New federal support for Canada’s pandemic-battered airline industry will be contingent on carriers providing refunds to passengers whose flights were cancelled, the government announced on Sunday.

Transport Minister Marc Garneau laid out the requirement as he announced that Ottawa is ready to respond to the sector’s desperate pleas for federal assistance by launching talks later this week.

Canada’s commercial airlines have been hit hard by COVID-19, with passenger levels down as much as 90 per cent thanks to a combination of travel restrictions and fear of catching the illness.

That has prompted airlines to furlough hundreds of pilots and technicians and discontinue dozens of regional routes since March. They have also cancelled numerous pre-booked trips, offering passengers credits or vouchers instead of refunds.

Many Canadians have since expressed anger over not getting their money back. The Canadian Transportation Agency received 8,000 complaints between mid-March and the end of August, most of which are believed to be related to refunds.

Passengers have also filed a handful of proposed class-action lawsuits and three petitions garnering more than 100,000 signatures that call for customer reimbursement.

Garneau acknowledged the challenges facing the sector as he revealed the pending talks.

“The air sector cannot respond to these challenges on its own, given the unprecedented impacts on its operations,” Garneau said in a statement.

“We are ready to establish a process with major airlines regarding financial assistance which could include loans and potentially other support to secure important results for Canadians,” he added. “We anticipate beginning discussions with them this week.”

Yet Garneau also made clear what the government would be demanding from airlines, starting with refunds of what is believed to be millions of dollars in pre-paid flight tickets and a curb on cancelled routes.

“Before we spend one penny of taxpayer money on airlines, we will ensure Canadians get their refunds,” he said. “We will ensure Canadians and regional communities retain air connections to the rest of Canada.”

It was not immediately clear whether that would include pushing Air Canada and others to resume dozens of routes that are currently suspended.

The tough words around refunds were cautiously welcomed Sunday as a good first step by Canadian Automobile Association vice-president Ian Jack, whose organization is one of the largest retailers of vacations and leisure travel in Canada.

“It’s the starter pistol, but it’s by no means a fait accompli,” Jack said. “We’ll be watching these negotiations closely. There is now a concrete, on-the-record commitment from the government that we expect them to honour.”

In contrast to Canadian authorities, the European Commission and the U.S. Department of Transportation have required airlines to refund passengers for cancelled flights.

The U.S. and European countries including France and Germany have also offered billions in financial relief to struggling carriers. Ottawa has provided no industry-specific bailout to airlines.

The pandemic has devastated the airline industry, with billions of dollars in losses for Canadian carriers amid grounded flights and tight international borders.

Canadian airline revenues in 2020 will fall by $14.6 billion or 43 per cent from last year, according to estimates in May from the International Air Transport Association.

The National Airlines Council of Canada, which represents major airlines, said it was encouraged by the news that Ottawa is looking to work with carriers and help “stabilize” the industry.

“The pandemic has had a devastating impact on airlines, our employees, on regional service and the communities we serve across the country. Airlines are struggling to remain viable because of the economic chaos crated by COVID-19,” President and CEO Mike McNaney said in a statement.

“All measures have been taken to reduce costs, and revenue has fallen beyond the means of even the most extreme cost cutting measures to address. The industry will not recover without strong federal leadership.”

— With files from Global News

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