FINDING A SOLUTION: Transat announces resumption of flights – demands aid from Ottawa for passenger refunds

Jean-Marc Eustache

Transat AT CEO, Jean-Marc Eustache is calling on the government for financial support, which he says would enable the travel company to refund passengers whose flights were cancelled due to the COVID-19 pandemic. “I say clearly to the various level of government, help us find a solution that is acceptable to all stakeholders, and we are all for it,” he said on a conference call with analysts Thursday.

Canadian airlines have mainly offered travel credit instead of reimbursements for the hundreds of thousands of trips that never took place amid border shutdowns and quarantines.

Eustache’s remarks came as the tour operator reported a loss of $179.5 million for the quarter ended April 30, compared with less than $1 million in losses a year earlier.

Transat said Thursday it would resume operations on July 23 after grounding its fleet on April 1, with plans to gradually start flying on 23 international routes and some domestic ones.

However, Ottawa continues to require a 14-day quarantine for all arrivals – in line with many other countries – making travel outside the country a “non-starter” for Canadians, National Bank analyst Cameron Doerksen said.

Eustache pointed to the contrast between Canada’s lack of sector-specific support and the billions in financial aid from other governments to justify the absence of refunds for Canadian customers.

“What is overlooked is that the government demand (for reimbursement) has been accompanied by assistance plans that are out of all proportion to what we have seen in Canada,” he said.

Transportation authorities in the United States and European Union have required airlines, including foreign ones, to offer refunds for flights cancelled as a result of the pandemic.

Unlike its US and many European counterparts, Ottawa has held off on handing out grants or loans particular to the airline sector, turning instead to a wage subsidy accessible to most employers and loans starting at $60 million for large companies.

WestJet Airlines Ltd. offers a partial exception to Canadian airlines’ policies. The airline quietly changed its position this month to allow customers whose flights to the US or UK were cancelled due to the pandemic to recoup their cash. The policy does not apply to other destinations, including flights within Canada.

The discussion over refunds remains heated. Three petitions – two were presented to the House of Commons over the past month – with more than 110,000 signatures call for full refunds before any financial aid is handed out to airlines.

Transat chief financial officer Denis Petrain said Thursday that “no significant” amount of fares have been refunded since mid-March.

Eustache publicly expressed concern for the first time Thursday about the impact of the coronavirus crisis on Air Canada’s deal to buy Transat for $720 million. The transaction has shareholder approval but still requires a green light from regulators in Canada and the EU.

The financial flogging and capacity reductions at airlines on both sides of the Atlantic could “impact the ability to reach an agreement with regulatory authorities,” he said.

One worry is whether a beefed-up Air Canada could offer appropriate “remedies” to rivals for gobbling up a larger slice of the market.

Airline sector remedies – key to securing a regulatory thumbs-up – often include giving up slots at airports as a kind of concession, but a devastated market and shrunken competition could mean many carriers would not have the capacity to seize the slots even if they wanted them.

Last month, European regulators launched an in-depth investigation into the deal amid European Commission concerns it may reduce competition and result in higher prices.

Nonetheless, Eustache expressed optimism that Transat’s main customer base – vacationers to Europe and sun destinations and passengers visiting friends and family within Canada – were likely to be among the first groups to take up air travel again, “well before business travellers,” who are outside Transat’s realm, he said.

Transat has negotiated on fixed costs such as aircraft rent, deferring payments and reducing overall costs to between $10 million and $15 million per month, down from $60 million, the company said. Some of its older aircraft are being dismantled for components. “We’re selling parts now,” said Eustache.

Significant uncertainty persists, despite Transat’s plan to take to the skies next month.

“Nobody knows what’s going to happen tomorrow,” he said. “Can you tell me when the borders are going to be open? Can you tell me when the people will travel on a plane?”

In April passenger kilometres fell 98 percent at airlines globally, while annual revenue is expected to fall by 55 percent or US$314 billion, according to the International Air Transport Association.

At Transat, revenue in its second quarter fell to $571.3 million compared with $897.4 million in the same quarter last year.

On an adjusted basis, the Montreal-based company reported a loss of $38.8 million or $1.03 per share for the quarter compared with an adjusted loss of $6.4 million or 17 cents per share in the same quarter a year ago.

Operations resume July 23 – travel restrictions permitting

Meanwhile Transat announced the resumption of its flights and tour operator activities as of July 23, 2020. It will offer a new flight schedule to 22 destinations in Europe, the South, the United States and Canada until the end of the summer season on October 31, 2020.

The company will also offer South and Europe packages during this period and will gradually reopen travel agencies in its network starting June 15, 2020. In addition, Transat unveils its Traveller Care program, rolling out new health measures to ensure the safety of its customers and employees.

Annick Guérard, Chief Operating Officer of Transat, said, “We will gradually operate a flight schedule with 23 international routes to Europe, the South and the United States, in addition to a domestic flight schedule between major Canadian cities.”

To address the concerns caused by COVID-19 and to prioritize the safety of customers and employees, Guérard said Transat will be implementing new health measures as part of our Traveller Care program.

Flights for summer 2020

Transat expects to resume its flights and tour operator activities as of July 23, provided that the travel restrictions applicable on that date allow it.

From Montreal, Air Transat will gradually operate direct flights to Athens (Greece), Bordeaux (France), Lisbon (Portugal), Lyon (France), Nantes (France), Marseille (France), Paris (France) and Toulouse (France). Travellers from Toronto will benefit from direct flights to Athens (Greece), Glasgow (Scotland), London (England), Manchester (England), Porto (Portugal) and Rome (Italy).

For travellers who wish to fly south, Air Transat will offer direct flights to Cayo Coco (Cuba), Cancun (Mexico), Fort Lauderdale (Florida) and Punta Cana (Dominican Republic) from both Montreal and Toronto, in addition to one direct flight a week to Port-au-Prince (Haiti) from Montreal.

To open the door to even more destinations via connecting flights and to allow Canadians to explore more of their country, the airline will also offer domestic flights between Montreal, Toronto, Calgary and Vancouver.

Temporary suspension of certain routes

Until the end of the summer season, the airline is suspending its flights to certain destinations in Europe (Amsterdam, Basel-Mulhouse, Barcelona, Brussels, Copenhagen, Dublin, Faro, Lamezia, Madrid, Malaga, Nice, Prague, Venice and Zagreb), the South (Cayo Largo, Holguin, Montego Bay, Puerto Plata, Puerto Vallarta, Roatan, Santa Clara, Samana and Varadero) and the United States (New Orleans, Orlando and San Diego). It is also suspending all its direct flights to Europe and the South from Vancouver and Quebec City. Customers affected by these cancellations will receive a travel credit for the value of the amount received on file, which they can use within 24 months of their original return dates.

Depending on demand and the easing of regulatory restrictions, Air Transat may enhance its flight schedule for the months of September and October. Customers are strongly encouraged to familiarize themselves with the governmental guidelines and entry requirements of their destinations, as they vary from country to country.

Flexibility offered to customers

Fully aware that travel plans can change, Transat is implementing a policy offering more flexibility to travellers whose flights are scheduled to operate this summer. Customers who booked before March 4, 2020, can change their travel dates, destination or package at no charge up to seven days before departure. If they prefer to cancel their trips instead, they will be able to obtain a travel credit valid for 24 months.

• The flight schedule for the 2020 summer season and other flight details can be found at airtransat.com/resumption-of-our-operations.

• For details on the measures featured in Transat’s Traveller Care program, travellers can consult airtransat.com/traveller-care.