WestJet Airlines Ltd. (TSX:WJA) is increasing customer surcharges on Canadian domestic flights.
The hike in surcharges comes after the country's air traffic control operator, NAV Canada, raised service rates this month. WestJet said customers can expect an increase of between $4 to $7 per airline ticket after NAV Canada enacted a 29.5% increase to the rates it charges airlines for its air traffic control services.
NAV Canada first proposed the rate increase in May to cope with the fallout from the COVID-19 pandemic and subsequent hit to its revenue. WestJet said it is considering appealing the NAV Canada rate increase.
In a news release, WestJet Chief Executive Officer Ed Sims said he was concerned any increase in fees could hamper a recovery in air travel demand and exacerbate the airline’s revenue problems.
WestJet has gradually been ramping up its service as COVID-19 cases in Canada decline, but its flight schedule last month was roughly 25% lower than the traffic it did a year earlier. WestJet said the recovery in air travel demand is also being hit by what it described in early July as a “patchwork of domestic travel restrictions.”
WestJet and other airlines have also been appealing for sector-specific relief from the federal government in order to sustain the industry, a call that the International Air Transport Association echoed in a separate news release on Tuesday. In a news release, IATA Chief Executive Officer Alexandre de Juniac said there must be a balance between combating the spread of COVID-19 and not choking out a global economic recovery.
"It’s time for governments to work together to implement measures that will enable economic and social life to resume, while controlling the spread of the virus," he said. "There is much at stake and no time to lose."
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