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RECOMMENDATIONS

1. The Competition Act be amended to define "predatory behaviour" within the airline industry and to give the Governor in Council the power to specify, by regulation, anti-competitive acts or conduct by air carriers.

2. The Competition Act be amended to give the Commissioner of Competition the power to issue temporary cease and desist orders in cases of predatory conduct in the airline industry. This action should only be taken following consultation with the Canadian Transportation Agency.

3. The government require, as a condition of approval, that a dominant carrier not engage in predatory behaviour. Any predatory action then taken by the dominant carrier should be subject to sanctions.

4. The government raise the foreign ownership limit in Canada's airlines to 49%.

5. The Air Canada Public Participation Act be amended to raise the limit of voting shares that any one entity can hold in Air Canada from 10% to 20%, with a review after two years to determine the impact of this change on the operation of the company.

6. Transport Canada, following consultation with Local Airport Authorities, develop regulations regarding slot allocation in such a manner that new entrants and existing carriers have reasonable access to slots at Pearson, and at other Canadian airports should the need arise. These regulations should incorporate a "use it or lose it" principle.

7. Transport Canada, as landlord, use its powers under ground leases and through such incentives as reduced rent to encourage airport authorities to adopt policies that provide reasonable access to airport facilities to new entrants and existing carriers.

8. The government review the Computer Reservation System (CRS) regulations to remove anti-competitive practices and to ensure that CRS competitive marketing information is not disclosed.

9. The government require, as a condition of approval, that a dominant carrier honour all frequent flyer points awarded by its affiliates, carriers with which it has an arrangement in this regard, and any airline that it acquires or with which it merges. As well, as a condition of approval, a dominant carrier should be required to allow continued participation by these carriers in its frequent flyer program.

10. The government require, as a condition of approval, that a dominant carrier allow new entrants and existing carriers to purchase points in its frequent flyer program.

11. The government require, as a condition of approval, that a dominant carrier offer to transfer its owned or leased surplus aircraft to interested parties in the domestic market. This offer should be made on reasonable terms and conditions, within a reasonable time period following restructuring and before selling them abroad or parking them. In the event that a dominant carrier and an interested party cannot agree, the Canadian Transportation Agency should assess what is reasonable.

12. The government require, as a condition of approval, that a dominant carrier negotiate interline agreements under commercially reasonable terms and conditions with all new entrants and existing carriers in the domestic market wanting such agreements.

13. The government require, as a condition of approval, that a dominant carrier code share with new entrants and existing carriers with which it has interline agreements.

14. The government ask the Competition Bureau to study, within a full merger review, the extent to which divestiture of regional affiliates would enhance competition in the airline industry in a dominant carrier scenario. If this study reveals that competition would be enhanced, the government should require a dominant carrier to take such action as a condition of approval.

15. The government initiate negotiations with the United States on reciprocal cabotage. However, no agreement should be concluded without a comprehensive review of the outcome of the negotiations by the Canadian Transportation Agency, the Competition Bureau and the appropriate committees of Parliament.

16. The government examine the viability of licensing Canada-only carriers to operate solely on Canadian domestic routes.

17. The government begin negotiations with the United States for the implementation of modified sixth freedom rights between the two countries to allow the sale, marketing or display of sixth freedom traffic on a single-ticket basis.

18. The government examine its international charter policy with a view to reducing the distinction between scheduled and charter services.

19. The government, recognizing restrictions that may exist within international bilateral air services agreements, remove current regulatory restrictions in such areas as advance booking requirements, minimum stay, purchase of return transportation, points of departure and return, minimum prices and entity charters.

20. In implementing its commitment to the very highest levels of safety in airline travel, the government use every available opportunity, throughout and following the restructuring of the airline industry, to communicate that safety is the first priority.

21. The government encourage all Canadian air carriers not specifically subject to the Official Languages Act to respect the spirit and intent of the Act where there is significant demand for services in either of Canada's official languages.

22. The government require, as a condition of approval, that a dominant carrier freeze air fares and ensure the availability of a reasonable number of discount seats. These conditions should exist for a two-year period.

23. The Canada Transportation Act be amended to allow the Canadian Transportation Agency to approve or disapprove any fare increases requested by a dominant carrier.

24. For the two-year period during which air fares would be frozen, a dominant carrier be required to justify any requests for air fare increases to the Canadian Transportation Agency. Requests would only be considered in extraordinary circumstances.

25. Upon approval of a fare increase by the Canadian Transportation Agency, a 60-day notice period be required before any fare increase takes effect. The amount of the increase must be communicated to consumers.

26. The government require, as a condition of approval, that a dominant carrier and any wholly-owned affiliates continue existing service to small and remote communities for a three-year period, notwithstanding sections 64 and 65 of the Canada Transportation Act. This condition should apply for the three-year period unless a new or existing carrier provides service of a similar quality at a reasonable price to these communities.

27. In a dominant carrier scenario, if an independent carrier ceases to provide scheduled air services, the government request the dominant carrier to operate these routes for a one-year period.

28. The Canada Transportation Act be amended to require all air carriers to give 48 hours notice to the Canadian Transportation Agency prior to initiating a service disruption. The Agency should then inform the public and affected airports.

29. The government review funding of, and eligibility for, the Airport Capital Assistance Program for financially vulnerable airports and assess whether the Program could be expanded to include airport operational costs to support essential air services to these airports. As well, the government should examine the impact of the devolution of airports and means by which emergency response services at airports should be financed.

30. The government require, as a condition of approval, that a dominant carrier agree to no job losses and no involuntary relocation. Instead, a dominant carrier should be required to achieve employment reductions only through attrition and voluntary separations associated with early retirement and other incentives.

31. The government require, as a condition of approval, that a dominant carrier negotiate early retirement and other incentives with representatives of employees.

32. The government require, as a condition of approval, that a dominant carrier negotiate the protection of retirement and other benefits with representatives of employees.

33. Parties to collective agreements containing a scope clause remove the clause in their next round of collective bargaining, recognizing that these clauses are anti-competitive and a barrier to quality service to certain communities in Canada.

34. The government instruct the Canada Industrial Relations Board to decide all outstanding cases regarding common employer designation in the airline industry in a timely manner but no later than 31 January 2000.

35. The government require, as a condition of approval, that a dominant carrier link travel agent remuneration only to sales volume and on a straight-line basis.

36. The government consider an amendment to the Competition Act that would enable licensed travel agents to "negotiate" collectively with air carriers regarding commissions.

37. The government, in drafting its legislative proposal for a three-element merger/acquisition review process for the airline industry, develop mechanisms for expeditious decision making in extraordinary situations.

38. The government require that a dominant carrier abide by conditions designed to lower and/or eliminate the barriers to entry for new and existing carriers, as well as conditions to protect consumers, airline employees, and residents of small and remote communities. Dominant carrier agreement to abide by these, and all other, conditions must be assured prior to approval being granted, and must be monitored on an ongoing basis.

39. The Canada Transportation Act be amended to require the Minister of Transport to appoint one or more persons to carry out a comprehensive review of the operation of a restructured airline industry no later than two years after a dominant carrier has been in operation.

40. The government instruct the Competition Bureau to conduct a review of competition issues related to a restructured airline industry no later than two years after a dominant carrier has been in operation.

41. If, on the basis of the reviews conducted under the Canada Transportation Act and by the Competition Bureau of a restructured airline industry, it is determined that conditions of approval applied to a dominant carrier should be extended, the government take such action.

42. The government appoint an independent ombudsperson to monitor the commitments of a dominant carrier, to oversee a public complaints process and to report annually to Parliament and to the appropriate committees of Parliament on the state of the airline industry. This person must be selected in accordance with a public and transparent selection process, and must possess expertise in such areas as airline policy, public interest advocacy, and regulatory and legislative processes.