Canada Stops Short of Direct Airline Aid in Federal Budget

Photo credit: Canada's 2021 federal budget provides no direct aid to airlines. Library of Parliament/Flickr

Canada’s federal budget, delivered to Parliament this week by the government of Prime Minister Justin Trudeau, offered the country’s struggling airlines a half-step toward aid without directly funding the industry. This stands is stark contrast to the U.S., which has funneled more than $70 billion to the country’s airlines since the pandemic began.

The budget includes $66 million (CAD$83 million) for biosecurity measures for the country’s airports. Other measures include $84 million to Transport Canada for digital security and $217 million for enhanced screening at 89 airports. The budget also includes a commitment to reopening the country’s borders. Canada has among the most stringent travel restrictions in the world, requiring both negative Covid tests and quarantines for incoming passengers. The U.S. border remains closed for non-essential travel.

The budget also contains almost $2 billion in aid for Canada’s aerospace sector.

Airlines did not get any direct aid in the budget, but airlines may be elibigle for loans through the government’s Large Employer Emergency Financing Last week, Air Canada got a $5 billion package through the program. The government is in talks with WestJet, Sunwing, and Air Transat for LEEF financing, Airline Weekly has confirmed.

The National Airlines Council of Canada (NACC), which represents the industry, said the budget was a good first step. “But more work is required, in particular the development of a safe restart plan for aviation and international travel, if we are to restore the hundreds of thousands of Canadian jobs that are supported by the sector and facilitate the economic recovery of communities across every region of Canada,” Mike McNaney, NACC president, said.

Air Canada has roughly halved its workforce since the pandemic began. Most of those workers were eligible for existing unemployment programs. As part of its loans through LEEF, Air Canada pledged to keep all 15,000 employees remaining on its roster. The carrier also committed to buying 33 Airbus A220s manufactured in Mirabel, Quebec as part of the deal.

In the U.S., by contrast, the CARES Act last year and subsequent coronavirus aid packages prevented U.S. airlines from furloughing or laying off staff. Tens of thousands of employees in the U.S. took voluntary separation offers, however.

WestJet did not confirm if it is in talks with the government for a LEEF loan package, but said it is discussing a safe travel restart program. “A healthy WestJet will help lead a stronger recovery, increasing competition and consumer choice while lowering the cost of travel for Canadians, all while anchoring Canada’s vital air travel and tourism sectors,” a spokesperson said.

Until the LEEF program extended aid to Air Canada last week, Canada stood out among large economies for not providing direct aid to airlines. “Countries that have a robust safe restart plan for their aviation sector and international travel, will be the best positioned to ensure the strong return of their overall economy, and bring back jobs and investment by successfully competing and taking market share from countries that are not well prepared,” McNaney said.