Canada moots subsidised regional air connectivity

In a major policy direction change, the Canadian government is considering subsidising airlines to stimulate affordable air connectivity across the country. “The government will work with partners to support regional routes for airlines,” the Governor General of Canada, Julie Payette, said during the throne speech at the recent opening of parliament. “It is essential that Canadians have access to reliable and affordable regional air services. This is an issue of equity, of jobs, and of economic development,” she said. The Canadian government until now had resisted calls for sector-specific aid programmes, focusing instead on broadly applied credit programmes and a federal wage subsidy. However, the throne speech signalled a change of direction, suggesting the government would focus on the hardest-hit sectors, “including travel and tourism, hospitality, and cultural industries like the performing arts”. This was confirmed by Economic Development Minister Mélanie Joly, who told CBC News the government planned to stimulate the local aviation industry and economy by subsidising airlines to launch affordable air services between smaller regional centres and connections to larger cities. She said the final details were still being worked out, but the idea was similar to the US’s Essential Air Service (EAS) programme, by which the government subsidises airlines to serve smaller communities that otherwise would not receive scheduled air services. This comes after Air Canada (AC, Montréal Trudeau) in June indefinitely suspended 30 domestic regional routes and closed eight stations at regional airports across Canada in response to a drop in air travel demand caused by COVID-19. The closures particularly impacted air travel in Atlantic Canada, Quebec, rural Ontario, and the West. The pandemic has resulted in a 94% drop in passenger numbers in Canada, with the airline industry operating at about 15% capacity, according to The National Airlines Council of Canada. Joly could not clarify if Air Canada would qualify for a subsidy to resurrect its suspended flights, or if the government planned to focus on different carriers. She also couldn’t say how large the subsidies would be and how they would be delivered. “We’ll be talking with every player in the sector, but at the same time, this needs to be a solution that makes sense,” she said. “And for a long time, many players across the country have been wanting to really connect, concretely, every day our regions and we want to give them a chance,” she said.