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Dissenting Bloc Québécois (BQ) Opinion
Presented to the Standing Committee on Transport As Part of the
Study on the Restructuring of the Airline Industry in Canada

Summary

The BQ has decided to present a dissenting opinion to the Transport Committee to indicate its disagreement with the majority report on the following points: shareholding in Air Canada; foreign shareholding in Canadian air carriers; airline safety; compliance with the Official Languages Act (OLA); airfares; airline service to outlying regions; and the future of regional air carriers.

1. Shareholding in Air Canada

When Air Canada was privatized in 1988, a rule limiting to 10% the volume of voting shares that could be held by a single individual or group was added to the legislation, to protect the public interest. The BQ considers that this rule has served Quebec and Canadian citizens - and Air Canada - well. If a dominant carrier were formed, this rule would take on even greater importance, since it would prevent a single individual or group from taking advantage of a special position and jeopardizing the carrier and thus the entire airline industry. This rule, along with the rule limiting to 25% the volume of voting shares in Canadian carriers that may be held by foreign shareholders, keeps effective control of the carrier in Canada. In the example of AMR's control over Canadian Airlines, the 25% limit on foreign shareholding was clearly inadequate to ensure actual control of that Canadian carrier.

The BQ recommends that the present rule limiting to 10% the volume of voting shares in Air Canada that may be held by a single individual or group be kept in the Air Canada Public Participation Act or any legislation governing a dominant carrier.

2. Foreign shareholding in Canadian air carriers

The 25% limit on foreign shareholding in Canadian air carriers was also challenged because, some stakeholders claimed, there was a lack of available capital in Canada, which could be offset by raising the [25%] limit. Within a few weeks, however, ONEX and Air Canada each managed to amass over $1 billion, from both domestic and foreign sources. That fact shows - if a demonstration were necessary - that the basic problem of the airline industry in Canada does not have to do with available capital.

The BQ rejects this pretext and points out the purpose of the 25% rule: to keep control of the airline industry in Quebec and in Canada. This control is vital since it keeps here strategic, highly qualified jobs in avionics, information technology, management, and finance. Furthermore, the 25% rule was not applied to shareholding by AMR in Canadian Airlines, a situation that resulted in many strategic jobs being shifted to the United States and suggests to us that the definition of effective control should be clarified in the legislation.

The BQ recommends that the rule limiting to 25% the volume of voting shares in Canadian air carriers that may be held by foreign shareholders be kept, and that the definition of "effective control" be clarified in the legislation.

3. Airline safety

Following the restructuring of airports that began in 1994 and the federal government's withdrawal from its responsibilities for airport infrastructures and safety, the level of safety has been of increasing concern to the public. Cuts to firefighting and air traffic control services have increased safety risks. We note that in a June 15, 1999 letter to the Leader of the BQ, the Transport Minister wrote that a "NAV CANADA aeronautics study would have to show that interrupting or reducing service would not unacceptably increase airline safety risks".

This comment shows that, in the Minister's opinion, safety risks can still be acceptably increased. The BQ considers that, where safety is concerned, no risk is acceptable. In 1998, NAV CANADA reimbursed $65 million to the airlines, which are the users of air traffic control services. We believe that part of that money should be invested in safety: maintaining control towers and flight information stations in the regions, and funding airport facilities that are not cost-effective.

The BQ recommends that the government change its approach and refuse to jeopardize passenger safety, in particular by changing NAV CANADA's excessively economic approach; this change would help maintain and improve the safety infrastructures and thus the economic viability of regional airports.

4. Compliance with the OLA

When the Commissioner of Official Languages appeared before the Committee, she emphasized how deficient services in French were in the airline industry, particularly in the regions. This situation must be corrected, and services provided in both official languages in all parts of Canada.

The BQ endorses the recommendation by the Commissioner of Official Languages that the legislation stipulate that:

(a) the Official Languages Act will continue to apply in its entirety to Air Canada regardless of its structure;

(b) that the regional affiliates and other subsidiaries be subject to Part IV (Communications With and Services to the Public), Part IX (Commissioner of Official Languages) and Part X (Court Remedy) of the OLA.

5. Airfares

The BQ considers that the airfare restrictions contained in recommendations 22 and 24 of the Committee's majority report should be valid for five years, not three years.

6. Airline service to outlying regions

The BQ considers that government allocation of international routes to a single national carrier would give that carrier a considerable economic boost, and that, in return, it would be justified to require that carrier to maintain regional service, even if that service were barely or not cost-effective.

Furthermore, people cannot afford the airfares being charged by the national carriers in certain regions of Quebec such as the North Shore; these airfares hinder economic development in these regions. In allocating highly lucrative international routes, the federal government must require that carriers not only provide service to specific outlying regions, but also ensure that airfares are affordable, something that is not now the case.

The BQ recommends that future legislation include an obligation that a dominant carrier continue to serve outlying regions at affordable airfares, through cross-subsidization, even if these routes are not cost-effective.

7. The future of regional air carriers

The source of the present crisis in the airline industry goes back to the early 1990s. The federal government's desire to maintain two national carriers at any cost has ended in failure. The regional carriers, which provide vital service to the regions of Quebec, have also suffered from the federal government's wait-and-see, fly-by-the-seat-of-its-pants attitude. The BQ considers that until the period of restructuring in the airline industry and the accompanying period of uncertainty have come to an end, Transport Canada should not issue licences to any new regional carriers.

The BQ recommends that, until the period of restructuring in the airline industry has come to an end, no Transport Canada licences be issued to any new regional carriers.