May 2, 2005
ALPA Pilots Oppose Liberalization Proposals, Call for Constructive Government Policies on Air Transportation
OTTAWA --- A spokesman for the union that represents most airline pilots in North America today told the House of Commons Standing Committee on Transport that the government needs to focus on mending its own transportation policies rather than looking for foreign competition and foreign investors to save Canada's air transport system.
"We are opposed to any initiatives that would permit foreign operations within Canada's domestic market (cabotage) or that would relax foreign ownership requirements and effectively trade control of Canada's airline infrastructure to foreign interests," said Captain Kent Hardisty, representing the Air Line Pilots Association, International. He was speaking at hearings on Air Liberalization and the Canadian Airports System. Capt. Hardisty is an executive vice president of ALPA and president of its Canada Board component. ALPA represents 64,000 airline pilots at 41 airlines in Canada and the U.S.
"Despite record passenger load levels, the airline industry in North America remains an economic basket case by any measure, with bankruptcies and failures all too frequently front page news. Thousands of airline workers in both Canada and the United States have suffered displacement and a lowering or loss of wages and working conditions. The traveling public is confronted by uncertainty and disruptions as air carriers reorganize under bankruptcy protection or fail outright," Hardisty said, further noting that "we do not believe that foreign control of our airline sector or operations by foreign carriers within our domestic marketplace are part of the solution."
Some of Canada's policies toward air transport actually are part of the problem. "As costs continue to rise, airline managements seem unable to pass those costs on to the consumer. Still, the Canadian government continues to levy excessive direct and indirect tax burdens upon the airlines. Airport rents, airport improvement fees, navigation fees, and security costs are all passed on to the airlines, which in a highly competitive market are unable to pass those costs on to the customer," he said.
"The government continues to treat the industry as a cash cow and employs piece-meal measures that treat the symptoms and not the root causes of the industry's financial woes. The recent failure of Jetsgo highlights the ineffectiveness of current government policy," he said.
"Meanwhile, airlines are almost compelled to continue to engage in destructive fare wars in an effort to either gain or retain market share, thereby further weakening the bottom line. New-entrant airlines exert additional downward pressure on revenues by undercutting established carriers' fares. Simply put, at the moment there are too many seats chasing too few passengers. To use an aviation term, the industry is in imminent danger of spiraling down out of control," he said.
Hardisty said that "while we believe that strong medicine is needed," the union is not advocating a return to the days where the government controlled access and fares on each and every city-pair route in the country and where the government owned and operated airports and the air navigation system.
"We recognize that Canada's prosperity is tied to the global marketplace. Canada needs to lay the foundations for a healthy and viable airline industry that results in affordable and accessible domestic and international networks. Further liberalization without fixing the fundamentals will only worsen what is already a grim situation," he said.
"ALPA believes that entry into the marketplace is far too easy, allowing poorly financed airlines to start up without regard to the public interest. The result is excess capacity and below-cost operations. Canadian aviation history since deregulation in the 1980s is littered with the financial wrecks of airlines that have come and gone, the most recent being Jetsgo. Jetsgo lost more than $55 million dollars in the eight months prior to its grounding and has $108 million in liabilities...Yet, the owner of Jetsgo, Mr. Leblanc, who has been at the helm of three major airline failures, wants the court to approve resumption in operations. That it might be possible is astounding and demonstrates the total inadequacy of air policy legislation in Canada," Hardisty said.
"A new entrant must be required to meet meaningful standards that are rigourously enforced. We believe that the government, before providing a licence to a new entrant, must carefully consider the following criteria: current capacity in the system, financial viability of the new entrant, and the public interest," he said.
# # #
See the full text of ALPA's submission, including its 11 recommendations (in English | in French).
ALPA Contact: Art LaFlamme, (613) 569-5668