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Supplementary Opinion
House of Commons Standing Committee
on Transport

By Joe Comuzzi, M.P.
Vice-chair, House of Commons Standing Committee on Transport
December 5th, 1999

INTRODUCTION:

The Report of the Standing Committee on Transport is not as comprehensive as it should be given the time constraints the Minister imposed on the Committee.

During the hearing period to consider a new airline policy for Canada, the landscape changed radically several times - i.e.: the Onex and Air Canada offers, the decisions by the Supreme Court of Ontario and the Superior Court of Quebec and the announcement on December 4, 1999 that Canadian Airlines no longer will be an independent air carrier in Canada.

AIRLINE PASSENGERS IN CANADA DEMAND:

• A safe air traffic system;
• Affordable year-round prices without travel restrictions including transparent costs on their tickets showing all charges the passenger is forced to pay;
• Reasonable access to service;
• The elimination of any barrier to entry into the Canadian market.

The Canadian taxpayer/consumer is entitled to these demands. They have paid through their taxation for every airport, runway and air navigation system in Canada. The taxpayer also pays for all regulatory agencies to ensure safety and a competitive environment. In essence, it is all Canadians, not the airlines, that have paid for air side, ground side and for regulatory agencies to facilitate air passenger or air cargo transportation services.

All airlines use these facilities on a purported "user pay" philosophy. Dominant airlines attempt to influence transport administrative and regulatory agencies more to meet the demands of their own operating criteria sometimes to the detriment of the Canadian passenger. You need look no further than the locations at Terminal Two and Three in Toronto to compare the facilities and inconveniences for passengers leaving or arriving from regional carrier locations to the facilities and conveniences afforded on the dominant routes.

THERE ARE FOUR MAJOR ISSUES TO CONSIDER:

1. Consumer protection and employee protection including independent contractors;

2. Low fare airlines;

3. Regional carriers;

4. Control and ownership.

1A. CONSUMER PROTECTION

The Competition Act and the Canada Transportation Act through their regulatory agencies are not accessible to the average Canadian nor are they responsive in a timely manner to the aggrieved passenger. Merely strengthening the power of these agencies would not alleviate the consumer or employee problem in a timely manner and would add more costs to the administrative expense.

The consumer protective issues that must be addressed deal with predatory pricing, the additional consumer cost for code sharing and interlining, airline cancellations and delays, overbooking, bilingual services, facilities for the physically challenged, comfortable seating for all passengers and refund policies to mention a few. Some of the recommendations made to the Committee by the Canadian Association of Airline Passengers and the Economic Committee chaired by Mr. Valeri, M.P. should be given further consideration.

1B. EMPLOYEE PROTECTION

The presidents of Canadian Airlines and Air Canada made commitments to the Committee with respect to the protection for all employees of Air Canada and Canadian Airlines in the event of a merger, takeover or buyout. The transcript of these assurances should be made available to the necessary parties to ensure the commitments made by the airlines are scrupulously followed.

Remedy: In order to ensure the immediate protection of all employees and the consumer, the Government of Canada shall insist on placing the government's designates on the Board of Directors of Air Canada. If Air Canada is not willing to voluntarily place directors on their Board, the Government of Canada should immediately take an equity position in Air Canada so as to ensure that Board positions are made available to protect the interests of the employee and the consumer.

2. LOW FARE AIRLINES:

The success of independent low fair airlines in Western Canada, the United States and other countries should be explored and low fare airlines should be encouraged to operate in Canada. Some of the reasons for the success of low fare airlines are independence from dominant carriers; no costly reservation and administrative systems; no travel point program; no code sharing with dominant carriers, no interlining service; and the use of standardized aircraft to mention a few.

Remedy: The powers of regulatory agencies must be enhanced to ensure low fare airlines gain adequate and timely slots at all airports, adequate and competitive airport facilities at all airports and the elimination of all predatory pricing by dominant carriers. Low fare airlines having an exclusive business relationship with dominant carriers would be counterproductive to this remedy and should not be considered as a low fare carrier.

3. REGIONAL CARRIERS

The total domination of regional carriers by a dominant carrier will not foster a competitive environment nor lead to lower airfares. The dominance especially through code sharing and interlining adds to the cost of regional services and lessens the passenger's ability to exercise their options when they arrive at the "hub" i.e. Eastern Canada experiences as stated by Charles Hubbard.

Remedy: Independent regional carriers should be given the same rights as outlined for low fare operators. Should regional airlines wish to code share and interline, the regional airline should not be forced to do so exclusively with a dominant carrier.

4. CONTROL AND OWNERSHIP

The decision to change the 10% control (Air Canada Public Participation Act) and the 25% foreign ownership restriction was not based on adequate research and was premature. The enormous success for all Canadians of the "Auto Pact" which ensured a fair share for Canada of the continental vehicle manufacturing market should serve as a model to develop an equivalent "Air Pact" building on the very successful "Open Skies" policy to ensure for Canada a fair share of the continental and intercontinental passenger and air cargo transportation market. The implications of the W.T.O. must also be considered in this analysis.

Remedy: There should be no change to the control (Air Canada Public Participation Act) or the foreign ownership provisions at this time. A special committee of the House of Commons should be struck as soon as possible to review the possibility of developing an "Air Pact" concept to ensure for Canada a fair share of the continental and intercontinental air passenger and air cargo transportation market.

The space allocated for this Supplementary Opinion does not permit a comprehensive review of the events leading up to this report. Should the reader wish additional information and documentary evidence, contact my parliamentary office at 613-996-4792.