Open Canada’s air travel market

Air Canada planes in Arizona.

The war between Canadian consumers and Air Canada drags on, with the airline still refusing to issue refunds for cancelled flights departing from Canada. To make matters worse, Transport Minister Marc Garneau says the Trudeau government will not force airlines to issue refunds.

Getting money back when a business doesn’t provide a service is pretty basic fair play. In an environment in which no one knows when plane travel will be back to normal, a voucher for a future trip is a poor substitute for cash. If you are one of the 14 per cent of Canadians without a job and struggling to pay your bills, a voucher is a real slap in the face, while a refund could go a long way in helping you stay afloat. It’s hard to understand why the government is letting the airline stick it to consumers this way.

If Air Canada is incapable of doing what’s right, that’s just one more reason to rethink how we regulate the domestic airline industry. The easiest way to shake things up would be to change our approach regarding international ownership. As it stands, airlines that fly domestic routes in Canada need to be majority-owned by Canadian citizens, which means international investors cannot account for more than 49 per cent of company ownership. Canada should follow Chile’s lead, eliminating ownership requirements altogether and allowing for international carriers to fly domestic routes.

This would be a huge benefit to consumers, as it would put much-needed downward pressure on travel prices in Canada. Based on aggregate data from international travel booking company Kiwi.com, Canada ranks 65th globally in terms of flight affordability. Our cost per 100 kilometres travelled is 2.1 times higher than in the United States, 2.8 times higher than in New Zealand and 3.6 times higher than in Portugal.

When it comes to air travel, Canadian consumers need more competition. Permitting international carriers to better optimize their routes by including additional Canadian cities would be a great step forward. For example, why shouldn’t British Airways be allowed to sell seats from Vancouver to Toronto while en route to London? Or American Airlines from Halifax to Calgary, while en route to Seattle? Or Air France from Calgary to Montreal, en route to Paris? Why not, indeed? It would save us all a lot of money.

Critics will argue that more competition will decrease Air Canada’s ability to connect our smaller towns and cities. But considering Air Canada has just announced the indefinite suspension of 30 small-market domestic routes, it’s a moot point. Air Canada’s decision shows exactly why now is the time to open the market to more competition.

If international discount carriers think they can make (our domestic) routes profitable, let’s make it legal for them to try

If international discount carriers think they can make those routes profitable, let’s make it legal for them to try. If a Canadian airline wants to attract international investment to expand its ability to fly domestic routes, it should be able to do so without arbitrary ownership limits. Air Canada may not be able to fly those routes and make a profit, but that doesn’t mean other airlines couldn’t. We should let them try.

No doubt some people believe the current turmoil is a reason to re-nationalize Air Canada and bring it back under government control. That is a terrible idea — for taxpayers and travellers alike. Both in Canada and internationally the airline industry has shown itself to be extremely volatile. In the past 20 years alone, the sector was devastated by 9/11, dealt another blow by SARS and didn’t see its stock prices recover to pre-9/11 levels until 2014.

COVID-19 highlights this volatility, as the pandemic has caused airline stock prices to fall at a rate never seen. A nationalized airline would not be immune to those shocks, which would then force taxpayers to foot the bill every time a crisis erupted. For a country with high — and rising — public debt, taking on a hugely risky public investment wouldn’t just be misguided, it would be reckless.

On the consumer side, the idea of a nationalized airline isn’t worth celebrating, either. For decades, the government has consistently failed to deliver the mail on time. Putting it in charge of getting you to your connecting flight is a recipe for widespread travel disaster.

Consumers would have more choice and more routes as a result of eliminating ownership restrictions. When we do travel again, the experience should be as consumer-friendly as possible. More competition is the only way to ensure that.

Originally published here.


The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org

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