, an email went out to all MPs and senators from Liberal MP Chris Bittle, parliamentary secretary to Transport Minister Marc Garneau.

"The COVID-19 pandemic has had a tremendous impact on all aspects of the Canadian economy, but few industries have been more negatively impacted than the air sector," Bittle wrote in a letter first obtained by Radio-Canada.

"Many of you have reached out to us to share your thoughts about the current impact of COVID-19 on the air sector. At this stage, we would like to hear from all parliamentarians [on] what is required to support a robust air sector in Canada."

Last month's throne speech promised "further support for industries that have been the hardest hit, including travel," and the government's consultations on support for the air sector apparently were due to start this week.

While demands for government aid to the air travel sector have been building for months, WestJet's regional retreat will drive those demands to a new level.

For the federal government, the case for doing something to prop up airlines and airports might be stronger than the case for doing nothing. But even if the government wants — or needs — to intervene, it still has to work out a way to do so that it can defend politically.

Bubble trouble

P.E.I. Premier Dennis King was among those calling on the federal government to take action on Wednesday. But it's the region's own "Atlantic bubble" pandemic policy — which imposes registration requirements on travellers from outside of Atlantic Canada and compels them to self-isolate for 14 days upon arrival in the region — that has caused the demand for flights in and out of the region to crater.

The Liberals probably don't want to be blamed if reductions in air service across the country become permanent. And sure enough, New Brunswick Premier Blaine Higgs told CBC's Power & Politics that he came away from a conversation with Intergovernmental Affairs Minister Dominic LeBlanc on Wednesday with the impression that "something's going to happen" for the ailing industry.

The federal response to the pandemic has not ignored the country's largest companies. All businesses have been able to access the federal wage subsidy. In May, the Liberals rolled out a targeted loan program known as the Large Employer Emergency Financing Facility (LEEFF).

WestJet has made use of the wage subsidy; Richard Bartrem, VP of marketing communications at WestJet, called it "terrifically helpful." WestJet has not sought assistance through the LEEFF program.

"The conditions that were placed [on] it just made it unwieldy in terms of our ability to recover from the pandemic," Bartrem said.

Critics have claimed LEEFF was rolled out too late and offers loans at terms less generous than what is available in the private sector. (When it was introduced, then-finance minister Bill Morneau called the program an option of "last resort" — so it might have been designed to not be popular.)

Only one company has been approved for a LEEFF loan to date, according to the federal government. Not long after the federal government announced that loan to Gateway Casinos (which operates 26 facilities across Canada), Conservative finance critic Pierre Poilievre was on his feet in the House of Commons ripping into the decision as an irresponsible use of public funds.

That's the risk a government takes whenever it offers help to specific firms or industries — even in the midst of a global economic crisis.

The nationalization route

Transport Minister Marc Garneau has had to fend off questions already about compelling airlines to refund customers for flights that were cancelled by the pandemic.

At the time, Garneau's stated reason for not forcing airlines to offer refunds seemed practical. Some struggling airlines might have collapsed completely if they were forced to pay back that money, he said. But if (or when) the federal government offers airlines support, the political conflict over refunds will come roaring back.

When Chrystia Freeland became finance minister in August, the National Airlines Council of Canada, which represents major carriers, wrote to her to outline a request for financial support in the form of "loans, loan guarantees or direct assistance." Airline unions have asked for $7 billion in federal loans.

The airlines also want "a national framework to ease interprovincial travel restrictions ... reciprocal border agreements with targeted safe countries" and the deployment of rapid COVID-19 testing.

Other countries have moved already to rescue their national carriers — in some cases through outright nationalization. The German government, for instance, now owns 20 per cent of Lufthansa. In Canada, any nationalization presumably would have to involve both Air Canada and WestJet.

LEEFF's limitations notwithstanding, the program's design suggests the government knew that it would have to justify and defend any effort to bail out a major corporate entity. LEEFF loan recipients have to abide by conditions that include restrictions on executive compensation and a requirement for climate-risk disclosure. Perhaps new conditions would help make loans for airlines more politically acceptable.

The political downside to bailouts

But even if the Trudeau government changed the terms of LEEFF to make it more industry-friendly, it still could be left to explain why the airline industry — or any other group of wounded firms — deserves special attention right now.

The Liberals have avoided taking a sector-specific approach to pandemic relief to date. If they start providing sector-specific assistance now, the floodgates will open — other sectors will demand the same assistance, or at least call on the Liberals to explain where they're drawing the line and why.

The government's throne speech specifically mentioned one avenue for assistance: supporting regional routes for airlines. "It is essential that Canadians have access to reliable and affordable regional air services," the speech said. "This is an issue of equity, of jobs, and of economic development."

That's a justification for targeted support. Would that be enough?

There's also the question of timing. As Premier Higgs acknowledged in his interview with Power & Politics, financial support will be of limited use as long as large numbers of people are uncomfortable with the idea of flying — and have nowhere to go.

Free-market disciples might turn their noses up at all of this, but the Trudeau government probably doesn't see this as the right moment to insist on laissez-faire economics. And perhaps the other federal parties will be reluctant to make the case for doing nothing as well.

For Trudeau, the challenge is to come up with an approach that makes things better — without making his government's political burden significantly heavier.

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5 minutes ago, Super 80 said:

I think we have to accept the possibility that Ottawa is at least okay with the airlines failing.

Or perhaps just content with the idea of one Major Airline along with smaller feeders?  

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I reiterate that I would like to see the government cash out some of the airlines tax losses. I imagine that AC alone will end up with a multi-billion dollar tax loss this year. If you trade government guaranteed loans for tax losses, the airlines will be paying tax again sooner once the market turns around. They'd also be able to recover their tax losses by repaying the loan and a fee. 

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Out of curiosity would anybody have the $$$ value each airline got to keep thru the cancelled ticket "voucher" idea.  The government gave the airlines a pass already and looked the other way.

2 x I tried to recover my money properly following the DOT guidelines -told no. So if the airlines get money, a lot of people are going to want their $$$ back before the ink dries.

Best to all affected by this chaos.  

 

 

 

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If accurate this will force the feds to do something about refunds, evidently no cash refunds for the cancelled Maritime flights.

Airline passengers voice frustrations after WestJet cuts services, refunds with vouchers

From Global News – link to story

By Graeme Benjamin Global News | Posted October 15, 2020

Click to play video 'WestJet passengers frustrated after services cut, refunds refused' A day after WestJet announced it’s cutting over 100 flights in Atlantic Canada, passengers say they aren’t being offered a full refund – only travel credits. As Graeme Benjamin reports, passengers say those credits will be of no use if the airline doesn’t return east.

Airline passengers trying to fly to the Maritimes say they aren’t being provided with a full refund after WestJet announced it would be significantly cutting services in the East Coast.

On Wednesday, WestJet announced it would suspending flights to Moncton, Fredericton, Sydney and Charlottetown indefinitely, while “significantly” reducing service to Halifax and St. John’s.

It’s a move airline passengers in the Maritimes say makes sense, given the situation brought about by COVID-19. But what doesn’t make sense to them is how they are being reimbursed.

“I don’t blame them for this decision, but they did take my money, they did take my reservation, and now they have to live with the consequences,” said Emmanuel Maicas, who recently booked a trip to the Dominican Republic.

Maicas says he spent nearly $6,000 on flights for the family trip. He says the travel credits are of no use to him if WestJet isn’t returning to Moncton, where he lives.

“If WestJet does not provide the service to me, well, I want my money back,” he said.

“In my mind, the only thing that will satisfy me is a full refund.”

That’s a similar situation that Megan Hilderpants has found herself in. She’s feeling slighted by WestJet after she and her wife booked flights to Fredericton just a few days before Wednesday’s announcement.

“It kind of seemed like they were already aware like this was unfurling,” said Hilderpants. “It seemed sort of dodgy that they would sell us tickets that soon.”

Hilderpants is also in the process of getting her money back, as Fredericton is the only location she and her partner are considering travelling to.

In a statement, WestJet spokesperson Morgan Bell said the Canadian Transportation Agency has determined that refunds to travel credits is acceptable in light of the situation brought about by COVID-19.”

But passenger rights activist Gábor Lukács says providing vouchers rather than a full refund is unlawful and verging on fraudulent.

“WestJet is breaking the law here by not complying with the fundamental obligation to refund passengers or rebook them,” said Lukács. “As an airline you have an obligation to rebook passengers or flights of other airlines.

“If they choose not to, you have an obligation to refund them in the original form of payment.”

Lukács says WestJet’s decision may be justifiable from a public health perspective, but its vouchers do not follow provincial, federal, nor common law.

“As a general contractual principle, if you make a contract to provide services and you are unable or unwilling to perform the services, the bare minimum you have to do is give back the party the bare minimum they paid,” he said.

As for the airline passengers, they don’t expect their fight with WestJet to end swiftly.

“Give us our money back, would be nice. That would be ideal,” said Hilderpants.

© 2020 Global News, a division of Corus Entertainment Inc.

 

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If a flight was booked and then cancelled to or from a destination that is no longer available, a refund should be given. Full stop. If a flight was cancelled to or from a destination that is still available but at a reduced frequency, you could make an argument to provide a travel credit. 

This whole concept of keeping money in the form of a credit when the airline knows full well many of these flights aren't going to return for years is incredibly shady. 

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54 minutes ago, CanadaEH said:

This whole concept of keeping money in the form of a credit when the airline knows full well many of these flights aren't going to return for years is incredibly shady. 

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The union also noted that a broad coalition of aviation employees will demonstrate on Parliament Hill at noon on October 20, demanding concrete measures from the Government of Canada to ensure the safe recovery of the aviation industry.

I can hear it now, the full throated roar of public support for an industry that's remained so demonstrably principled throughout the crisis.

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Here’s what agents are saying about WestJet’s cuts – and will there be refunds?

From Travelweek – link to story

Here’s what agents are saying about WestJet’s cuts – and will there...

Friday, October 16, 2020 | Posted by Kathryn Folliott

TORONTO — WestJet isn’t the first airline to pull its flights from a once-robust market amid the COVID-19 pandemic, and it likely won’t be the last.

After WestJet announced that it was cutting 80% of its capacity in Atlantic Canada effective Nov. 2, local travel agents we spoke to said they were sympathetic to WestJet’s plight, noting that the airline’s cuts came on the heels of Air Canada’s route suspensions, announced in June 2020 and primarily in Atlantic Canada, and Transat’s July 2020 decision to cancel its USA and South program out of Western Canada.

Many agents say they are hoping these latest cuts will get the attention of the federal government, as the industry continues to lose jobs and millions of dollars, and entire regions lose airline service on major carriers.

Others wondered, will WestJet offer refunds instead of FTCs for the cancelled routes, since service has been suspended indefinitely with no restart date in sight?

THE REFUNDS QUESTION

The federal government is in the midst of the ultimate balancing act, protecting the country’s economy and health amid an unprecedented pandemic, and there are no easy answers.

But there is an answer to the refunds question. At this point, WestJet says it will not be offering refunds on the cancelled Atlantic Canada flights.

“We appreciate there are Atlantic Canadians who are voicing their desire for refunds in light of this announcement,” WestJet spokesperson Lauren Stewart told Travelweek.

“We fully anticipate returning to the region when the situation improves and will extend the travel credit expiry date beyond the current 24-month window should it be required,” she said.

Stewart added that the Canadian Transportation Agency has determined that refunds to travel credits is acceptable in light of the situation brought about by COVID-19.

WestJet announced its cuts to the Atlantic Canada region earlier this week. Service to and from Moncton, Fredericton, Sydney and Charlottetown will be suspended indefinitely. Quebec City flights will also be discontinued.

Service to and from Halifax and St. John’s will be reduced, to 2x daily service between Halifax and Toronto, 9x weekly service between Halifax and Calgary, and 11x weekly service between Halifax and St. John’s. All changes take effect Nov. 2.

Until now WestJet was the only Canadian airline that serviced 100% of its pre-COVID domestic network.

“We understand this news will be devastating to the communities, our airport partners and the WestJetters who rely on our service,” said Ed Sims, WestJet President and CEO. “While we remain committed to the Atlantic region, it’s impossible to say when there will be a return to service without support for a coordinated domestic approach. Our intent is to return as soon as it becomes economically viable to do so.”

RETAILER REACTION

Since July 3 Nova Scotia, Newfoundland and Labrador, PEI and New Brunswick have maintained an ‘Atlantic bubble’ in an effort to keep COVID-19 transmission and caseloads to a minimum. Air travel to and from Canada has also been severely impacted by the federal government’s 14-day quarantine requirement and its advisory against all non-essential travel, now into its eighth month.

With the Atlantic bubble in place, “no one is travelling to and from Atlantic Canada. As a result both WestJet and Air Canada have reduced their capacity. Unfortunately a negative economic impact of keeping Atlantic Canadians safe,” says Gary Gaudry, President, Maritime Travel.

While the route suspensions are disappointing, Gaudry adds, his first concern upon hearing the news about WestJet’s cuts was for Maritime Travel’s clients. “When Air Canada ceased serving a market they had refunded the customers who had credit as the customers had no way to use their credit. Hopefully WestJet will see fit to do the same.”

Gaudry notes that the federal government did announce recently that it plans to support regional airline routes, so as not to isolate cities.

He adds: “We are hoping that when the government provides the necessary support, the airlines will return to the markets they have exited.”

While the Canadian government stepped up with a long list of financial aid programs like CEWS and CERB, providing strong economic support for Canadians in these extremely challenging times, it has so far not provided industry-specific assistance for airlines.

WestJet’s Sims said that while WestJet worked to keep essential air service to all of its domestic airports, demand for travel is being severely limited by restrictive policies and third-party fee increases “that have left us out of runway without sector-specific support.”

Joel Ostrov, President, Canada East Region – Direct Travel, says his reaction to WestJet’s decision echoes his reaction to other cuts made by airlines around the world, including here in Canada, in the wake of COVID-19. “Air Canada made similar cuts to their regional network serving smaller communities in Canada,” says Ostrov. “These cuts are made for the most part because of the Canadian government’s refusal to give assistance to the airline industry in this country. If you contrast this to other countries, almost all of them have given billions of dollars to assist the airline industry to get through the COVID-19 crisis, but Prime Minister Trudeau has refused to offer direct assistance to Canada’s airlines.”

Ostrov said that WestJet’s decision, “although painful to those communities affected, is totally understandable given the current situation, and probably totally necessary to their survival.”

He called on the travel industry to lobby the federal government to provide aid to Canadian airlines to help them survive the pandemic.

ON THE FRONT LINES

In Charlottetown, PEI, The Travel Store owner Paulette Soloman says WestJet’s service suspension was a complete surprise.

“We had no idea this announcement was coming, it was quite out of the blue for us. It’s really unfortunate to see reduced lift coming out of Atlantic Canada,” she said.

WestJet was a welcome addition to the options available to her agency’s clients, says Soloman. “Not only were they offering excellent service within Canada but their expansion into international destinations has been great for travellers as well.”

Like Ostrov, Soloman says these latest route cuts are a clear indication that help is needed from government – not just for airlines but for the entire travel and tourism industry. “When big players like WestJet are cutting service it should not go unnoticed, and I hope very much that attention is given to the effect not just on this airline but also to the trickle-down effect on other industry players such as travel agencies and our advisors, and of course most importantly to travellers,” she said.

Travel Time TPI’s Lois Barbour, in St. John’s, NL, says the focus should be on rapid testing as a means to get air travel back in true recovery mode.

“We have still not moved any closer to a plan to implement that would allow us to travel safely, with quick tests administered on departure and arrival to ensure that travellers with COVID-19 are not moving about undetected,” says Barbour. “That seems like it should be the issue that deserves momentum around it which would then allow us to open up to travel gradually and safely.”

Barbour adds: “The airlines are essential to our economic futures and our travellers deserve more efforts towards the implementation of a plan. It’s a sad day for the industry when after these many months we still cannot have hope of a return to normal operations.”

In Dartmouth, NS, Niche Travel Group owner Faith Sproule says the drop in capacity from Atlantic Canada will hurt WestJet Vacations sales as well. “We only had one direct flight to Halifax to Cancun, but often used WestJet Vacations for Saint Lucia, Antigua, Barbados, etc. I hope they keep two or three flights a day to Toronto so we can still send clients away. One more issue for us to deal with now.”

And it’s not just WestJet. Says Sproule: “Transat cancelled their direct Halifax to Jamaica (our top seller), but right now they still have Cancun, Punta Cana and various parts of Cuba. We have over 150 passengers rebooked for 2021 destination wedding groups to Jamaica and had to go through the full cancellation process again for the second time with them. Total nightmare!”

TTAND travel specialist Scott Penney is also based in Dartmouth, NS. He worries about more cuts in the coming months, as the industry heads into winter with no end in sight to the travel restrictions and the pandemic. The industry has rallied like never before in the face of COVID-19. But the concern is real.

“No doubt our Atlantic bubble has had a major impact on WestJet’s decision which is totally understandable,” says Penney. “From a pure economic standpoint, they cannot continue to have planes come into and out of Atlantic Canada that are mostly empty.”

Penney says he’s worried about the lasting impact on lift in and out of the region. “Being such a small part of Canada, I worry that the cutbacks by WestJet may be around for a long time and may have a lasting impact especially on our smaller towns and cities.”

But moving on from the pandemic is the light at the end of the tunnel for this industry, one that has overcome so much especially in the past two decades. Says Penney: “I look forward to when COVID will be just a memory as we look forward to rebuilding our industry … and seeing WestJet and the other airlines start to increase their lift out of Atlantic Canada again.”

 

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3 minutes ago, Fido said:

Maybe after this people will realise that Westjet does not care about the East and Air Canada does not care about the West

Fido, do you really think any  private corporation or indeed any political party cares about anything than themselves?   

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On 10/17/2020 at 12:48 PM, Airband said:

I can hear it now, the full throated roar of public support for an industry that's remained so demonstrably principled throughout the crisis.

I'm sure the government's lack of early action reflects the poor standing of the industry with the public on issues like refunds. However, I think the government was also right not to rush in with aid like the US and Europeans did. Those first tranches of aid were either premature, essentially subsidizing unneeded capacity and saving airline shareholders. In Canada, there were measures for people and small business, more so than for large corporations. As bad as things have gotten, large corporations have not filed for bankruptcy. Large landlords have absorbed rental hits rather well, even if they have had to trim shareholder dividends a bit. It's fair to have shareholders of all businesses eat a bit of the loss. I thought the US airline bailouts in particular were ridiculous, basically keeping everyone on staff, most of the planes flying, etc. That's just a waste of government funds. And only now that that program has ended is the US airline industry downsizing. It's painful, but why subsidize people and corporations to do nothing?

In Canada, the rightsizing program in the airline industry is well advanced. I'd rather not see the airlines take shareholder positions in the industry. They can suspend the excise tax on aviation fuel, trade loan guarantees for tax losses, etc, cut airport fees and rents on the proviso the airports pass some of that down to the airlines.

The government could even get creative. For example, take over the leases on some AC 777-300ERs to replace the military's A310s, which is also an efficiency and environmental benefit.

But whatever the plan, there will be complaints that it serves some airlines better than others. That may be inevitable because of the different missions, ownership structures, etc. And the plan also has to address the rest of the tourism industry that isn't covered by the various government programs already in place.

 

Edited by dagger
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I thought the US airline bailouts in particular were ridiculous,

You've said that several times I think.  Wasn't the real fear driving the bailouts that having to refund so many airfares nearly overnight would put several carriers  into Chapter 11?

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Use your Travel voucher / credit to purchase a fully refundable fare to any destination.  call back and cancel the flight and ask for your refund.  problem solved.

 

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19 minutes ago, Specs said:

You've said that several times I think.  Wasn't the real fear driving the bailouts that having to refund so many airfares nearly overnight would put several carriers  into Chapter 11?

It wouldn't matter - the government could have strung out the airlines for a while, insisting that they take downsizing actions up front. Instead, the aid package explicitly required them to maintain flights and employment. 

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34 minutes ago, boestar said:

Use your Travel voucher / credit to purchase a fully refundable fare to any destination.  call back and cancel the flight and ask for your refund.  problem solved.

And the refund will be applied to the form of payment used for the refundable fare, IOW the value of the travel credit will just be reinstated. Problem not so solved.

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