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View of the empty counter of Air Canada at the International Airport in Mexico City on Feb. 1, 2021.ALFREDO ESTRELLA/AFP/Getty Images

Air Canada said it needs government aid before it can give refunds to customers whose flights were cancelled in the pandemic.

An executive from Canada’s largest airline told federal politicians on Thursday the airline has followed the guidance of the Canadian Transport Agency and offered vouchers or credits instead of refunds for the thousands of flights cancelled during the COVID-19 pandemic.

Under questioning, David Rheault, Air Canada’s managing director of government affairs, was unable to say how many tickets the non-refunded fares amount to, but said the airline is trying to preserve its cash amid a collapse in demand for air travel. Air Canada has already refunded about $1.2-billion in fares, where required, he said.

“From the outset we complied with the order of the Canadian Transport Agency,” Mr. Rheault told the House of Commons transportation committee. “If we get some aid from the government, we’ll be able to refund” the fares.

Taylor Bachrach, a NDP member of Parliament from British Columbia, noted Air Canada’s latest financial results showed it had $7.7-billion in liquidity, including almost $3.7-billion in cash.

As of Sept. 30, Air Canada had $2.3-billion in advance ticket sales.

The airline has collected almost $500-million in wage subsidies from the taxpayer-funded emergency program designed to prop up people sidelined in the pandemic, Mr. Bachrach said. “That would make it the largest recipient of the wage subsidy in Canada,” he said.

“Can you explain to Canadians why a corporation with billions of dollars cannot provide a refund to customers for a service that was not provided?” he asked Mr. Rheault.

Air Canada is burning through $15-million a day and has laid off 20,000 employees – about half its work force – as it cuts routes and pulls out of smaller airports to save money. Mr. Rheault said the carrier is operating 20 per cent of its network with 50 per cent of its employees.

“This situation cannot carry on,” he said.

The federal government is in talks with the aviation sector on aid that is expected to include loans, grants and breaks on fees. The government has said any airline that wants financial help from taxpayers must refund customers’ money. The airlines have lamented the slow pace of the talks, and noted their international rivals have enjoyed state aid worth about $200-billion.

WestJet Airlines Ltd. in October said it would give refunds for flights that the airline cancelled, reversing its policy amid public pressure from customers who said a credit was useless, given many people do not want to travel.

The plight of Canada’s airlines shows no sign of improving as governments in Canada and elsewhere impose new travel restrictions to contain a resurgent pandemic.

The government announced plans to require travellers to take a COVID-19 test on arrival in Canada, and a three-day stay at a quarantine hotel, at a cost of about $2,000, while waiting for the test results. Those who test negative can continue their 14-day quarantine at home, while anyone who tests positive will be transferred to a government facility.

Canada’s airlines last week agreed to suspend all flights to Mexico and the Caribbean between Jan. 31 and April 30. As a result, Sunwing, Air Transat and Air Canada Rouge have suspended operations. Porter Airlines has been grounded since March.

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