The Canadian government has launched a C$150 million repayable loan program to help airlines struggling with soaring fuel costs tied to the Middle East conflict and the closure of the Strait of Hormuz. Finance Minister François-Philippe Champagne presented the initiative as a way to ensure stable air travel ahead of the summer season,but critics — including former Air Canada chief operating officer Duncan Dee and WestJet — warn it echoes pandemic-era bailouts that were ultimately forgiven .

C$150 million at stake — and a history of C$400 million forgiven

According to the government announcement, the loans are repayable and come with conditions such as restricting executive pay and maintaining Canadian operations, though specific terms are negotiable. Yet critics point to the recent precedent: roughly C$400 million in COVID-19-related loans to airlines were forgiven in 2025, effectively becoming direct taxpayer subsidies, as the source reports. former Air Canada COO Duncan Dee and WestJet have both publicly questioned whether this new program will follow the same path.

Jet fuel's double whammy: from US$2 to US$4.34 and back

The immediate trigger for the program is the volatility in global oil prices caused by geopolitical tensions.. The source notes that jet fuel prices,though slightly reduced from a peak of US$4.34 per gallon in late April, remain significantly above the pre-war level of about US$2 per gallon. The closure of the Strait of Hormuz — a critical chokepoint for oil shipments — has disrupted supply chains, driving up costs for Canadian carriers that rely on imported fuel. The government has also temporarily paused collecting the federal excise tax on fuel as an additional measure to alleviate pressure, but the underlying energy market risk remains.

Why WestJet and a former Air Canada COO are crying foul

WestJet's spokesperson told the source that airlines need "a sustainable future built on fixing foundational economic barriers, not corporate charity." Duncan Dee echoed that sentiment, arguing that the government should address systemic cost issues instead of perpetuating a cycle of temporary bailouts. conservative Deputy Leader Melissa Lantsman added that the loans treat "a symptom, not the disease" and that consumers rarely benefit. On the other hand, carriers including Flair, Porter, and Air Transat expressed support, saying they welcome the offer and are reviewing the details — a split that reveals the industry's conflicting interests.

The structural question the program sidesteps

The program does not appear to address the underlying factors that make Canadian airlines so vulnerable to fuel price spikes: limited competition, high airport fees, a lack of fuel hedging strategies,and a tax structure that adds to operating costs. As the source reports, critics insist that without structural reforms, the industry will continue to rely on taxpayer money. the government, for its part, maintains that the loans are repayable and desined to protect travelers and maintain competition during an era of volatile energy markets — but has not outlined any long-term plan to wean carriers off state support.

Who qualifies? The fine print on executive pay and Canadian operations

To qualify for the loans, airlines must agree to restrict executive pay and maintain Canadian operations, though specific terms are negotiable, according to the government statement. What remains unclear is exactly how the government will enforce these conditions and whether the loans will be available to all carriers or only those deemed essential for connectivity. The source article does not provide a list of eligible airlines or a timeline for application, leaving open questions about transparency and equity in distribution.