porcsord wrote: ↑Wed Oct 21, 2020 10:13 am
Gilles Hudicourt wrote: ↑Wed Oct 21, 2020 10:04 am
So why would Canadian airlines be expected to refund when they received ZERO financial aid from the Government ?
Because they were unable to deliver the service they sold? The same reason that if I bought a TV from a store and then the TV was undeliverable I would expect a refund. You want the government to provide refunds for to citizens because the airline can't afford to? That is the single dumbest thing I have ever heard. I'm done here, but that logic makes us all look terrible.
So I am dumb. Ok its noted. That is always an effective argument. You replied so quickly that I conclude you read very very fast.
So here is another article I guess you will read just as fast. I wrote this one. In it I explain why Canadian airlines cannot re-imburse.
https://www.linkedin.com/pulse/run-airl ... 13rQ%3D%3D
Its on LinkedIn, so I cut and past it here for you.
Most large airlines in the World received direct financial aid from their home countries.
These Foreign Airlines that fly to Canada are in direct competition with Canadian airlines that received no direct financial aid from the Canadian or Provincial Governments, save CEWS, which is minuscule compared to the massive losses they are facing.
Some Canadian Airlines, such as Porter and Sunwing, just prefer to sit it out rather than compete under such unequal conditions, especially with the Canadian border restrictions which will kill any attempt at recovery as long as they are in place.
US Airports and Air Traffic Services are partially funded by US taxpayers, for in the US, Airports are recognised as major contributors to a region’s economy. Canada's airports and Air Traffic Services are 100% funded by user fees, which ultimately are paid by the passengers. The Canadian Government considers major Canadian airports as cash cows.
The conditions are now set for the total bankruptcy of Canadian aviation in favour of foreign carriers and it is Canada's aviation workers who are going to take the brunt of it in the beginning, but the hardships will quickly trickle down to every aspect of the Canadian economy. No sector of the economy will come out unscathed in Canada if Canadian Aviation collapses.
In the US, airlines were required to refund money for all the flights because of the COVID crisis. But in order to do so, US airlines received 25 Billion US dollars in Government aid in March 2020, and are expecting more funds later this year. US Airports received another 10 Billion US dollars. All Canada did for Canadian Aviation so far is to wave Airport rents from Airport authorities until the end of the year. In Europe, airlines that refunded passengers also received massive financial aid from their Governments, and their borders are not the subject of blanket closures as in Canada.
Airlines are very much like banks. When bank customers deposit money in their bank accounts, the bank lends some of that money to others, to pay a house mortgage for example. But that money is the customer’s money and they are entitled to it any time they want, in theory. Banks lend out and invest a certain percentage of their customers’ money and keep the rest of it on hand to cater to normal customer cash withdrawals and other transactions that may require immediate liquidity.
However, if one day, the Prime Minister of Canada was to appear on National TV and tell all Canadians that because of a National crisis, Canadians were to stop depositing their salaries in their bank accounts and to withdraw all their cash, all the banks in Canada would fail. The bank coffers would be bled dry and they would all be forced to declare bankruptcy, through no fault of their own.
There is a term for this: It is called a run on the bank. Even thought the banks in Canada make Billions in profits, none of these banks are in a position to instantly reimburse to all their customers what is in effect the customer’s money. Their money is invested in assets, loans etc.
What I just described above for the banks is exactly what the Government of Canada did to the airlines of this country.
But first a little context.
Airlines are business that have huge amounts of cash flow, but which are run on razor-thin profit margins. A typical airline that has 3 Billion dollars of annual revenues may just clear 35 million dollars profit on a good year. That is just over a 1% profit margin but it is normal for an Airline.
Such an airline would have carried around 5 million passengers during course of a year. That’s a net profit of About $7 per passenger. In fact, if every satisfied passenger was to give their crew a $10 tip after each flight, the crews would earn more in tips than the airline would make in profit at the end of the year.
This is airline reality.
This high cash flow is made possible by the fact that many passengers buy their tickets months in advance of their flights. They get better deals that way. Why? Because this lead time allows for the airline to better plan their flights, their schedules, their routes, the aircraft types to be used, the flight frequencies, the crew requirements, all with one goal: get a high as possible seat occupancy in their aircraft in order to keep costs and prices low and try to make a profit.
When a passenger buys short term, he prevents the airline from doing all that planning for filling the seats up, which is why they charge you more. Some passengers buy seats almost one year in advance. This explains why there are always hundred of millions to billions of dollars on the airline’s bank accounts. But just like the banks, the airlines do not sit on all that money. They make it work for them. They place that money in all sorts of things: Investments, new aircraft, new aircraft engines, spare parts purchases, paying off loans, overhauling engines and aircraft, painting aircraft, installing new aircraft interiors, hedging fuel in advance to get a better price, hiring and training more crews and many other expensive things. In the case of all-inclusive packages, rooms, food and transport are booked for passenger accommodations. All of this is to make sure that when the day came, the passenger would have the seat he paid for on the flight he booked, at the lowest possible price.
Then this happened.
https://www.youtube.com/watch?v=4ArTbAutKIc
On March 16th 2020, the Prime Minister of Canada, in response to the CODID-19 pandemic, told Canadians to stop travelling, asked Canadians abroad to come home, prohibited foreigners from entering Canada, and imposed a 14 day quarantine on all people entering Canada.
In the same speech, he also said that 10 Billions dollars in aid would be forthcoming for Canadian businesses to help them cope with the crisis.
Canadian airlines heeded the call. They continued to fly for weeks, bringing hundreds of thousands of Canadians home, at great loss to them. This airborne operation, a modern-day Dunkirk, was done mostly at airline expense. The aircraft were mostly leaving Canada empty of passengers to fly Canadians home.
Subsequently, tens of thousands of flights had to be cancelled, not because the airlines could not perform the flights, but because the vast majority of passengers who had booked those flights were prevented from travelling by Government legislation.
This is when passengers began to massively ask for refunds. The Government of Canada created a run on the airlines.
The Government of Canada, the Prime Minister himself, after initially promising Aid to the Airlines, reneged on his promise and did nothing. All the airlines in the World that were able to refund passenger tickets after the COVID crisis, were only able to so after receiving Government financial aid.
Canada’s Airlines are victims of the Government’s policies. And so is the travelling public.