New restrictions on flights from the Caribbean and Mexico announced on Friday could trigger bankruptcy in Canada’s aviation sector and force permanent closures of airports and travel agencies, experts say.
“Today’s announcement is really the nail in the coffin for the aviation and tourism business,” said Robert Cogniz, Founder and Managing Director of Airtel Inc., an aviation consultancy. “We’m going to look at bankruptcy filings, some of which you might even see failures.”
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John Groteck, a lecturer at McGill University and head of its global aviation leadership program, said Sunwing and Transat AT Inc. are at high risk for bankruptcy because they rely on planes for solar destinations.
Sunwing said the risk of the plane going bankrupt was “definitely a lie”. Spokeswoman Melanie Phillips said the decision to suspend flights to all solar destinations was based on continued cooperation with the government and the Canadian aviation industry.
Transat has announced that it will completely suspend all Air Transat flights, including Europe, until April 30, sending customers back to Canada within the next two weeks.
“We will do everything we can to bring our customers back to Canada,” said CEO Jean-Marc Eustach.
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Gratech said it expects additional cuts, including 400 to 500 layoffs at WestJet and 2,000 at Air Canada, at WestJet Airlines Ltd. and Air Canada.
According to Air Canada, flights to destinations in the sun represent about 12 percent of total revenue, which is estimated to be about $ 200 million in lost revenue between now and April 30.
Experts’ comments come as Prime Minister Justin Trudeau announces that airlines have reached an agreement with the government to suspend flights to the Caribbean and Mexico until April 30.
Trudeau said those who come to Canada should be isolated in a hotel, which can cost them more than $ 2,000. If passengers test negative for COVID-19 after three days, they will be allowed to be isolated at home, even if they are under close surveillance.
If entrants are tested positive for the virus, they must complete 14 days of isolation at a government facility to ensure they do not carry the most aggressive variant of the disease, Trudeau said.
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Air bookings have already dropped significantly this month after the federal government announced that passengers entering Canada must provide proof of a negative COVID-19 test before departure. Declining demand prompted airlines to cut more routes and staff, and Air Canada laid off 1,700 workers this month.
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But Cogonis said the latest round of restrictions will further restrict travel, which could lead to major changes in the landscape of Canada’s aviation industry.
“It would definitely end up with hundreds of travel agents across the country, if not thousands, of people,” he said.
Airlines have been in talks for months with the federal government on the terms of any sectoral assistance. Ottawa has said it will continue to offer any assistance in getting a full refund for passengers whose flights have been canceled since the outbreak began.
On Friday, several industry groups said they hoped the government would take action on the financial relief of the restrictions.
The National Airlines Council of Canada, which represents key carriers in the country, has reiterated its call for government assistance and said the organization looks forward to working with Ottawa on a recovery strategy for the industry.
UNIFOR calls for immediate financial assistance to stem the tide of total industrial collapse.
“You can’t be without another. Further travel restrictions without providing financial assistance to airline workers could jeopardize the future of Canada’s aviation industry, ”said Jerry Diaz, the union’s national president.
Canadian Airports Council country airports are burning with cash reserves, lay off employees and have 85 to 90 percent more debt than they need since spring.
“Today, there is nothing to reduce, but restrictions continue to accumulate,” said President Daniel-Robert Cooch.
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The Canadian Association of Independent Travel Consultants said the sector, especially storefront agencies, needs vital support to survive.
“I am very disappointed that they would not have released this announcement at the same time today with the help announcement,” Kokonis said.
The remaining flights, especially the Trans-Pacific or Atlantic routes, are more important to airlines financially than flights to solar planes because airlines have contracts to ship cargo with them, Gretek said.
Those freight routes are also important during infections because they can be used to carry medical equipment and vaccines, Gretek said.
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“For those who wonder why all flights simply cannot be grounded, we note that doing so can lead to unintended consequences,” said Robert Kiquare, CEO of the Air Canada Pilots Association. “If the plane crashes, it can shut down the supply chain of important goods to Canadians _ name some, including mail, BPE and drugs.”
“Last week, our pilots operated planes with very few passengers _ less than six per cent of pre-epidemic loads _ but carried millions of kilos of essential goods across Canada and across the country,” Kikuer said.
Gratech said the aircraft’s revenue has increased during epidemics and will soon exceed revenue from passenger sales. Over the past few months, Air Canada has switched some aircraft exclusively to carry cargo.
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