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An entrepreneurial approach in Canadian aviation

During a November 2004 venture-capitalist meeting in California, noted American economist Paul Romer said, “A crisis is a terrible thing to waste.” The New York Times covered the implications of the phrase in a 2009 article, noting how Romer was referring to the rapidly rising education levels in other countries compared to the United States, but the quote became a rallying concept for economists and consultants looking for constructive opportunities amid the Great Recession.

In other words, every once in a while an event shines a light long enough on things previously obscured in a way that creates an opportunity for change that should not be squandered. It appears the Canadian aviation industry is on the precipice of such an opportunity in 2020.

Over the last three years, Canada’s commercial aviation industry witnessed a level of policy, regulatory and political activity it has not seen since the transportation reforms of the mid-1980s and 1990s.

From the federal government musing about airport privatization, to a passenger bill of rights, to a carbon tax on air travel and, most recently, the offloading of airport security screening; it was an avalanche of politics, policy and regulations that hit the industry.

Did the impact of the adoption of any of those various policies represent a crisis for the industry? As wrong-headed and poorly designed as some were, the answer is likely not. The reason is that the real crisis is found not in the policies themselves, but in the manner that they came about, driven political and fiscal considerations that have precious little to do with the kind of policies that have to be fixed if Canada is to have the kind of commercial aviation system it needs to continue to prosper.

This is not something new.

Transport Canada’s policy influence has been waning since the Chretien government’s “commercialization” of airports and air traffic control and the introduction of 100 per cent-plus cost recovery.

Then, as well as today, decisions with significant bottom-line implications for the industry and for air travellers are more likely to be made in the office of the Minister of Finance than that of the Minister of Transport.

Moreover, and more troubling still, because such decisions are routinely draped with the cloak of budget confidentiality, there is rarely any meaningful opportunity for engagement or consultation before they are sprung on Canadians in a budget speech.

After a federal election where airplanes and air travel became newsworthy only after it was learned that the Liberal campaign – unlike the others – used two planes instead of one, it is fair to ask whether that will change.

I believe it can.

But the industry must stop focusing on the symptoms and begin tending to the root of the problem.

The old tactics of quiet diplomacy and discreet engagement, whether on the golf course or in the boardroom, while sometime effective in dealing with transactional issues affecting one company or another, have not worked in fixing the major structural issues affecting the industry as a whole.

The reason these issues have frustrated our industry’s efforts for so long is that they carry significant financial and political implications for the Government of Canada.

Addressing them will require the federal government (under a Liberal minority) to consider the political opportunity costs of changes to a system that provides it, largely predictable and growing net revenues.

The nature of the issues faced by our industry require tactics that are informed by a clear strategic outlook and the capacity to execute a playbook that includes public engagement, the cultivation of strategic alliances and networks, and the audacity to challenge governments.

In a recent interview, Air Canada president and CEO, Calin Rovinescu, said that the ingredients of long-term business success were an entrepreneurial mindset, being nimble and innovative; and the willingness to disrupt the status quo.

Our industry should take those words to heart. The crisis is now in front of us – let’s not waste it.

Massimo Bergamini is an Ottawa-based policy entrepreneur, advocate and writer. He recently stepped down as president and CEO of the National Airlines Council of Canada.