"Keep 'em flying...but at what cost?"

September 10, 2003

So much for the thrill of flying.  While the concept of air travel is a wondrous convenience for which we remain grateful because it meets the personal and commercial necessities of modern life, for many Canadians, it has become a confusing ordeal. 

The difficulties that have long plagued Canada’s airline industry are no longer simply financial.  Many air travelers have come to expect that taking their next flight will involve a great deal of turbulence … before they even leave the ground.  

For example, comprehending the fares for Canada’s largest airline, Air Canada, has never been easy, but navigating through to the best deals has become ridiculously complex.  One thing is clear, passengers in the U.S., where there is open competition in the airline industry, enjoy less expensive fares.  Even Air Canada gives better deals to its U.S. customers on international flights than it offers to Canadians flying the exact same route! 

As for domestic seat sales, they’re limited to one-way fares on specific major routes serviced by competing airlines, namely WestJet and Canjet.  These “deals” are not so readily available at smaller airports where competition is scarce or non-existent.  Air Canada says routes to and from these smaller communities are less profitable.  Yet, given a chance at real competition, these are ideal markets for many smaller airlines.  For example, Dawson Creek is now well served by Terrace-based Hawk Air, and Prince George, Fort Nelson and Fort St. John are being served by Peace Air, based out of Peace River, Alberta.

Air Canada filed for bankruptcy protection in April and has been attempting to reduce its $12-billion debt, cut its fleet and boost the efficiency of its operations.  Canadian consumers have shown great patience, but have begun to question why WestJet and Canjet maintain relatively respectable levels of customer service while keeping a lid on expenses and faring better through crises, including September 11th, SARS and the Ontario blackout, which Air Canada cites as partially responsible for its financial woes, flight delays and hours-long passenger line-ups. 

The federal government has, so far, somehow resisted its natural tendency to offer a significant bailout to Air Canada.  It should continue to resist.  Left to its own devices, any corporation learns it must adapt its business practices and customer service.  It’s called competition.  In fact, I believe the successes of WestJet, Canjet and other airlines will ultimately help turn Air Canada around financially. 

The more the Liberals intervene, the worse the situation gets.  Since they came to power in 1993, eight airlines have died.  They continue to limit foreign ownership of Canadian airlines, which is what may kill a recent offer by a U.S. company to financially resuscitate Air Canada.  Canada also imposes the highest international air security fees in the world, further curbing airline traffic.  

The Canadian Alliance believes the air security tax should be eliminated, fuel taxes should be cut, airport rents reduced and the foreign investor limit increased.  Instead, the Liberals’ continued over-regulation and over-taxation threatens to further ground Canada’s airline industry.