Alberta concerned Air Canada relief package may disadvantage WestJet

Alberta is asking the federal government for assurances that Air Canada won’t get preferential treatment over Calgary-based WestJet now that Ottawa is a part owner of the nation’s largest airline.

WestJet cutting jobs and slashing flight capacity by 1/3

Travis Toews, minister of finance, sent a letter two weeks ago to his federal counterpart, Chrystia Freeland, urging her government to adequately support other airlines during Canada’s post-pandemic economic recovery.

“I am concerned about the implications of the federal government now owning a portion of Air Canada, and the impact on competitiveness this may have on our other national airline, WestJet,” it reads.

The letter notes WestJet already has a number of measures in place that were conditional for Air Canada to get the support, including restoring service to airports and a refund policy.

It asks for “assurance” that Ottawa will continue to “exercise neutrality and ensure a level playing field in Canada’s airline sector.”

On April 12, the federal government announced it would support Air Canada with a $5.9 billion aid deal — including $500 million in equity, giving Ottawa a stake in the company for the first time since it was privatized in 1989.

WestJet is continuing discussions about assistance with the federal government, according to the airline and Freeland’s office.

Give all airlines equal treatment, Toews asks

WestJet also thanked the province for its intervention, but Alberta isn’t pushing for a specific deal on its behalf.

“I don’t have an optimal solution,” Toews told CBC News. “I would suggest that equivalent assistance needs to be offered to all carriers regardless of size or market share.”

Toews did not say what role the province could potentially play in supporting WestJet — and aviation is typically a federal jurisdiction. He said his focus is on creating a stable business environment for the airline to operate in.

Ottawa said the conversations with airlines aren’t over.

“Maintaining a vibrant, competitive Canadian air sector and Canadian airlines is a priority,” a statement from Freeland’s office said.

The airline sector has received $2.1 billion in aid through the Canada Emergency Wage Subsidy and a separate $1 billion for the sector, plus the $5.9 billion specifically for Air Canada.

Freeland’s office also said the government is open to providing help refunding airline passengers in the event the company does not need liquidity.

Rick Erickson, an independent airline analyst in Calgary, said he was surprised to see the federal government broker a deal with one specific airline and not have a large blanket offer to the industry.

“There needs to be some kind of reassurance from the federal government that there’s neutrality here,” he said, adding his concern with the ownership stake Ottawa now has.

“I really question the need for the federal government to have an ownership stake, and I’m somewhat concerned about what the implications might be since we’ve seen it many times in the past with government policy and the necessity to make commercial decisions are often at loggerheads.”

CBC