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“Governments must be prepared to change policies in what has become a changed world”: Air Canada CEO

“Governments must be prepared to change policies in what has become a changed world”: Air Canada CEO
Michael Rousseau, President and Chief Executive Officer, Air Canada. (Supplied)
Michael Pihach

Michael Pihach is an award-winning journalist with a keen interest in digital storytelling. In addition to PAX, Michael has also written for CBC Life, Ryerson University Magazine, IN Magazine, and Michael joins PAX after years of working at popular Canadian television shows, such as Steven and Chris, The Goods and The Marilyn Denis Show.

Governments at all levels need to coordinate a common approach to travel in both domestic and international markets, said President and Chief Executive Officer of Air Canada, Michael Rousseau, at a public speaking engagement on Thursday (Oct. 7).

Addressing attendees at a luncheon hosted by Canadian Club Toronto, Rousseau, outlining Air Canada’s COVID-19 recovery plan, touched on “several things” governments can do to help the airline meet its full potential.

This includes implementing vaccine certification and testing requirements and greater standardization for sharing testing and vaccination documents with foreign governments for international travel, he said.

“We will continue to work with all levels of government to ensure these initiatives are executed,” said Mr. Rousseau in his address, which was also livestreamed for online audiences.

“The worst of the pandemic is behind us”

The CEO of Canada’s largest airline, who took the reins at Air Canada in February following the retirement of Calin Rovinescu, was optimistic in saying that “the worst of the pandemic is behind us” as more people, guided by safety measures, start meeting in person again to conduct business.

Michael Rousseau, president and CEO of Air Canada, spoke at a Canadian Club Toronto lunch on Thursday (Oct. 7)

“Everywhere, the world is adapting to this new normal which is taking shape,” Rousseau said, urging governments and corporate Canada to encourage Canadians to get back to the office, especially in light of Canada's high vaccination rates. 

New policies for a "changed world"

In regards to embracing a new normal, Rousseau, admitting he’s gotten to know governments “much better in the last little while,” emphasized the need for action in creating travel policies that fuel a competitive and efficient airline industry that benefits all Canadians.

“Governments must be prepared to change policies in what has become a changed world,” Rousseau said.

The CEO’s remarks echo those of others in Canada’s tourism and airline sector this week following Prime Minister Justin Trudeau’s announcement that COVID-19 vaccination will be mandatory for all air, train and marine vessels passengers as of Oct. 30.

The new rule applies to air passengers flying on domestic, transborder or international flights departing from airports in Canada, rail passengers on VIA Rail and Rocky Mountaineer trains and marine passengers on non-essential passenger vessels, such as cruise ships, on voyages of 24 hours or more.

(Click here for an official government backgrounder).

Prime Minister Justin Trudeau announces mandatory vaccinations for air and train travel. (File photo)

Mike McNaney, president and CEO of the National Airlines Council of Canada (NACC), which represents Air Canada, Air Transat, Jazz Aviation LP and WestJet, on Wednesday, called for a review mandatory PCR pre-departure testing for fully vaccinated international travellers coming to Canada, as well as “blanket travel advisories.”  

READ MORE: Vaccine mandate for travel should include review of outdated measures, industry says

In May, Ottawa’s own COVID-19 Testing and Screening Expert Advisory Panel recommended the removal of pre-departure PCR testing, among other progressive ideas for a safe restart of aviation

Rousseau noted this panel on Thursday, saying the “most immediate” thing governments can do is to take a science-based approach to further relax restrictions.

Fixing a "flawed funding model"

The CEO also called on governments to fix the “flawed funding model” for Canada’s air transports infrastructure.

“Canada is an outlier among developed countries in terms of the extent it relies on users to pay the costs of the air transport system,” Rousseau said. “COVID exposed the shortcoming of this model. Once a user disappears, the infrastructure came under immediate pressure.”

READ MORE: "No time for half measures": All air & rail travellers must be vaccinated by month's end, Trudeau says

This led to airport debt payment deferrals and higher fees for navigation, he said, causing airport improvement fees to increase at most Canadian airports.

President & CEO of Air Canada Michael Rousseau (right) takes audience questions at the Canadian Club Toronto's event on Oct. 7.

Fees can now exceed $40 compared to being capped at $4.50 in the U.S., Rousseau said.

“These and other costs, such as airport rents and city taxes, reduce competitiveness and could hinder our recovery,” Rousseau said. “No country charges these fees to the same extent as Canada. Governments must realize that the air transport infrastructure supports the entire economy and benefits everybody. Not just people flying.”

Emerging from the ashes

Rousseau also took time to review Air Canada’s COVID-19 recovery strategy, touching on losses and wins. 

Air Canada’s traffic decreased by 90 per cent at the height of the pandemic, Rousseau said.

In May 2019, the airline had 330 daily flights from its Toronto global hub to 130 destinations. By May 2020, operations were down to less than 30 daily flights to 22 destinations.

Systemwide, Air Canada carried 13.7 million people last year. “That sounds impressive,” Rousseau said, “but we carried 51.5 million the year before that.”

“Most painful of all,” the CEO said, was Air Canada having to lay off more than 20,000 employees – “more than half of workforce.”

Air Canada, at its worst point, was burning “1 million in cash per hour,” Rousseau said, which led to an operating loss of 3.8 billion in 2020.

The “vital number” that was the foundation to Air Canada’s recovery was entering the pandemic with $7 billion dollars liquidity, Rousseau said.

“That gave our airline one of the strongest balance sheets, relative to our size, in the global industry,” he said.

READ MORE: Air Canada starting service between Toronto Billy Bishop & Ottawa on Oct. 31

Air Canada securing up to $4 billion in extra financing through fully repayable loan facilities with the Government of Canada in April was “important,” Rousseau added.

This past summer, Air Canada had 88 per cent more capacity than last season. (Air Canada)

“To date, we have not drawn on any of this money, nor do we intend to,” he said. (Except for a “small facility” to help with customers refunds).

Calling Air Canada’s financial position “secure,” Rousseau said the airline is now focused on other aspects of its recovery.

This includes the recalling of employees (9,600 have been brought back since the start of 2021) and restoring Air Canada’s network, which Rousseau admitting to being a “slow process.”

Still, progress is happening: this past summer, Air Canada had 88 per cent more capacity than last season (it’s still down 65 per cent from pre-COVID summer 2019).

In June, Air Canada announced services at 50 Canadian airports, added three new routes, and re-established some regional flights.

In July, the airline unveiled its summer trans-border schedule, which included 55 routes, 34 destinations in the U.S, and is now up to 220 flights between U.S. and Canada.

That same month, Air Canada unveiled an international schedule, which includes the resumption of 17 routes and 11 destinations, including a return to Vienna, Dublin and Zurich and new services to Doha and Cairo.

READ MORE: Customers will “come back enchanted”: Air Canada restarts Toronto-Vienna flights

And, just yesterday (Oct. 7), Air Canada announced a new service between Billy Bishop Toronto City Airport and Ottawa beginning October 31.

At Toronto Pearson airport, in particular, “we foresee an accelerating recovery,” Rousseau said, noting how the “VFR” market (Visiting Friends and Relatives) is driving business today.

The aim, he said, is for Air Canada to reach 75 to 80 per cent of its pre-pandemic schedule by next year.

Innovation, such as Air Canada’s CleanCare+ safety program, digital and touchless services, will also play a “central role” moving forward, Rousseau noted.

However: “As exciting as these tools might be, there will always be a need for positive human connection,” he said.

Aeroplan will be a “key differentiator”

The recently-transformed Aeroplan program, launched last fall, will be a “key differentiator” for Air Canada in a “much more crowded Canadian airline industry,” Rousseau said.

“This is especially true in the early stages of recovery because the Aeroplan target market has been expanded to leisure travellers – the customers we expect to return first,” Rousseau explained.

Aeroplan, over the past year, has announced several partnerships, including deals with the LCBO, Uber and Starbucks.

Starbucks is one of the latest brands to partner with Aeroplan. (Supplied)

“You can have a fun a night, get a safe ride home and sharpen up with coffee in the morning. And earn points on top of that. That’s customer service,” Rousseau said. 

Air Canada, which recently won multiple Skytrax awards, is also focused on modernizing its fleet, expanding cargo facilities, committing to net zero emissions by 2050 and investing in diversity, equity and inclusion.

Competing with low-cost carriers 

Rousseau also took questions from the audience on Thursday.

When asked how Air Canada will compete against the low-cost carrier options that are emerging in Canada's marketplace, Rousseau said his airline will “find ways to compete effectively.”

“We have incredible attributes, we’re comfortable, but weary of new competition,” he said. “We encourage new competition, it makes us better at the end of the day.”

The CEO was also asked about the future of business travel.

“There’s no doubt leisure travel is coming back much faster than business travel,” Rousseau said.

“We’re well positioned [to] adapt if there is a permanent reduction in some level in business travel. I’m not ready to say that right now. It’s going to be a very fluid situation as time goes on over the next couple of years.”

“If the new normal is slightly lower than it was in 2019, then we’ll adapt to that situation.”

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