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Contrails: Laundry List

Canada is a niche player in the global aviation market, but one with the potential to be greater than its size.


September 27, 2007
By David Carr

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The Air Transport Association of Canada’s annual general meeting is
more than seven months away. Still, it is not too early to point out a
disturbing pattern that follows the yearly gabfest. Every November the
federal Minister of Transport arrives at ATAC to set up industry hopes,
only to have the Minister of Finance knock them down come budget time.
Will this year be any different? The signals are mixed.

Except
for those attacks on Paul Martin for having operated Canada Steamship
Lines under flags of convenience, transport failed to make an
appearance in the recent election, and is not one of Conservative Prime
Minister Stephen Harper’s top five priorities.

That said, this
is a PM who appears to respect the traditional divisions of federal and
provincial responsibility. We can expect that the Conservatives will
pay more attention to those non-provincial responsibilities that
appeared to bore the Liberals for most of their last 13 years in
government, including the military and air transport. As a result, both
Defence Minister Gordon O’Connor and Transport Minister Lawrence Cannon
should be two of the busiest fellows around the Cabinet table.

There
are two disciplines that govern the movement of passengers and goods:
safety and commerce. Transport Canada has done a commendable job in
maintaining Canada’s place as a world leader in aviation safety,
although regional offices’ reluctance to adhere to a national standard
is inefficient, and is increasing the cost of compliance for many small
operators.

As for the commercial aspect, and with respect to
former Liberal Transport Minister Jean Lapierre, if Stephen Harper were
to lock the transport file in a bottom drawer and toss away the key,
the Conservatives could not make as great a hash of the portfolio as
the Liberals already have. Something Liberal transport critic Belinda
Stronach would be wise to remember in the unlikely event that she wants
to use the portfolio to goose her leadership ambitions.

For his
part, Cannon is left with a laundry list of unfulfilled Liberal
promises that should crack open new markets and eliminate federal
practices that are driving up the cost of flying. Top of this list is
airport rents, which are increasing the cost of access for commercial
and corporate operators alike. Lapierre promised a fix but delivered a
Band-Aid – which neither addresses the issue of rent gouging, nor
balances inequities of rent collection across the system. (Pearson will
continue to handle one-third of Canadian passenger volume, but account
for two-thirds of Transport Canada’s rent payments.)

Ottawa is
an absentee landlord collecting money for facilities Canadians have
already paid for with our taxes. In the next budget the government
should announce a timetable to eliminate airport rents and introduce a
new Canada Airport Act that would protect consumers through monopoly
price regulations.

Likewise, the next budget should complete a
Liberal promise to increase allowable foreign ownership of Canadian
airlines to at least 49%, thereby giving established carriers and
startups greater access to capital.

On the corporate side, a
cross-border agreement will be needed for fractional ownership in
Canada to gain the critical mass it needs to be competitive in the
North American market. Before the Canadian Business Aviation
Association annual general meeting sets down in Montreal this summer,
the government should announce an accelerated timetable to negotiate
the blending of C and N registrations for fractional operators.

Finally,
the Transport Minister should press for a more open, open-skies
agreement with the US. Full marks to Lapierre for getting the deal
done. But the package is anything but ‘open.’

Whether in the
corporate or commercial sector, Canada is a niche player in the global
aviation market, but one with the potential to be greater than its
size. Since navigating Air Canada through bankruptcy protection, for
example, ACE chair and CEO Robert Milton has been busy putting flesh on
his skeletal vision to build Air Canada into one of the international
airline industry’s leading brands. It should warm the heart of anybody
who remembers when Canada used to regularly punch above its weight on
the world stage, and it will be a refreshing change to have a
government that can align with such priorities in action rather than
just words.


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