Evidence of meeting #29 for Health in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
A recording is available from Parliament.
2:45 p.m.
Liberal
Tony Van Bynen Liberal Newmarket—Aurora, ON
Thank you.
My next question is for Air Transat.
What would it mean to the financial viability of the airlines if non-essential travel restrictions were loosened prematurely but then had to be tightened up again due to new waves?
2:50 p.m.
Senior Director, Government and Community Affairs, Air Transat
Thank you for the question. I'll answer and see if my colleague Captain Bourdages wants to weigh in.
I think, on behalf of all of us, that nobody wants to get this wrong. First and foremost, the UN civil aviation organization, ICAO, has laid out its CART protocols, and we, the airlines and airports, are working now with the federal government and interdepartmental committees to look at all of this suite of restrictions and make sure we get it right. The “safe to safe” corridor is one of them.
We want to be clear. We think that we can't wait years until there's a widely available vaccine to get back in the air. We have to get this done safely. We believe there is a path forward, in line with public health recommendations and UN standards, for sure.
2:50 p.m.
Liberal
Tony Van Bynen Liberal Newmarket—Aurora, ON
Great, thank you.
My understanding is that, with pre-pandemic flights, many of the flights pretty much had to be fully booked for airlines to be profitable. Is that correct? If so, what are the implications post-COVID? Would prices need to go up much higher because of the lower passenger loads?
I'll direct that to each of the airlines. What does the future look like post-pandemic?
2:50 p.m.
Senior Vice-President, Air Canada Express and Government Relations, Air Canada
Well, I'll start. I'll be quick, to allow my colleagues to respond.
Look, we're a supply-and-demand business. We're in a state right now where demand is off. I don't necessarily see that transition into higher airfares. What it does mean for the businesses is that as long as these restrictions stay in place and we're not looking at balanced ways to reopen the economy, it will have a tremendous impact on the financial viability of these companies in order for them to sustain themselves.
Due to the high fixed cost nature of our business, we're continuing to burn through cash on a daily, monthly and quarterly basis. To put a fine point on it, and we've stated this publicly, we burn roughly $22 million in cash because of the infrastructure and the support for this business. That equates to about $1.8 billion a quarter, if you do the math on that. If demand does not pick up, it will have a significant downward impact on these organizations as a whole.
2:50 p.m.
Senior Director, Government and Community Affairs, Air Transat
Sure. I'm happy to jump in as well for Air Transat, just to say that if we are able to safely restart, as we hope, in about a month's time, we're looking at about 15% capacity. In our leisure business, summer is do-or-die. We're already well into summer. Again, we're looking at offering about 15% of our offerings. It is a pretty dire situation. We have not operated or sold tickets for more than three months.
2:50 p.m.
Manager, Aviation Security, WestJet Airlines Ltd.
Yes, I would just like to add to that as well. I think it is very difficult for us to ascertain what the financial impact will be in the post-COVID world.
Just picking up on what Ferio and Howard have said, I would also like to point to a recent IATA study that actually touched on seat distancing. In addition to the demand that we would require, any sort of health measures would require us to impose certain things such as seat distancing—although we are doing that now.
They completed a study. Out of 122 airlines, on average the break-even point was at a load factor of 77%. On 737 aircraft, which are the majority of our fleet, if we maintain social distancing for the extended future, that would put our load factor at, effectively, 62% of normal capacity. If you look at the break-even point of 77%, and a seat distance capacity of 62%, there are obviously some inherent challenges there.
I think it's hard for us to predict, but there are many factors that go into what the post-COVID world will look like.
2:50 p.m.
Liberal
The Chair Liberal Ron McKinnon
Thank you, Mr. Van Bynen.
Mr. Thériault, you have two and a half minutes.
2:50 p.m.
Bloc
Luc Desilets Bloc Rivière-des-Mille-Îles, QC
Mr. Chair, this is Mr. Desilets. I will be taking over. I hope that is all right.
I would like to thank our guests.
I have a quick question for Mr. Liebman from Air Transat.
What percentage of refund requests were granted?
2:50 p.m.
Senior Director, Government and Community Affairs, Air Transat
I do not exactly understand the question.
To date, we have issued credits to our customers worth approximately $500 million on approximately $600 million in sales.
2:50 p.m.
Senior Director, Government and Community Affairs, Air Transat
No, I am not talking about refunds. Everyone has been offered a travel credit. We are not giving refunds.
2:55 p.m.
Bloc
Luc Desilets Bloc Rivière-des-Mille-Îles, QC
Okay.
I will ask Mr. Pugliese the same question. What percentage of refund requests have been granted to date?
2:55 p.m.
Senior Vice-President, Air Canada Express and Government Relations, Air Canada
Thank you. I don't have a percentage for a refunds approach process, but what I can tell you is that just over a billion dollars in refunds on refundable tickets is in process.
2:55 p.m.
Bloc
Luc Desilets Bloc Rivière-des-Mille-Îles, QC
You are talking about refundable tickets. Am I to understand that no money has gone to refunding customers' tickets?
2:55 p.m.
Senior Vice-President, Air Canada Express and Government Relations, Air Canada
That is correct. That was living to the provisions by way of the contract that they purchased the ticket under.
2:55 p.m.
Bloc
Luc Desilets Bloc Rivière-des-Mille-Îles, QC
In Quebec, normally, a service that is not rendered automatically implies a full refund. In this case, Mr. Pugliese, I am asking you what difference your company sees between a cancellation due to the COVID-19 pandemic and a routine flight cancellation, for which you would refund a customer.
2:55 p.m.
Senior Vice-President, Air Canada Express and Government Relations, Air Canada
Well, it's a good question. We have a refund for cancelled flights for which the customer purchased a refundable ticket. In the cases where they are not refunded, they did not purchase a refundable ticket.
I just want to highlight again that this is not out of the ordinary for the industry and that it is the practice. As per the CTA statements that were made on April 22, we are following that and adhering to that.
2:55 p.m.
Bloc
Luc Desilets Bloc Rivière-des-Mille-Îles, QC
It is unfortunate for us Canadians, because we see that tickets are being refunded in many other countries. You are usually subject to similar constraints and requirements.
I would like to ask you one more brief and probably simpler question, Mr. Pugliese.
2:55 p.m.
Liberal