Fly free, little airlines
Domestic flights in most developed countries are, from a Canadian perspective, enviably affordable. Americans can regularly find fares from New York to Orlando, Fla., for less than $200 round trip, for example; French citizens can fly from Paris to Marseilles and back for $150; Russians can zip from St. Petersburg to Moscow for just $100. Canadians can only ponder those fares and weep. When they want to take a trip in their own country, they have little choice but to ride with one of the big domestic carriers, which means they have to pay up.
Most major travel markets include ultra- low- cost carriers that provide inexpensive domestic flights. Canada, on the other hand, only recently got its first ultra- low- cost carrier in NewLeaf Travel, which technically isn’t even an airline, but rather, a ticket “reseller” — a distinction that allows it to circumvent some of Canada’s Byzantine airline operating restrictions.
One of those rules, according to the Canada Transportation Act, is that Canadians must own 75 per cent of the voting shares of a Canadian airline to “ensure that strategic decisions regarding air services within Canada … are conducted by Canadians.” That rule has proved to be prohibitive for at least two companies — Vancouverbased Canada Jetlines Ltd. and Calgary- based Enerjet Ltd. — both of which want to launch low-fare airlines in Canada, but can’t meet the 75 per cent threshold.
Jetlines and Enerjet have petitioned the federal government for an exemption that would allow 49 per cent foreign ownership, arguing that there simply isn’t enough capital in Canada to finance their launches. Airlines cannot receive licences to operate unless they have enough cash on hand to operate for 90 days without turning a profit — a threshold Jetlines and Enerjet say they can meet if they can make use of foreign investors. Transport Minister Marc Garneau has said the government is looking at the proposal “very carefully,” but has not given a timeline as to when it might make a decision.
What possible hazards could lie in wait for Canadian passengers if Ottawa relaxes its rules? Foreign owners are permitted to sell Canadians 10-packs of Timbits and cases of “Canadian” beer — why not inexpensive options for domestic air travel? Is it not in Canada’s interest to facilitate greater travel among its citizens within its national borders?
European countries de- regulated their airlines two decades ago. They, have seen the growth of a thriving new industry, which encourages travel and in turn, stimulates the expansion of tourism and the jobs and revenue it brings. Liberal Sports and Disabilities Minister Carla Qualtrough, who supports granting the exemption, advised Garneau that the new airlines could generate up to 1.1 million new passenger trips a year in British Columbia alone, while creating 850 direct jobs and more than $ 850 million in economic benefits. While Canada’s major airlines understandably hope to protect their most lucrative routes, budget airlines often service more regional, quick- stop flights between smaller communities. Enerjet, while based in Vancouver, would also fly out of airports in Abbotsford, Victoria, Kelowna, Prince George and Comox.
There is no question that Canadian entrepreneurs are up to the task of establishing successful new carriers. In just 10 years, Porter Airlines, headquartered at Billy Bishop Airport on Toronto Island, has grown into a successful and popular competitor to bigger, longer- established carriers, while expanding and modernizing the rundown island airport and winning approval for an underground walkway to replace the ferry service connecting it to the mainland. Only Garneau’s refusal to allow the expansion of its runway has prevented it from serving the rest of country.
Both Air Canada and WestJet oppose an exemption, arguing that they are restricted by a similar 25 per cent investment limit in the U. S. But restrictive policies in the U.S. are no reason to penalize Canadian travellers in their own country. Competition tends only to increase options, lower prices and offer more choice. WestJet, which started as a discount carrier itself, has already indicated it will use lower fares to compete with the newcomers.
While Ottawa says it is “working diligently” on the exemption request, delay will only do a further disservice to Canadians. Jetlines head Jim Scott warned in a letter to stakeholders last week that it could lose its prospective investor if a decision isn’t made soon. Discount travel is not a new phenomenon and there is no reason the government should need a lengthy period to respond. Liberals claim they are devoted to improving the lot of middle- class Canadians, and middle class Canadians are sick of paying unnecessarily high fares for domestic travel.