Smaller cities suffer the economic brunt of Air Canada’s pandemic exit

Because the airways and the federal authorities battle it out over an trade bailout, a brand new spherical of service cuts this week has left many in Canada’s smaller centres feeling like they’re being held for ransom.

There isn’t any query that the funds of Air Canada and WestJet have been severely harm by the collapse of home and worldwide journey through the pandemic, which has solely been made worse by a brand new and extra extreme wave of COVID-19 unfold.

The airways say they’re closing the routes as a result of that’s the place they’re shedding cash.

However as Fredericton, Yellowknife, Prince Rupert and Kamloops were added to an extended record of small communities to the place Air Canada will not fly, questions are being raised over whether or not weak regional economies are getting used as a bargaining chip to drive the federal government’s hand.

Monica LaBarge, who teaches on the Smith Faculty of Enterprise at Queen’s College in Kingston, Ont., mentioned that whereas airways world wide have misplaced cash through the pandemic and are in search of financial savings, it’s arduous to disregard the political implications of slicing companies to smaller enterprise centres which have few transportation alternate options.

“It is not a tough stretch for them to say we simply cannot afford to do it proper now,” mentioned LaBarge, “However there could also be a strategic facet to it as effectively.”

Enjoying a strategic recreation

In Europe, governments have already offered airways tens of billions of {dollars} in bailout cash to assist them survive the monetary influence of journey bans and lockdowns.

And whereas Canadian airways have been in a position to benefit from the identical subsidies out there to different struggling companies, LaBarge mentioned an even bigger bailout bundle particularly for airways has been held up by a dispute over the place the cash will go.

“The airways and governments and shopper teams to some extent have been in a little bit of a standoff as customers are ready for refunds for flights they weren’t in a position to take,” mentioned LaBarge. 

The lineup at Yellowknife airport safety verify on Dec. 29, 2017. In contrast to some regional airports the NWT capital will nonetheless have service for important journey, however not from Air Canada. (Priscilla Hwang/CBC)

By not refunding ticket costs paid in good religion by passengers, she mentioned that Air Canada might have created its personal problem when it then went to the federal government in search of bailout money.

“The federal government’s on this untenable place that they cannot actually afford to do this from an optics perspective and from a equity perspective too,” mentioned LaBarge. “It is not truthful for particular person customers to subsidize Air Canada’s losses.”

On Tuesday, a spokesperson for Canada’s new Transport Minister Omar Alghabra known as regional service cuts disappointing, saying future assist for the airways will probably be on the situation that regional airports proceed to be served.

However Perrin Beatty, President and CEO of the Canadian Chamber of Commerce known as the most recent Air Canada cuts “deeply troubling.”

“With cuts to regional air service in Atlantic Canada and throughout the nation, the state of affairs is far more than simply an air trade concern — pockets of our nation danger being disconnected from others,” mentioned Beatty on Wednesday, calling on the federal government to supply further assist.

Firm blames authorities

In an announcement Wednesday of new service and staffing cuts, the airline put the blame for its newest 25 per cent lower, together with 1,700 further layoffs, squarely on authorities rules.

“For the reason that implementation by the federal and provincial governments of those elevated journey restrictions and different measures, along with the present quarantine necessities, we’ve seen a direct influence to our close-in bookings and have made the tough however needed resolution to additional regulate our schedule and rationalize our transborder, Caribbean and home routes to higher mirror anticipated demand and to cut back money burn,” mentioned Lucie Guillemette, govt vp and chief business officer at Air Canada in a launch.

The lack of extra jobs will get the federal government’s consideration, however maybe not as a lot because the outcry over the lack of service to small city centres throughout the nation.

Ken Christian, mayor of Kamloops, B.C., mentioned he was “past dissatisfied” to see the cancellation of the town’s solely direct flights to Vancouver, about 250 kilometres away. 

Deneen Everett, govt director of Yellowknife Chamber of Commerce, mentioned that whereas stunned by this week’s announcement that the airline was slicing service to the capital of the Northwest Territories, her members had a variety of sympathy for Air Canada as a struggling enterprise.

Yellowknife Chamber of Commerce was dissatisfied Air Canada was pulling out however members believed the airline needed to make the proper resolution for his or her enterprise. (Jennifer Geens/CBC)

“We definitely respect that Air Canada has to make the proper resolution for his or her enterprise,” mentioned Everett. “However clearly it’s disappointing information for our group.”

Airways have urged that air journey just isn’t a serious explanation for COVID-19 unfold, however Everett mentioned that the tight journey restrictions that led to the main service’s resolution have helped to maintain the NWT virtually COVID-free. Presently there are not any instances being reported within the territory.

“We’re one of many most secure locations on the planet proper now and probably the greatest enterprise environments for retail,” she mentioned. Nonetheless, the Chamber stays fearful that with out authorities assist, the close to full lack of vacationer site visitors will result in the everlasting lack of many companies.

One concern for LaBarge is how lengthy it can take for the struggling airline enterprise to get its books in ok form to return to the communities it’s now abandoning. Yellowknife nonetheless has scheduled passenger service from different airways, however in response to Ted Bartlett, president of Transport Motion Atlantic, different communities shedding service usually are not so fortunate.

The Kamloops, B.C., airport pictured in June 2019. Kamloops Mayor Ken Christian mentioned he was ‘past dissatisfied’ that the town is shedding its solely direct flight to Vancouver. (Courtney Dickson/CBC)

Bartlett, who volunteers in his position on the transportation advocacy group, mentioned he was stunned that as New Brunswick’s provincial capital, Fredericton can have no service in any respect.

“It appears to me a metropolis just isn’t a metropolis until it has good transportation hyperlinks to the remainder of the nation and the world,” he mentioned.

Fashionable companies, together with in smaller cities, depend upon shifting items and other people shortly from world wide and Bartlett says many worry regional airports might not survive, compounding the pandemic’s influence on native corporations.

“The airways after all reply to their shareholders and it is all about shareholder worth,” mentioned Bartlett. He mentioned that was totally different 40 years in the past when as a Crown company, a part of Air Canada’s job was to supply service to all elements of the nation.

However in response to an e mail this week from Alghabra’s press secretary Allison St-Jean, the federal government stays dedicated to regional air service, however the technique of acquiring it’s now totally different.

“Earlier than we spend one penny of taxpayer cash on airways, we are going to make sure that Canadians get their refunds, regional communities retain air connections to the remainder of Canada and Canadian air carriers keep their standing as key clients of Canada’s aerospace trade,” she wrote.

Observe Don Pittis on Twitter @don_pittis

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