New travel rules the ‘nail in the coffin’ for airlines, tourism industry: experts

New restrictions on flights from the Caribbean and Mexico are likely to trigger bankruptcies in Canada’s airline sector and force permanent closures for airports and travel agencies, aviation experts say.

“Today’s announcement really was the nail in the coffin for the airline and tourism business,” said Robert Kokonis, founder and managing director of aviation consulting firm AirTrav Inc. “We’re going to see bankruptcy filings, you might even see a few outright failures.”

John Gradek, a lecturer at McGill University and the head of its Global Aviation Leadership Program, said Sunwing and Transat A.T. Inc. are most at risk of bankruptcy, given their reliance on flights to sun destinations.

Sunwing said it was “categorically untrue” that the airline is at risk of bankruptcy. Spokeswoman Melanie Filipp said that the decision to suspend flights to all sun destinations was based on ongoing collaboration with the government and the Canadian aviation industry.

Transat announced a complete suspension of all Air Transat flights, including to Europe, until April 30 and is repatriating customers to Canada over the next two weeks.

“We will do everything we can to return our customers back to Canada,” said CEO JeanMarc Eustache.

At WestJet Airlines Ltd. and

Air Canada, Gradek said he expected further cuts, including layoffs of between 400 and 500 at WestJet and around 2,000 at Air Canada.

For Air Canada, flights to sun destinations represent around 12 per cent of total revenue, which would translate to around $200 million in lost revenue between now and April 30, Gradek estimated.

The experts’ comments came as Prime Minister Justin Trudeau announced that airlines have reached a deal with Ottawa to halt flights to the Caribbean and Mexico until April 30.

The government will also require entrants to Canada to quarantine in a hotel on arrival, costing them more than $2,000, Trudeau said. If travellers test negative for COVID-19 after three days, they will be allowed to quarantine at home, albeit under increased surveillance.

If entrants test positive for the virus, they will have to complete their 14-day quarantine at a government facility to ensure they are not carrying a more aggressive variant of the disease, Trudeau said.

Airline bookings had already dropped significantly this month after the federal government announced that travellers entering Canada would have to provide proof of a negative COVID19 test before departure. The drop in demand prompted airlines to cut more routes and staff, with Air Canada laying off 1,700 workers this month.