Good afternoon. My name is John McKenna, and I am the president of the Air Transport Association of Canada. I thank you for inviting me to appear before this committee.
I want to switch to French for one second.
For technical reasons, I will speak in English, but I will be happy to answer your questions in the language of your choice.
ATAC has represented Canada's commercial air transport industry since 1934. We have 180 members engaged in commercial aviation, operating in every region of Canada. Our members range from flight training organizations; local air taxis; and regional carriers that serve remote, northern and indigenous communities to very large carriers servicing Canada, the U.S. and international destinations for both business and leisure travel.
We welcome the opportunity to comment on the devastating impact that this pandemic and its containment measures are having on our industry. Although we support the government in its actions aimed at curbing the spread of COVID-19, containment and restrictions on air travel have had a truly horrendous economic impact on most segments of the air transport industry, with traffic and revenue down to less than 10% of usual levels.
Many of our members have ceased operations altogether. Air operators are counting on a financial aid package from the government, while some operators struggle to continue servicing northern and remote communities that rely on air transport for survival.
I believe that a significant number of air operators will probably not survive, unfortunately, and the quality of air services to Canadians will undoubtedly suffer.
Canada is lagging behind, as most foreign governments acted within weeks to come to the aid of their aviation industries, including the U.S.A., Australia, Brazil, China, Denmark, Finland, Germany, Hong Kong, Italy, New Zealand, Norway, Singapore, Spain and Sweden. Meanwhile, our letters to the Prime Minister, the Minister of Finance, the Minister of Transport, the Minister of Economic Development and the Minister of Indigenous Services remain unanswered.
Our industry is capital-intensive, with very high fixed costs. While little or no revenue is generated, operators still have to pay for their aircraft through loans or leases, insurance, basic regulation-required airworthiness upkeep, hangars, and parking fees in addition to all the other normal business overhead costs.
So far, the government has tabled the Canada emergency wage subsidy, which can only help pay for a skeleton staff when operations are all but stopped. Canada's large employer emergency financing facility program is interesting, but its $300-million threshold eliminates the vast majority of air carriers. We estimate that only five or six carriers qualify for this program, while over 30 other carriers—key socio-economic enablers in their regions, and critical to Canada's connectivity—are left out.
The Canadian government must recognize the critical role that aviation plays in Canada. Without immediate government help, many Canadian air operators will not be around to provide their critical service and its enabling role in the economy at the beginning of the long recovery when they will be most desperately needed.
The critical government financial aid package would also avoid greater economic damage by ensuring that operators can rapidly scale up when travel restrictions are lifted and quickly contribute to jump-starting the Canadian economy. However, some airlines may require more than loans if they are to continue providing essential service to Canadian communities.
Our industry is facing two major challenges. The first, of course, is short-term survival. The other is the uncertainty of what our market will look like coming out of this crisis, which is best summarized by the following questions: How long before people are willing and able to travel by air again? When will foreign borders open up and remain open? What health and safety restrictions will the government impose on our operations? Will those restrictions make the cost of flying prohibitive?
We expect that the impact of COVID-19 will last much longer than initially thought and that recovery will be very slow—and, unfortunately, even impossible for a number of us.
A comprehensive government action plan will help the air transport industry save over 55,000 direct skilled jobs, and many times that in indirect jobs; maintain essential connections; transport people who require medical treatment; deliver life-preserving supplies; and overall, be a key enabler for the recovery of the Canadian economy.
I thank you for your attention, and I am happy to answer any questions.