The federal government’s 2022 Budget, which was tabled last week, makes one thing clear: Canada’s economy, according to Finance Minister Chrystia Freeland, has recovered and it's time for government aid programs to end.
Pandemic aid has been the largest government expenditure since World War II, and in travel and tourism specifically, some $23 billion dollars were spent over the past two years to keep hard-hit businesses afloat.
Federal aid has been lifeline for many Canadian travel agencies and agents. And in many ways, it still is.
Even if the recent easing of travel restrictions has led to an uptick in business, the road to a full recovery remains a long one.
“Our sector is besieged by debt and is only now starting to see a recovery,” Avery Campbell, director of advocacy and industry relations at the Association of Canadian Travel Agencies (ACTA), said Monday (April 11) at a virtual town hall. “There should be continued support to enable meaningful recovery and we are deeply disappointed that the government made the decision to cut off support too early.”
Addressing trade members, Campbell, alongside Wendy Paradis, president of ACTA, explained what Budget 2022 means in the grand scheme of things, while also outlining next steps.
“ACTA’s focus will now transition from survival to recovery,” Paradis said, noting priority areas, such as the lifting of all remaining travel barriers, reducing regulatory burdens, tackling the labour crisis, and fostering an environment where agents can thrive.
But the end of federal support still stings, given how “our sector will be among the last to recover based on how and when compensation is paid,” Paradis said.
What’s in it for agents?
Budget 2022 will establish the Liberal government’s spending priorities for the upcoming year.
It’s among the most important documents for guiding government policy. And with the support of the NDP, Budget 2022 is expected to pass, said Campbell.
The Tourism and Hospitality Recovery Program wage and rent subsidies were critical to travel agency survival during the pandemic, helping businesses with up to 75 per cent of support.
Those subsidies will end on May 7, and even though Ottawa is allowed to extend them until July, “it is clear” that won’t happen, Campbell said.
There’s also no support for independent travel advisors (ITAs) forthcoming, squashing any hope that the independent travel agent relief proposal, or the ITARP, that ACTA submitted to Ottawa in December will pass.
This hits particularly hard as ITAs have been without targeted support since the Canada Recovery Benefit (CRB) ended in October 2021.
During the pandemic, leading federal aid programs, such as the CEBA, CERS, CEWS and RRRF, excluded many hard-hit small businesses.
But securing sector-specific aid never materialized, despite ACTA’s best efforts to draw attention to the cause by orchestrating video campaigns aimed at politicians on social media in recent weeks.
The Liberals’ current tourism strategy largely focuses on labour shortages, destination development and changing the context of public health.
ACTA’s plan, now, is to work with governments to ensure that lessons learned from the past two years “are taken to heart” so the industry is secure if a future crisis, such as the emergence of a new COVID-19 variant, occurs, Campbell said.
Still, Ottawa has budgeted “very little” for tourism’s growth, Campbell explained.
So far, it has set aside more than $20 million in funding over the next two years for a new Indigenous tourism fund, and $55 million for the Trans Canada trail and national parks program.
“This signals potential opportunities in domestic tourism for travel agents,” Campbell said.
Budget 2022 establishes a new dental program, which starts in 2022 for children under the age of 12 in families that have an income of less than $90,000.
This program extends to children under the age of 18, seniors and persons with disabilities in 2023, with a full deployment set for 2025.
“This will [result in] significant cost savings for travel agencies and ITAs currently paying out of pocket for dental insurance,” Campbell said.
Budget 2022 also presents tax savings.
Currently, small businesses benefit from a reduced nine per cent tax rate on their first $500,000 of taxable income (compared to a general tax rate of 15 per cent).
Once a business has reached $15 million dollars in capital, it can no longer access this benefit.
Budget 2022, however, will allow businesses to reach up to $50 million in taxable capital before losing access to the small business tax rate, “which will create tax savings for many mid-sized travel agencies,” Campbell said.
Ottawa is also working to lower credit card processing fees, which means “bottom line savings for all travel businesses,” Campbell added.
Border changes coming April 25
Citing the recent lifting of pre-departure testing for fully vaccinated travellers, and resumption of cruises in Canada, Paradis noted how “our sector is in a much better place” compared to where it was a few weeks ago when the Omicron variant slowed travel activity.
“Our members are seeing sales rapidly climb to a level we haven’t seen before pandemic started,” Paradis said. “Travel businesses are busy, especially with leisure travel.”
Changes to Canada’s border restrictions are coming soon.
On April 25, unvaccinated children under the age of 12 who are accompanied by a fully vaccinated guardian will no longer require a pre-departure test.
Also, on that same date, travellers will no longer need to submit a quarantine plan through the ArriveCAN app (but using the platform to enter Canada will remain mandatory).
“We’re now in a position to build on our recovery that started back in February,” Paradis said.
Signs also indicate that Ottawa has no plans to reintroduce COVID-19 testing at the border.
While the government spent a whopping $1 billion on arrival testing in 2021 and 2022, there is zero budget assigned to border testing in 2023 and beyond, according to a federal spending chart Paradis shared.
Ottawa will, however, continue to spend one million dollars each year on its international proof of vaccination document, until 2027, to facilitate Canadians travelling abroad.
“This signals the government’s belief that vaccination will continue to be a key aspect to travel mobility worldwide,” Paradis explained.
Ending the vaccine mandate
While some border changes are coming soon, there is no evidence that the federal vaccine mandate for plane, train and ship travel will be lifted, ACTA says.
On advocating for the removal of the vaccine mandate, “We will engage in strategic advocacy as appropriate,” Campbell said.
Health Minister Jean-Yves Duclos has previously indicated that Canada’s vaccine mandate won’t end anytime soon.
“He has been very firm in not changing that in the immediate future,” Paradis said. “Our advocacy organizations will continue to demand a plan for easing the rest of restrictions.”
Why didn’t ACTA waive fees?
Paradis later took questions from attendees, reiterating ACTA’s commitment to helping ITAs, a plan for addressing the labour crisis, while reminding the industry that ACTA will be returning to in-person events this September.
She also explained why ACTA didn’t waive member fees during the pandemic like The Travel Industry Council of Ontario (TICO) and Office de la Protection du consomateur (OPC) did.
“TICO and OPC are able to waive fees because the government is giving them money to waive fees. That’s the only way that that is possible,” Paradis said.
Paradis said ACTA, over the past two years, incurred its highest advocacy costs “in the history of our association,” noting that team members worked 12 to 14-hour days, seven days a week, during the pandemic.
While talk of waiving fees was discussed, “it was not possible and it is not possible” because ACTA, being a trade association, isn’t able to access the type of funding that TICO and OPC are entitled to, Paradis said.
WestJet weighs in
Officials from WestJet also addressed attendees yesterday, providing an update on the airline’s recovery while also taking questions.
In a pre-recorded video, Chuck Crowder, vice-president, sales, contact centre and WestJet Vacations, said that guest intent to travel is the “strongest we’ve seen since the start of COVID-19.”
Earlier this month, WestJet recorded its highest single-day guest count since the onset of the COVID-19 pandemic.
The airline is investing heavily in its Atlantic gateway: recently, WestJet completed its inaugural flight from Calgary International Airport to London's Heathrow Airport, adding to its already-existing flights to London-Gatwick.
WestJet’s non-stop service from YYC also includes Paris and Rome and Dublin will be added in May.
Crowder said the company’s commitment to the trade remains an important focus as it continues to build on self-serve options so agents can manage itineraries with ease.
Flights with Swoop, WestJet’s low-cost arm, are also now available with WestJet Vacations packages (exclusively through travel advisors), providing more flight options to places like Las Vegas, Mexico and the Caribbean.
Crowder briefly addressed the pending WestJet-Sunwing deal, which “will bring together two distinctly Canadian travel and tourism success stories to deliver new travel options and greater value for travellers in a rapidly-expanding leisure and work-from-anywhere market.”
Refunds, telephone wait times
In a Q&A that followed, Spencer Sorensen, manager of commercial sales at WestJet, addressed the issue of refunds.
WestJet, Sorensen said, is processing files from oldest to newest, and is currently in January 2022.
On the air-only side, the majority of refunds have been processed, and agents are urged to visit westjettravelagents.com for info on open-status tickets that are eligible for an extension, he said.
Sorensen also touched on telephone wait times, an ongoing “pain point” across the industry.
“We’ve been on a hiring sprint,” Sorensen said, noting that 40 WestJet Vacations agents were recently hired, bringing the call centre workforce up to some 1,100 employees.
Sorensen said WestJet Vacations, last week, answered 90 per cent of calls within one hour and 50 per cent were answered within ten minutes.
“Having callback options have been a help for the trade,” Sorensen said. “We’re getting back to where we need to be.”