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Description: Air Canada has ordered 25,000 Covid-19 test kits that may be able to detect the virus in about five minutes. With the airline industry being battered as the virus dissuades passengers from flying, the test kits may offer a way to convince potential customers to take to the sky once again. A quick test may also be useful in persuading government authorities to rethink travel regulation during the pandemic.

Date:  October 1, 2020

Source:  cbc.ca

 Link: https://www.cbc.ca/news/business/air-canada-testing-kit-1.5745976

Discussion points:

1) Have you flown since the original Covid-19 shutdown in March? What was your experience like?

2) Has the need to fly to your university campus changed how or where you are studying this year?

3) On pages 9-32 and 33 of Wiley’s Financial Accounting: Tools for Business Decision-Making, we see a comparison of the Return on Assets of both Air Canada and WestJet. What do you think would be happening to this ratio for Air Canada and WestJet in 2020?

7 Responses to “Rapid tests”

  1. Chacha Dominion, Adrianna Dewar, Dylan Corkum

    1) None of our group has flown since the Covid-19 shutdown in March. Our experience with Covid-19 with travel by automobile was impacted due to borders being closed and travel being restricted. For example, we were not able to visit family or friends outside the province of New Brunswick.
    2) Although we don’t need to fly to campus, we mostly study only online and do not need to walk or drive to campus for in-person classes. This has cut down commuting times for the school day.
    3) Since both companies are experiencing significant decrease in demand for flights, sales and therefore net income will decrease. This will make the return on assets lower for both Air Canada and WestJet.

    Reply
  2. Lucy Poole, Hunter Morley, Nana Kwabena Asare Nti

    1. Since the Covid-19 shutdown, I had to change my flight plans because we had to go home earlier than expected, and because of the Covid situation there were no direct flights from Moncton to Toronto. So, I booked a flight from Moncton to Halifax and sat in the plane alone for that flight, because I think either people were scared to fly or they also had their plans changed due to the Covid situation. From Halifax, I was to join another flight to Montreal then from Montreal to Toronto, but the flight to Montreal got canceled and I had to wait for about 8 hours to get another flight to Toronto.

    2. Although we didn’t all have to fly to come back to campus this year, I know of a lot of students (from both Mount Allison and other institutions from across Canada) whose plans changed because of the stress and risk associated with inter-provincial travel during COVID-19, specifically by plane. We’ve seen that students living outside of the Atlantic Bubble were more likely to travel by air to travel to their Atlantic Canadian campuses, but students who would need to leave the bubble to get back to school were more hesitant to do so. This makes sense, because students would feel more comfortable entering the Atlantic Bubble, where there have been significantly less positive cases than other Canadian regions, than they would feel having to leave it.

    3. The ratio for Air Canada and WestJet would certainly be decreasing at this time in 2020. The reason for this is because COVID-19 temporarily shut down almost every major and small business in the world. Therefore, the net income for these airlines would also be decreasing. However, in this article it explains how Air Canada has ordered 25 000 test kits that can receive a result in 5 minutes. By doing this, the airlines are trying to influence more people to travel via airplane because the test kits will provide a safe travel experience for the passengers on board. If this plan works for the industry, then we will start to see the net income, and consequently, the return on assets ratio, rise because more people will be spending money on plane tickets.

    Reply
  3. Alex Smith \ Kevinique Stubbs \ Ryan Richard

    1. Kevinique is the only one who has flown since the initial Covid-19 lockdown in March. She thinks that it was somewhat normal, despite the message from the chief medical officer and covid packages they were given. These included gloves, sanitizer, masks, wipes, etc. It was nerve-wracking for her as she know she was safe but didn’t know who else had been responsible, safe, or exposed. She thought that there would be less people flying, but in reality this was not the case. Besides that, the travelling was fine.

    2. No, the need to fly has not affected any of our plans for studying. On the contrary, it will make getting back home for Kevinique a lot more difficult.

    3. As the ratio for return on assets is net income / average total assets, this ratio would definitely be declining for 2020. This is due to the economy slowing to halt and travel restrictions being put in place. As a result, there would be considerably less individuals flying which yields less profit (net income) for any company in the airline business.

    Reply
  4. Akhilesh Penta, Efe Onal, Jacob Myra

    1. Two of our group members traveled at the beginning of the pandemic. this was before masks and testing were mandatory, so the most notable observation we both had was how empty the airports were, there were hardly any people around and at the airport that I was in the only place open to get food was the Tim Hortons.
    2. Two of the three of our group members are from outside of North America (India) and (Turkey) and if they wanted to come to campus they are required to be tested before the flight after the flight and also quarantine for 14 days upon arrival to campus. Since all classes are being delivered online Efe and Akhilesh stayed at home and are doing classes from their homes. The most inconvenient part of this is the difference in time zones.
    3. Since both Air Canada and West-jet are seeing a decrease in demand for flights due to the effects of the COVID-19 pandemic and the response and restrictions on travel caused a decrease in sales is seen and resulting in a decrease in net income. This will make the return on assets lower for both Air Canada and WestJet.

    Reply
  5. Emily Mitchell, Jean-Luc Melanson, Noah McCarthy

    1) Being from out of the country, when the Covid-19 shutdown happened in March I waited a while to figure out my travel plans to get home. By the time I decided to head home, the US-Canada borders were closed and it was hard to find a flight. The process was also longer due to the fact that I had to give a valid reason for returning to the US and also had to explain my quarantine plans. We have also heard from friends that have flown in recent months that flying has gone somewhat back to normal, keeping in mind that there are safety policies in place, such as symptom checks and requiring mask. It can definitely feel pretty scary sitting inches away from a stranger on a plane during a global pandemic.

    2) I am personally from New Brunswick and therefore did not have a need to fly to University before COVID-19 as it is only a short 30 minute commute from my home. Some of my friends from abroad however have had their travel plans drastically altered because of the Pandemic. Some have chosen to stay in Sackville over the summer as they were unsure if they would be able to return for class in September. Others have stayed at home and are attending classes remotely, which can get tricky if they’re in different time zones. Some may even choose to take the year off from studying altogether because they are unable to attend classes in-person, and prefer the traditional learning to the new method of hybrid learning offered by most universities this semester. In general, it’s safe to say that mostly everyone’s studies have been affected by COVID-19 in some way, and travel restrictions have played a significant role in this change of plans.

    3) The return on assets ratio measures overall profitability. It helps determine how efficiently a company makes income from its assets. The return on assets ratio is derived by taking net income and dividing it by average total assets. That being said, in 2020, the return on assets ratio for major airline company’s will most likely go down, due to the fact that their net income will be lower this year.

    Reply
  6. Paige Matchett, Jackson Major, Tara MacKinnon

    1) Since the COVID-19 outbreak in March, no one in our group has flown. However, our travelling was still extremely restricted due to provincial and federal regulations. Thankfully, the Atlantic bubble has allowed all of us to come to campus and experience a mixed online – in class university semester.

    2) The need to fly has not impacted our university experience, as we are all from within the Atlantic bubble. Nonetheless, I know the governmental restrictions have prevented a lot of students from attending their universities in person. Another barrier that deterred students from travelling was the required fourteen day isolation upon arrival. Regardless of our current location in Sackville, NB, the coronavirus has still severely impacted how we are learning. For the most part, our classes are primarily online. Therefore, we spend our time doing classes from within our apartments. Although this has decreased the time we spend travelling, it has also decreased our social interaction – which has been a very difficult adjustment.

    3) Through the comparison of the Return on Assets of both Air Canada and WestJet, it is evident that the Return on Assets ratios would be decreasing in 2020. This is because both companies are experiencing a severe lack of demand for their services (due to the COVID-10 outbreak), thus, decreasing their overall net income. When applying the formula, a decrease in net income will result in a decrease of the ratio as a whole. It is due to the travel restrictions that Air Canada and WestJet are experiencing the lack of service demand, therefore, if the 25 000 COVID-19 tests that provide quick results work properly – the companies could convince the government to lessen restrictions, and therefore, encourage individuals to travel more. This increase in demand would increase the companies Return on Assets ratio.

    Reply
  7. Myaella Letourneau, Alexa Kastner, Jack Hooper

    1. Since mid-march, one of our members had to fly once from Montreal to Moncton in August to get back to Mount Allison University. She found that while going through security, the precautions were good; the officers ensured that social distancing was respected. However, after she went through security, the airport felt too normal for the situation that we are in. There was not enough social distancing precautions in place and she noticed this especially when masks were being taken off to eat. She wore a face mask and shield because she knew cases in Montreal were high and did not want to take any chances. She found the situation stressful because it did not seem like others were taking it as serious as she was. She flew Air Canada and was glad to have a family member to travel with her because the plane was full and she might have ended up seated next to a stranger if she was alone. In the plane, the precautions were good; extra masks were provided, gloves, sanitizer and water were also provided to passengers. Besides the efforts from the company to keep everyone safe, she felt like the lack of social distancing in the plane was discomforting. Based on her experience, she will try to avoid air travel as much as possible.

    2. None of us thought about not returning to Mount Allison due to travel restrictions. However, returning to campus was something that two of our members thought about. Self isolating and the flight we had to take was not something we wanted to do, but since none of us wanted to study somewhere else, we decided to come back to campus.

    3. The Return on Assets ratio has definitely gone down this year, considering profits for all airlines are down. When net income decreases, the whole ratio decreases. Both companies has seen and will continue to see a decrease in revenue. The sales went down but the non-current assets remained the same which causes a decrease to both ratio.

    Reply

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