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 bysubsidizing airlines, CBC News has learned.

The final details are still being worked out, but Economic Development Minister Mlanie Jolysaidthe ideais for federal departments or agencies to subsidize airlines to launch routesbetween 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 publiclyin 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 comesafterAir Canada's decision in June to suspend indefinitely30 domestic regional routes and close eight stations at regional airports across Canada in response tothe sharp drop in demand for air travel caused by theCOVID-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 isolatedand should not be isolated," Joly said. "And it's a job for the federal government to keep that connection a reality."

Still unclearishow large the subsidies would be and how they would be delivered. Joly also said shecouldn't state whetherAir Canada would qualify for a subsidyto 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 percent.

So far, thefederal governmenthas resistedcalls for sector-specific aid programs,focusing instead on broadly applied credit programs and the federal wage subsidy.

But the thronespeech 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."