It’s the first mid-sized Canadian airline operator to go out of business due to the pandemic, and the largest to date.
Just two days after AC announced it would end its Air Canada Express contract with Sky Regional Airlines Inc., and with no industry-specific support in place from the federal government, the airline operator’s CEO said he was left with no choice but to shut down operations as of 31MAR, Air Canada announced Monday that it will transfer all of its Air Canada Express flights to Jazz Aviation LP as a cost-cutting measure.
“Sadly, as a result, we will be forced to shut down our operations, despite our many adjustments in the face of the various travel restrictions imposed by governments, thus far without any sector-specific support,” Russell Payson, founder and chief executive officer of Sky Regional, told The Globe & Mail.
“I am extremely proud of Sky Regional’s record, and its outstanding, innovative and dedicated team; and it is hard to reconcile the tragedy of today’s announcement given the strength and success of our organization,” he said.
Based in Toronto, Sky Regional employed about 650 people and operated 25 Embraer E175 aircraft for Air Canada Express.
In a memo to employees obtained by The Globe and Mail, Sky Regional said that it will “cease its operations and business” as of 31MAR and all employees would be terminated, except for pilots who will be transferred to Jazz, which is a subsidiary of Chorus Aviation. That transfer will require further negotiations between Jazz and the Air Line Pilots Association.
In the Globe report, John Gradek, who teaches aviation leadership at Montreal’s McGill University, said Air Canada CEO Michael Rousseau made the move to cut costs and position the airline for when demand returns after the pandemic.
“Rousseau is very much a cost accountant,” he said. “He knows that to survive Air Canada is going to cut its costs significantly.”
Many in the airline industry have called on the federal government for sector-specific aid, warning the country’s air carriers are falling behind their international rivals and won’t be in a position to compete after the pandemic ends.
When Transport Minister Omar Alghabra was contacted about any such aid, spokesperson Allison St-Jean reiterated Ottawa’s position that federal assistance is on the way, but is conditional on regional routes being maintained and ticket refunds being offered to customers who have had flights cancelled during the pandemic.
“The COVID-19 pandemic has had significant impacts across the economy, including in the aviation sector. Air carriers have taken measures to improve the viability of their operations,” St-Jean said. “The decision to terminate the contract with Sky Regional Air was a decision made between Air Canada and Sky Regional Air.”