Ensign (Internet Publication), Tuesday, May 18, 2004
and Western Star (Cornerbrook, Nfld), Thursday, May 20, 2004

Air Canada: waiting at the brink

by David Orchard

For several months the fate of Air Canada has hung in the balance. The same voices raised against a national oil company, a Canadian ship building industry, or a national railway are busy explaining that the idea of a national airline is also both unnecessary and out of date.

Air Canada (then Trans-Canada Airlines) was created in the 1930s by the government of Canada and the Canadian National Railway. In the words of Peter Pigott, author of National Treasure: The History of Trans-Canada Airlines, Trans-Canada Airlines, like the national rail lines before it, was conceived of as a venture to overcome Canada's "vast geographical barriers, thwart the Americans… and unite the country." Endorsed by both the opposition Conservatives and the CCF as a publicly controlled company, this "flying symbol of national identity -- a maple leaf with wings," was incorporated by Mackenzie King's government in 1937; transnational mail and passenger operations began in 1939.

The airline developed a reputation for good service and technological expertise. In 1955, it was the first North American airline to use turbo prop aircraft commercially, revolutionizing air travel on the continent. It pioneered development of the black box technology and in 1961 the world's first computerized reservation system. In 1982, Air Canada won Washington based Air Transport World's Technical Management award for "its consistent record of excellence over the years"; its fleet management was cited as "among the best in the world." In 1985, it topped 700 airlines to win Air Transport World's coveted award for excellence.

None of this was good enough apparently. Privatization would be better, Canadians were told. In 1989 the company was put on the market. Next we were informed that free trade in the air was necessary and in 1992 the Open Skies Agreement was signed with the United States. (In pointing out that the Open Skies Agreement could lead to the end of Air Canada, this writer was roundly chastised for being stuck in the past, unable to move with the times or appreciate the new opportunities now available to Canadian airlines with the vast U.S. market at their beck and call.)

Now Air Canada is in bankruptcy protection, begging a Hong Kong billionaire, then a New York vulture fund or a foreign bank to take it over.

On a daily basis Canadians are admonished not to expect government intervention to save the airline or continue to cling to nostalgic notions about national flag carriers. If the market does not want a national flag carrier, so be it. Several European national airlines are in trouble also and their governments aren't rushing to save them. We must let the market rule.

However, Canada is not a small, densely populated country like many European nations, any one of which could fit into the Toronto-Metro corridor, and which already possess well developed transportation options. It is the second largest nation on earth, with a widely scattered population and we need a national airline today every bit as much as we did in the 1930s.

Who exactly will serve Quebec City, Saskatoon, Thunder Bay, Baie Comeau, Flin Flon, Kamloops, Charlottetown and Saint John after the market has spoken and our Minister of Transport has resolutely refused to intervene? Many of these centres were not in the past, and are not today, attractive enough for private airlines to maintain operations there. Those whose ideology leads them to campaign endlessly against public ownership would see the essential Canadian institutions disappear one by one until there is no infrastructure left to serve and hold our far flung nation together.

Past Canadian governments, both Liberal and Conservative, worked hard to create what historian W.L. Morton has called "agencies of national purpose." Thanks to their foresight and determination we have a nation.

Our current government, however, seems to pride itself on downsizing, cutting or selling off these very same institutions on the grounds, apparently, that they cost money to maintain. The official Opposition urges them to cut and eliminate even faster.

Canada today is a richer country than it has ever been. Yet, our political leaders appear bereft of any sense of national purpose, let alone concrete proposals to give Canadians -- French or English speaking -- a sense of national meaning and direction.

Economist June Menzies, adviser to John Diefenbaker in the 1950s, warned that a nation without a vision dies. How long can a nation with political leaders focused on cutting taxes and dismantling its vital infrastructure survive?

Some of the world's most efficient companies are publicly owned and there are numerous Asian, European and North American examples testifying to that. In fact, when Jaguar, Rolls Royce and Chrysler failed, public intervention rescued them and set them back on their feet.

A mixture of public and private enterprise and the resulting competition between the two has worked very well for Canada and many other countries. Now the pendulum has swung too far in the direction of wiping out public control and initiative returning us to the kind of laissez-faire environment that led to the battle for public enterprise in the first place.

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