WestJet Reinstates Routes: Is Federal Aid Right Around the Corner?

March 25, 2021 Jim Byers

WestJet’s announcement that it will restore suspended routes in Atlantic Canada, Quebec City and Western Canada has fueled speculation that a financial package from Ottawa is coming soon.

When the Trudeau government sat down with airlines for the first time in November of last year, they made it clear that any sector-specific assistance plan for Canadian airlines would be conditional on a number of factors, including refunds for customers who had their flights cancelled due to the pandemic and also a restoration of the numerous routes that had been cut.

WestJet last fall said it would begin refunding passengers, although some have complained about the conditions imposed. Now they’re restoring the suspended routes.

That would seemingly clear the way for Ottawa to loosen its purse strings and provide some kind of assistance, likely in the form of low-interest loans.

In a story in the Globe and Mail today, Royal Bank of Canada stock analyst Walter Spracklin said WestJet’s announcement is a signal that a long-awaited package for Canadian airlines “could be imminent.”

But Robert Kokonis of AirTrav Inc. , an expert on the aviation scene in Canada, isn’t so sure.

“I would like to be optimistic on the government support file, but approaching the beginning of April, I remain pessimistic,” he said in an email to Canadian Travel News. “That said, I feel a sense of optimism regarding WestJet’s announcement.

“With a rising number of people receiving at least one COVID vaccine dose, and a pent-up demand for travel, WestJet is getting planes and crews back in place to at least be in a position to start generating cash flows over the summer season. And that in and of itself is something the federal government has been banking on all along – as vaccines get into Canadians’ arms, they likely see a diminished political case for financial intervention.”

WestJet on Wednesday said it’s not asking for a bailout in the traditional sense of the word.

“What we have been seeking all along … are policies that enable us to bring our investments to life, that bring our employees back and that drive our travel and tourism sector,” said Andrew Gibbons, WestJet’s director of government relations.

Unifor president Jerry Dias has said that talks between the airlines and the government originally focused on the prospect of a $7 billion loan to be repaid at 1 per cent interest over 10 years. But he said the final package could be a lot bigger.

WestJet on Wednesday said it would restore suspended flights in May and June for Fredericton, Moncton, Quebec City, Charlottetown and Sydney, Nova Scotia. They also said that flights between Halifax and St. John’s, Newfoundland will resume on May 6. In addition, flights will resume in late June to Gander, Deer Lake (Newfoundland, Medicine Hat, London, Ontario and Lloydminster, Alberta.

“No one instructed us to do this,” Gibbons said on Wednesday. “This was a WestJet decision.”

Gibbons said there’s no deal yet with the federal government in terms of a financial package. He said he can’t provide details but that talks are continuing.

“Hopefully we’ll have more to say in the near future,” he added.

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