As negotiations are set to begin between major airlines and the government for an industry-specific pandemic support package, the head of WestJet sent an open letter to MPs and senators today to say his airline was not asked by the government to refund passengers for cancelled flights.
The airline’s president and CEO Ed Sims wrote that his airline “took this action without any prompting from the government because it remains the right thing to do and we did so at the very first opportunity.”
“Looking after Canadians is not something that a government needs to extract from this company.”
The comments came after Transport Minister Marc Garneau said he made it “very clear” to airlines “until they commit in writing to refund passengers, they will not get a cent from the Canadian government.”
It’s a change in government messaging that started with Garneau’s announcement on Nov. 8 that talks would start with airlines about an industry-specific support package.
Garneau had been warning that forcing airlines to refund passengers billions of dollars for cancelled flights could have a devastating effect on the sector and cause some airlines to fail.
Those eligible for WestJet refunds
On Oct. 24, WestJet announced it would start a six- to nine-month process of refunding passengers with refundable and non-refundable tickets for flights cancelled by WestJet during the pandemic.
Passengers with non-refundable tickets who cancelled their flights on their own are not eligible. Some passengers are upset that not all tickets are being refunded, and that some travellers are receiving travel vouchers instead.
Sims said WestJet’s refund policy “aligns” it with government directives in the United States and the European Union.
“To require refunds beyond those offered by WestJet would take us out of step with the rest of the world’s refund requirements, which would make domestic carriers less competitive and air travel less affordable for Canadians,” Sims wrote in the open letter.
There has been an outpouring of outrage in Canada over airlines issuing vouchers. The head of the Canadian Transportation Agency told MPs on Dec. 1 that the pandemic exposed a major gap in Canada’s Air Passenger Protection Regulations — the fact that airlines are not required to refund passengers if cancellations are out of a carrier’s control.
More than 100,000 Canadians have joined petitions calling for government action on refunds, and several class action lawsuits have been filed against airlines.
Sectoral support package for airlines
Sims also said WestJet is “grateful” for the Canada Emergency Wage Subsidy (CEWS), which helped keep the airline’s employees on the payroll and “manage the pandemic’s immediate impact.”
WestJet has not publicly stated how much money it has received through CEWS to cover up to 75 per cent of employees’ pay. Before the pandemic hit, the company had roughly 14,000 employees. Now, the airline says it has 10,000 on leave and 4,000 actively working.
“We are not seeking policy that strictly supports our bottom line and frankly that is not what the nation needs,” wrote Sims.
Sims wrote that the industry needs federal financial support to avoid increasing ticket prices and any such package should include “green credits for fuel efficient aircraft” and should “ensure Canada has a competitive global airline based in Western Canada.”
He criticized what he called “double-digit price” hikes by regional airports and air traffic control, pointing out that the pandemic has dramatically affected the number of planes flying.
“Given this crisis is no fault of our own, we reject all references to a bailout,” wrote Sims. “The federal government is aware of our financial position and has been since the start of the pandemic and we continue to ask for rapid movement in ensuring the continuity of travel and tourism in Canada as one of the major backbones of our GDP.”
The federal government has spent $1.4 billion helping Canadian airlines pay up to 75 per cent of employee wages during the pandemic, according to the fall economic update.
Financial support to come with strict conditions, says minister
Garneau said last month more financial support for airlines would come with strict conditions, including “ensuring Canadians and regional communities retain air connections to the rest of Canada.”
WestJet shut down most of its operations in Atlantic Canada. In October, the airline announced it was eliminating 100 flights, which represent about 80 per cent of the airline’s service in and out of Atlantic Canada. The airline also says it is suspending its flights between Quebec City and Toronto.
Sims wrote that “given the economic realities created by the Atlantic bubble, [a] difficult decision had to be made to reduce service to the region … these reductions were a last resort and we hope to return to these regions when it makes sense to do so.”
The federal government’s economic update last month proposed $1.2 billion for airports, airport infrastructure and regional airlines.