Home » WestJet’s retreat from Atlantic Canada pushes the federal authorities right into a nook

WestJet’s retreat from Atlantic Canada pushes the federal authorities right into a nook

by newsking24

Two hours after WestJet introduced on Wednesday that it was curbing its flights to and from Atlantic Canada, an e mail went out to all MPs and senators from Liberal MP Chris Bittle, parliamentary secretary to Transport Minister Marc Garneau.

“The COVID-19 pandemic has had a tremendous impact on all aspects of the Canadian economy, but few industries have been more negatively impacted than the air sector,” Bittle wrote in a letter first obtained by Radio-Canada.

“Many of you have reached out to us to share your thoughts about the current impact of COVID-19 on the air sector. At this stage, we would like to hear from all parliamentarians [on] what is required to support a robust air sector in Canada.”

Last month’s throne speech promised “further support for industries that have been the hardest hit, including travel,” and the federal government’s consultations on assist for the air sector apparently had been as a result of begin this week.

While calls for for presidency help to the air journey sector have been constructing for months, WestJet’s regional retreat will drive these calls for to a brand new degree.

For the federal authorities, the case for doing one thing to prop up airways and airports is perhaps stronger than the case for doing nothing. But even when the federal government desires — or wants — to intervene, it nonetheless has to work out a method to take action that it may possibly defend politically.

Bubble bother

P.E.I. Premier Dennis King was amongst these calling on the federal authorities to take motion on Wednesday. But it is the area’s personal “Atlantic bubble” pandemic coverage — which imposes registration necessities on travellers from exterior of Atlantic Canada and compels them to self-isolate for 14 days upon arrival within the area — that has triggered the demand for flights out and in of the area to crater.

The Liberals in all probability do not need to be blamed if reductions in air service throughout the nation grow to be everlasting. And certain sufficient, New Brunswick Premier Blaine Higgs advised CBC’s Power & Politics that he got here away from a dialog with Intergovernmental Affairs Minister Dominic LeBlanc on Wednesday with the impression that “something’s going to happen” for the ailing {industry}.

WATCH | Atlantic premiers involved as WestJet ends most flights in area:

Premiers are expressing concern after WestJet introduced it could shut down most of its operations in Atlantic Canada. 9:52

The federal response to the pandemic has not ignored the nation’s largest firms. All companies have been capable of entry the federal wage subsidy. In May, the Liberals rolled out a focused mortgage program generally known as the Large Employer Emergency Financing Facility (LEEFF).

WestJet has made use of the wage subsidy; Richard Bartrem, VP of selling communications at WestJet, referred to as it “terrifically helpful.” WestJet has not sought help by means of the LEEFF program.

“The conditions that were placed [on] it just made it unwieldy in terms of our ability to recover from the pandemic,” Bartrem mentioned.

Critics have claimed LEEFF was rolled out too late and affords loans at phrases much less beneficiant than what is out there within the personal sector. (When it was launched, then-finance minister Bill Morneau referred to as this system an choice of “final resort” — so it may need been designed to not be standard.)

Only one firm has been accredited for a LEEFF mortgage up to now, based on the federal authorities. Not lengthy after the federal authorities introduced that mortgage to Gateway Casinos (which operates 26 amenities throughout Canada), Conservative finance critic Pierre Poilievre was on his toes within the House of Commons ripping into the choice as an irresponsible use of public funds.

That’s the danger a authorities takes at any time when it affords assist to particular companies or industries — even within the midst of a worldwide financial disaster.

The nationalization route

Transport Minister Marc Garneau has needed to fend off questions already about compelling airways to refund clients for flights that had been cancelled by the pandemic.

At the time, Garneau’s said cause for not forcing airways to supply refunds appeared sensible. Some struggling airways may need collapsed utterly in the event that they had been pressured to pay again that cash, he mentioned. But if (or when) the federal authorities affords airways assist, the political battle over refunds will come roaring again.

When Chrystia Freeland grew to become finance minister in August, the National Airlines Council of Canada, which represents main carriers, wrote to her to define a request for monetary assist within the type of “loans, loan guarantees or direct assistance.” Airline unions have requested for $7 billion in federal loans.

The airways additionally need “a national framework to ease interprovincial travel restrictions … reciprocal border agreements with targeted safe countries” and the deployment of fast COVID-19 testing.

Other international locations have moved already to rescue their nationwide carriers — in some instances by means of outright nationalization. The German authorities, as an illustration, now owns 20 per cent of Lufthansa. In Canada, any nationalization presumably must contain each Air Canada and WestJet.

LEEFF’s limitations however, this system’s design suggests the federal government knew that it must justify and defend any effort to bail out a significant company entity. LEEFF mortgage recipients must abide by situations that embrace restrictions on government compensation and a requirement for climate-risk disclosure. Perhaps new situations would assist make loans for airways extra politically acceptable.

The political draw back to bailouts

But even when the Trudeau authorities modified the phrases of LEEFF to make it extra industry-friendly, it nonetheless could possibly be left to clarify why the airline {industry} — or every other group of wounded companies — deserves particular consideration proper now.

The Liberals have prevented taking a sector-specific method to pandemic aid up to now. If they begin offering sector-specific help now, the floodgates will open — different sectors will demand the identical help, or at the least name on the Liberals to elucidate the place they’re drawing the road and why.

The authorities’s throne speech particularly talked about one avenue for help: supporting regional routes for airways. “It is essential that Canadians have access to reliable and affordable regional air services,” the speech mentioned. “This is an issue of equity, of jobs, and of economic development.”

That’s a justification for focused assist. Would that be sufficient?

There’s additionally the query of timing. As Premier Higgs acknowledged in his interview with Power & Politics, monetary assist can be of restricted use so long as massive numbers of individuals are uncomfortable with the thought of flying — and have nowhere to go.

Free-market disciples may flip their noses up in any respect of this, however the Trudeau authorities in all probability does not see this as the suitable second to insist on laissez-faire economics. And maybe the opposite federal events can be reluctant to make the case for doing nothing as properly.

For Trudeau, the problem is to provide you with an method that makes issues higher — with out making his authorities’s political burden considerably heavier.

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