In early June, WestJet Airlines Ltd. publicly rejected a federal Finance Department proposal to provide up to $150 million in loans to Canadian airlines aimed at offsetting rising jet fuel costs. The Calgary-based carrier not only declined the financial assistance but also called on the government to reconsider its broader approach to supporting the aviation sector, urging a focus on addressing fundamental cost issues rather than continuing temporary corporate aid.

The loan program, launched last month and officially known as the “liquidity for airline sector resilience facility,” was designed to help carriers navigate soaring fuel expenses driven by geopolitical tensions involving Iran and the United States. However, fuel prices have since declined by approximately 24 percent over the past month, although they remain around 32 percent higher than a year ago. This drop has led some industry observers to question the ongoing need for government loans.

WestJet criticized continued government financial support, citing past losses incurred through loan forgiveness during the COVID-19 pandemic. The airline highlighted that taxpayers lost roughly $400 million in 2025 due to forgiven pandemic-era loans. The Calgary airline pointed to Montreal-based Transat A.T. Inc. as an example of a carrier with a history of reneging on debt, noting that last year the government acquired a 20 percent stake in Transat as part of a debt forgiveness deal.

The recent collapse of Spirit Airlines in the United States—attributed in part to sharply increased fuel costs—was cited as an example of a government choosing not to intervene to sustain a struggling airline. In contrast, Ottawa’s loan facility aims to maintain affordable air travel and ensure the continuity of airline operations amid fuel cost volatility.

Some analysts and officials argue that alternative policy tools provide more equitable and sustainable sector support. In April, the federal government cut aviation fuel taxes by four cents per litre, along with reductions in gasoline and diesel levies, offering broad-based relief across the transportation sector. This approach contrasts with the targeted loan program, which tends to favor carriers like Transat and Toronto-based Porter Airlines, whose more price-sensitive passenger bases were disproportionately affected by fuel surcharges.

Financial results reflect these dynamics, with Transat posting a $79 million loss in its most recent quarter compared to a $23 million deficit a year earlier. Industry analysts suggest that Transat’s clientele, largely comprised of bargain-focused travelers, is less able to absorb sustained fare increases compared to the premium and business segments served by carriers such as WestJet and Air Canada.

Beyond fuel tax cuts, some experts recommend reducing or eliminating passenger fees imposed at Canadian airports, which average $148 per flight—significantly higher than the $49 average in the United States. The government has also suspended carbon taxes on aviation but faces decisions regarding the United Nations-backed Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Delaying enforcement deadlines could ease financial pressures while maintaining commitments to emissions reductions.

The ongoing Passenger Bill of Rights program, introduced in 2019 and championed by former Prime Minister Justin Trudeau’s government, imposes compensation up to C$2,400 for flight delays and cancellations. Some industry voices have suggested temporarily capping payouts to balance consumer protections and airline financial viability.

As fuel prices stabilize, critics argue that continued government lending to airlines with past difficulties repaying loans is untenable. Instead, they advocate for policy measures that provide broad-based sector relief and address structural cost challenges to promote long-term industry resilience.