Progressive Conservative Party
Dissenting Opinion

My main focus throughout this Committee was to ensure that we maintain as much competition as possible in the industry. My second concern is in respect to low-volume, regional airports throughout the country and their ability to survive, considering that most of them have been divested by the Federal Government and have been left to their own resources for their continued existence.

Although the final outcome of restructuring the aviation industry may be determined by decisions made by the Board of Directors of Canadian Airlines and Air Canada, no matter what the outcome, every effort should be made to ensure that competition is encouraged at all levels. The report makes many recommendations to encourage competition, but falls short in a few areas.

In the first instance, I believe that the regional airlines should be divested and allowed to evolve and grow based on their particular market, be that British Columbia, Québec or the Maritimes. Each market has different needs, and divested regionals would have more flexibility in meeting those unique requirements at a lower cost. The report does recommend that the Government engage the Competition Bureau in further study to determine whether the regionals should be divested, and I support this recommendation. However, I would like to see the recommendation more strongly worded and the process started toward divestiture.

My second concern is the ability of smaller, low-volume airports to survive. Since 1994, the Government has turned over the management and operational responsibility of airports in Canada to local Airport Authorities. High-volume airports that deal with large numbers of people have many opportunities to generate alternative revenue from parking, restaurant concessions, store concessions, and a variety of other businesses and services such as car rental agencies. Low-volume airports do not have these same opportunities, and many are at risk because they rely only on landing and terminal fees. Under a merger scenario that would reduce the number of flights, these low-volume airports will become even more vulnerable.

Although the report makes recommendations to the Government on how it might ensure these essential services, this is going to be a growing problem in the future as more and more of these divested airports find themselves in financial difficulty.

The other area related to competition where I feel the Committee's report fell short was in regards to low-fare airlines. Again, I believe that independent, low-fare airlines should be encouraged, and should be allowed the opportunity to establish their unique markets and approaches in order to meet market demand. It was unfortunate that time did not permit a presentation by CanJet, which is proposing a low-fare airline in central and eastern Canada operating from Hamilton Airport.

Recent events involving InterCanadian and the proposed CanJet operation make it very clear how small airlines can be vulnerable to a major dominant airline`s plans and strategies. Many of the Committee's recommendations follow closely with the Competition Bureau's excellent report on a restructured industry with one dominant carrier.

From all of the testimony, it became clear there was consensus that the industry was not in crisis or broken, but only one airline. The testimony clearly raises the question of why Section 47 of the Canada Transportation Act was invoked to suspend the Competition Act. Based on testimony, the consensus is that there was no crisis. There is an urgent situation dealing with Canadian Airlines, but Section 47 has very strict parameters and the use of this section in this case was inappropriate.

As a result of the crisis announcement on August 13, the aviation industry in Canada has been thrown into chaos for four months, and certainly has played a role in the suspension of InterCanadian Airlines' operation and the loss of 1,000 jobs in Atlantic Canada. Over this period, the rules governing the aviation industry were very unclear and unpredictable, and the situation was exacerbated when the Minister of Transport mused about several changes he may or may not make to ownership rules.

When the process started with the suspension of the Competition Act, there were no rules governing the restructuring of the aviation industry. Halfway through the 90-day suspension of the Competition Act, the Minister suggested some rules and then, three-quarters of the way through, he suggested that he might change the rules again. This constantly changing position discouraged proponents from making proposals and delayed others until they could get an idea of the parameters they would be required to meet. The 90-day period came and went with no change to the situation, and was for all intents and purposes a tremendous waste of effort at a significant cost to the aviation industry and its employees. In the end, it appears that Canadian Airlines has accepted the offer by Air Canada because they had no other option.

Having said that, I want to compliment all members of the Committee for working together, and also to the Government Members of the Committee who participated in all of the heated debates and did not hesitate to question current or proposed Government policy.

I would also like to thank the Clerk of the Committee and the research staff who did an exemplary job of locating the information and formatting the research in the best possible fashion for us to use. They worked long hours in order to make sure that work was prepared for the Committee at the appropriate time, and they all exceeded expectations at every turn.