Canadian airlines won't recover from COVID-19 for years: Industry execs

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The future of Canadian airlines in the wake of COVID-19 is looking pretty grim after industry executives testified in front of the Commons health committee.

“We don’t see our business recovering for another three years,” said Ferio Pugliese, senior vice-president with Air Canada, according to Blacklock’s Reporter. “By the time we hit the end of this year we might see ourselves recouping about 25% of our business.”

Pugliese said it costs Air Canada $22 million a day to operate with revenues down 95% and 20,000 employees laid off.

“That equates to about $1.8 billion a quarter,” he said. “If you do the math on that, if demand does not pick up, it has a significant downward impact.”

On March 25, the Canadian Transportation Agency gave airlines the green light to offer customers travel vouchers instead of cash refunds for prepaid tickets. The Transport Ministry says airlines owe customers billions of dollars in that regard.

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However, the agency suspended all public hearings into consumer complaints.

“To suddenly require paying out the refunds all at once, which would be in the billions of dollars, could have very significant economic consequences for airlines,” testified Lawrence Hanson, assistant deputy transport minister.

“There is at present no requirement that airlines undertake a specific activity related to the refunds.”

Howard Liebman, Air Transat’s senior director, said the airline hasn’t earned any money since operations were suspended on April 1.

“Sales and revenues completely collapsed,” said Liebman. “In our leisure business, summer is do or die. We’re already well into summer. We’re looking at offering about 15% of our offerings. It is a pretty dire situation.”

But Conservative MP Matt Jeneroux (Edmonton Riverbend) questioned consumers with prepaid tickets getting vouchers instead of refunds.

“It’s unfathomable to me that if someone paid for a service but didn’t use that, they would still be charged for that service,” said Jeneroux.

Jared Mikoch-Gerke, manager with WestJet Airlines, said offering customer vouchers was “an appropriate and responsible approach in extraordinary circumstances.”

“We’ve had to park two-thirds of our fleet, our workforce has been reduced by 9,000 and we are operating about a hundred flights a day carrying less than 10% the number of guests that we normally would be,” said Mikoch-Gerke, adding WestJet travel is down 90%.

He said WestJet hasn’t flown to the U.S. or internationally since March 23.