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Edmonton-based discount carrier Flair Airlines has slashed its schedule, idled four of its seven Boeing 737s and most of its 400 employees are getting the emergency wage subsidy.HO/The Canadian Press

Small Canadian airlines grounded amid the COVID-19 pandemic say without government aid, they will be unable to restart when demand for air travel returns. And Air Canada and WestJet Airlines say they, too, need and deserve more help from Ottawa.

The federal government has announced some help for the air transport sector, such as waiving rent payments for airport authorities until December and loans to some airlines from Export Development Canada (EDC). The 75-per-cent emergency wage subsidy for businesses has also kept thousands of idled airline employees from being laid off.

Ottawa has said more help is on the way for airlines and other industries devastated by shutdowns and social distancing measures aimed at slowing the killer virus.

Even so, small airlines are in danger of failing, said John McKenna, head of Air Transport Association of Canada, which represents 75 of the country’s small carriers, including Air Inuit and Air North.

“They’re all hurting,” Mr. McKenna said. “I’d be surprised if they all made it through.”

Measures such as flight restrictions, border closures and social distancing rules have caused demand for air travel to plummet. Recovery will likely be slow. Income losses and unemployment, along with fear of catching COVID-19 while flying, are expected to keep demand for travel low for at least three years.

Mr. McKenna said the government needs to act quickly to ensure the survival of small airlines that serve Canada’s 600 airports – many of which are in remote communities that rely heavily on air transport for work, food and cargo. “We’ve heard for weeks that [aid] is coming, but that’s all we’ve heard,” he said. “The longer the government waits the tougher it’s going to be.”

The Department of Finance did not answer questions posed by email and phone over two days.

“We’ve seen the public pronouncements in terms of what [the federal government] may eventually do,” said Mike McNaney, head of the National Airlines Council of Canada, which represents Air Canada, WestJet and Air Transat. “We still don’t know how they plan to proceed.”

The lobby group for the country’s largest airlines says the government must provide aid quickly because carriers’ finances are rapidly deteriorating.

Edmonton-based discount carrier Flair Airlines has slashed its schedule, idled four of its seven Boeing 737s and most of its 400 employees are getting the emergency wage subsidy. Jim Scott, chief executive officer of Flair, has a plan to resume service when customers return in the coming months.

But the airline does not have the cash for the gate bookings, simulator training sessions, jet fuel and other expenses required to restart, Mr. Scott said. The carrier’s 2020 forecast, made before the pandemic began, was to carry 1.5 million passengers, and generate $230-million in sales and a $20-million profit. “And now? Nothing,” he said by phone.

The government needs to step in with cash grants for airlines, Mr. Scott said, and ensure the small carriers are not forgotten. “The airline industry, for the most part, has days and weeks left in it, not months,” he said.

Flair applied for a loan from EDC, but it was not accepted, Mr. Scott said. The airline has hired a consulting firm to help it re-apply.

Air Canada tapped EDC in late April for $788-million to buy 18 Airbus A220s. Porter Airlines received a $135-million loan from EDC.

But bailing out Air Canada and WestJet could be an unpopular move for the federal government. The carriers have plenty of cash to pay for fixed costs and the means to borrow money.

Both airlines are also refusing to refund customers’ money for flights cancelled due to the COVID-19 pandemic, a stance backed by the Canadian Transportation Agency. It is not clear if announced class-action lawsuits or provincial consumer laws will override the federal watchdog’s judgment.

Jacques Roy, a logistics professor at HEC Montreal, said taxpayer aid could come with a key condition: The airlines must give refunds.

WestJet had $1.3-billion in cash and posted a 70-per-cent increase in profit in the third quarter of 2019, the airline’s final public reporting period before it was taken over by Onex Corp.

Calin Rovinescu, Air Canada’s chief executive officer, said on May 4 Canada’s largest airline had $6.5-billion in cash at the end of March, and is able to borrow more. But when asked about Ottawa’s much-anticipated airline aid, he noted large carriers in other countries were in line for packages worth about US$10-billion each.

“I know our government is looking at and considering various models from around the world,” Mr. Rovinescu said. “I would say that those are all models that are out there for larger carriers that we would consider to be potential competitors.”

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