Thank you, Chair, I will begin.
Honourable members, thank you for the invitation to speak to you about the impact of the COVID-19 pandemic on the air transport sector in Canada.
My name is Lawrence Hanson, and I'm the ADM of policy at Transport.
Owing to the fact that Canada is a very large country with a widely dispersed population, and has a material number of people for whom the air mode is the only viable source of supply for parts of the year, we rely on air travel more than many other countries.
Canada has built a strong and effective air transport system that connects Canadians to each other and the world. It supports tourism, regional economic development, and an aerospace supply chain that produces aircraft with world-leading environmental performance.
The air sector employs about 108,000 people in Canada. Although the pandemic has had an impact on every sector of the economy, the decline in the air sector has been the most severe, and its recovery is expected to take relatively longer. Eight months into the pandemic, passenger levels are still down almost 90% from the same period last year.
Canada's air system has been traditionally funded by passengers themselves. Currently, however, we have a user-pay system that has almost no users. Consequently, airlines and airports continue to face significant fixed costs with little or no off-setting revenue.
Inevitably, this has led to efforts by key players to either find new revenue or, more likely, cut costs. There have been widespread layoffs, route suspensions and cancellations by airlines. Airports and the non-profit corporation that provides air navigation services, Nav Canada, have raised rates and fees.
Over and above these negative outcomes, Canadians across the country have received vouchers in lieu of refunds for travel cancelled due to the pandemic, and they are understandably angry.
To mitigate the severe impact and instability caused by the pandemic across all sectors, the government has implemented broad-based measures like the Canada emergency wage subsidy. These have been helpful in providing initial stability for air operators.
In addition, in March, the government waived payments for airport authorities that lease airports from the federal government for the remainder of 2020. The government also took action to ensure service to remote communities that rely on air transport for essential goods and services, with funding of up to $174 million announced in August, and a separate program of $17.3 million announced in April for the territories alone.
However, the impacts on the air sector during COVID-19 are without precedent, and service providers are unable to respond to these ongoing challenges on their own. This threatens the ability of Canadians to access reasonable air transport services at a reasonable cost, and these impacts could have important implications for communities, regions and the wider economy. It also threatens the many jobs in air transport and in the industries that rely upon it.
That is why, on November 8, Minister Garneau announced that in order to protect the interests of Canadians, the government is developing an assistance package for Canadian airlines, airports and the aerospace sector. Yesterday's fall economic statement provided additional information regarding rent and infrastructure support that will be provided to airports.
The minister's statement made it clear that support to air carriers would be dependent on securing real outcomes for Canadians, including the provision of refunds in place of vouchers, maintaining regional connectivity, and remaining good customers of the Canadian aerospace industry.
Helping to ensure the economic viability of the sector, and protecting the interests of Canadians is a necessary but not a sufficient condition for the successful restart of the air industry. It will also be important to ensure that air travel remains safe and secure, and addresses the added public health dimension created by the pandemic.
For that and related issues, I will turn to my colleague, the associate assistant deputy minister of safety and security at Transport, Aaron McCrorie.