So, you thought 2021 would offer some breathing space for Air Canada stock. But the year has only brought more hurdles. The biggest challenge has been the stringent air travel restrictions, and they just got worst. It has gotten so bad that AC has reduced its capacity by another 25% in the first quarter.

In June 2020, AC slashed 20,000 employees (50% workforce), retired 75 planes, and suspended 30 domestic routes and eight stations until further notice. After six months, the airline is making more cuts. This month, it suspended services to more than six domestic routes and slashed 1,700 jobs and another 200 employees at its Express carriers. The culprit is Canada’s travel restrictions.

Air Canada frustrated with Canada’s air travel restrictions

Since March 21, Canada has had a blanket prohibition on foreign travelers coming to Canada. Canadians and residents returning to Canada have to undergo a mandatory 14-day quarantine. AC initiated voluntary COVID-19 testing for all arriving passengers to force the Justin Trudeau government to ease the quarantine requirement for passengers testing negative.

The government even agreed to the testing. But then came the second wave of mutant virus, and Canada made its already stringent requirements more stringent. Starting January 7, all travelers over five years of age flying to Canada from abroad need to get a negative result on the COVID-19 test taken 72 hours before the scheduled departure.

Now, AC proposed to replace the quarantine requirement with COVID-19 testing. But the proposal backfired. Now all travelers from abroad have to present negative test results and also fulfill the 14-day quarantine requirement.

There was confusion around which diagnostic companies’ test results the government would consider. Then even if you get the test done, there is a possibility that the airline might cancel the flight. All this hassle had an immediate impact on AC’s close-in bookings, thereby forcing it to adjust its routes to the expected demand and slow the cash burn…CLICK for complete article