Federal government wants to restore regional flights by subsidizing airlines

The federal government is finalizing a plan to re-establish flights to regional airports across the country by subsidizing airlines, CBC News has learned.

The final details are still being worked out, but Economic Development Minister Mélanie Joly said the idea is for federal departments or agencies to subsidize airlines to launch routes between smaller regional centres and connections to larger cities.

"Many other countries in the world go ahead and support their regional routes through subsidies, including the U.S.," Joly told CBC News. "So we want to find a way to work with partners to make sure there can be that interconnection ... at an affordable price."

The idea was first pitched publicly in Wednesday's speech from the throne.

"The government will work with partners to support regional routes for airlines," Gov. Gen. Julie Payette said in French, reading from the speech. "It is essential that Canadians have access to reliable and affordable regional air services. This is an issue of equity, of jobs, and of economic development."

The move comes after Air Canada's decision in June to suspend indefinitely 30 domestic regional routes and close eight stations at regional airports across Canada in response to the sharp drop in demand for air travel caused by the COVID-19 pandemic.

Those closures have had a significant impact on travel in Atlantic Canada, Quebec, rural Ontario and the West.

"We think that Canadians living in our regions should not feel isolated and should not be isolated," Joly said. "And it's a job for the federal government to keep that connection a reality."

Still unclear is how large the subsidies would be and how they would be delivered. Joly also said she couldn't state whether Air Canada would qualify for a subsidy to resurrect its suspended flights, or if the government plans to focus on different carriers.

"We'll be talking with every player in the sector, but at the same time, this needs to be a solution that makes sense," she said. "And for a long time, many players across the country have been wanting to really connect, concretely, every day our regions and we want to give them a chance."

The loss of regional flights is only one challenge facing an airline sector that has been hammered by the pandemic. The National Airlines Council of Canada says the industry overall is operating at about 15 per cent capacity right now, while passenger numbers are down 94 per cent.

So far, the federal government has resisted calls for sector-specific aid programs, focusing instead on broadly applied credit programs and the federal wage subsidy.

But the throne speech signalled a change of direction on that front, suggesting the government would focus on the hardest-hit sectors, "including travel and tourism, hospitality, and cultural industries like the performing arts."