Features Operations
Contrails-May/June 05

Will commercial aviation in Canada ever catch a break? It looked
promising last November in Vancouver at the Air Transport Association
of Canada’s (ATAC) annual general meeting. At that meeting, a freshly
minted Transport Minister entered a den of skeptics and emerged a
winner by delivering much the same message as previous Liberal
transport ministers have delivered to ATAC, but with greater conviction.

“Some
of the initiatives of the previous government have been overtaken by
events,” Jean Lapierre told a lunchtime crowd. Code for ‘we screwed up’
by a government that has a hard time admitting that since 1993 it has
been the “previous government”.

The bar was raised even higher
by Conservative transport critic Jim Gouk, who sidestepped a golden
opportunity to criticize the government, and instead made a passionate
plea to the industry to do a better job pressing its case. He would
appear to have a point. In a recent survey by Toronto-based Ekos
Research Associates, transport ranked 16th in a list of Canadian top
priorities for the federal government. Even then it was transport
safety and not the overall health and competitiveness of the industry.
Defence did not even crack the top 20, although preventing acts of
terrorism sat in 12th spot.

Topping the list were health care
and education, two exclusively provincial jurisdictions that the
federal government cannot resist interfering in as its own
responsibilities crumble to dust. Giovanni Bisignani, the International
Air Transport Association’s (IATA) outspoken Director General and CEO
has identified the bilateral system, national ownership rules and the
attitude of competitive authorities as the “three pillars of
stagnation”. In Canada, Fred Lazar, a professor at York University’s
Schulich School of Business, has added a fourth: the federal government.

Liberal
air transport policy is in a shambles. The government dropped the ball
on airport privatization. It dampened short-haul demand by cynically
using the September 11th 2001 terrorist attacks to front-end a massive
tax grab. It stands guilty of trying to micro-manage privately owned
Air Canada, while it is frustratingly slow in reducing foreign
ownership restrictions and opening up markets through new bilateral
agreements with China, India and the European Union.

As the
industry continues to be burned by high taxation and fee increases by
unregulated monopoly service providers, Ottawa fiddles with airline
specific advertising guidelines. None of this would be allowed to
happen with Canada Steamship Lines (CSL), the Montreal-based Great
Lakes and St. Lawrence shipping concern, bought and rescued by Paul
Martin and now turned over to his sons. CSL and its sister company CSL
International operate the largest fleet of self-unloading vessels in
the world, the hulls sometimes filled with rich federal government
contracts.

As Finance Minister, Paul Martin placed CSL in a
blind trust, although he was permitted to look through company books an
eyepopping 12 times. (Although having watched Martin dither and flail
as Prime Minister, I have to wonder how he managed to keep those ships
afloat in the first place). The Chrétien government closed the door on
many offshore tax havens, while leaving one, the Bahamas conveniently
open. Care to guess where the bulk of CSL’s ships are registered?

The
government’s position is that Canada must have a competitive shipping
industry, even though CSL’s ships fly foreign flags of convenience and
its crews remain non-Canadian.

The double standard is
breathtaking. Still, even after Finance Minister Ralph Goodale pulled
the rug from beneath Lapierre in the recent budget, the Transport
Minister refused to give up, publicly expressing disappointment in his
cabinet colleague and promising relief on airport rents by June.
Professor Lazar calculates that if Canada’s eight major airports were
indeed non-profit and the federal government suspended ground rents,
aeronautical charges in Canada would plummet a combined 42%.

ATAC
argues that relief on airport charges would be the minimum to signal
that the government is committed to cleaning up the mess the Liberals
have created since 1993. Alas, even this line in the sand might be too
much to hope for as a government battered by a scandal of its own
making struggles to avoid a snap election.