Help passengers, not airlines
I used to fly Air Canada down to New York. That is to say, I used to think about flying Air Canada down to New York. This was years ago, when air travel was all about the comfort and safety of the airlines and passengers were at best an unavoidable nuisance. If you wanted to fly without booking ahead three weeks, staying over a Saturday night, departing on even-numbered hours during months with the letter R and all the other rules that were then the norm, the cost was $1800 return. Eighteen hundred dollars. I used to drive down to Buffalo instead, two hours away, to pick up the JetBlue flight into JFK. The cost: $100 each way. And they had leather seats.
So whatever Jetsgo may have done or not done to precipitate last week’s messy collapse, and however shabbily it treated its customers and employees at the end, I for one am prepared to cut it a lot of slack. The airline, like its upstart rivals WestJet and CanJet, brought real competition to the skies at last after several years in which the federal government seemed determined to stamp it out, the better to nurture back to health its perpetually sickly child, Air Canada. The last time I flew the Toronto-New York route, it cost me something like $39. Amazing what a little competitive stimulus can do.
I suppose I’m happy that Ottawa has disavowed any intention of bailing out the airline. This is, after all, a system of profit and loss, in which companies are expected to bear the consequences of their own mistakes. And I’ve read all about the many errors Jetsgo made: the excess capacity, the aging fleet, and so on. Still, I can’t help thinking that if this was Air Canada, the government would not have been so quick to proclaim its devotion to free-market principle. How many times has Air Canada been bailed out, in one way or another, in the past? Four? Five?
And it is striking the many ways in which government contributed to Jetsgo’s demise. I don’t just mean the usual complaints of high fuel taxes, punitive airport rents, and excessive security charges, of which all the airlines complain. I mean specific actions by specific governmental and quasi-governmental agencies, all directed at Jetsgo. In particular, it is worth noting that what triggered the events of last Friday were the demands that Jetsgo, which had no prior history of missing payments to suppliers, should immediately pay all bills owing to two of its creditors, the Greater Toronto Airports Authority and Nav Canada, operator of the country’s air traffic control system. Two large quasi-governmental monopolies, facing little in the way of market disciplines themselves, but awfully concerned that Jetsgo should submit to theirs.
Why? Why was it so essential that Jetsgo pay there and then, right before March break, one of the airlines’ biggest annual revenue generators? What fiscal emergency were the GTAA and Nav Canada facing that they couldn’t wait a couple of weeks? We should mention also the contributions of Transport Canada. After a botched landing in the ice and fog at Calgary Airport in January, in which a Jetsgo plane skidded off a runway-- hardly an unknown occurrence, especially given the conditions -- the department threw a fit, putting the airline on a thirty-day notice of suspension, demanding it upgrade all of its training manuals and issuing restrictions that forced it to fly at low altitude, with consequent loss of fuel-efficiency. I’m all in favour of safety, but wasn’t this just a little bit of overkill?
But never mind. The issue now is what to do to sustain competition in the skies. Within hours of Jetsgo’s collapse, the other airlines had begun raising fares. One study has found they are already 20 to 50% higher on comparable routes than they were just a week ago. To his credit, the Minister of Transport, Jean Lapierre, had been talking even before all this about opening domestic air routes to foreign carriers, a practice considered so exotic in airline circles it is given a special name -- cabotage -- as if to suggest some sort of mild perversion. But, like the airlines, he insists it must be negotiated with the United States bilaterally, with reciprocal access guaranteed for Canadian airlines south of the border.
Hogwash. Don’t negotiate it. Just do it. If we wait until reciprocal arrangements can be made, we will be waiting until doomsday. The notion that trade should be liberalized only as and when it suits the domestic industry is the true perversion. It was never part of the case for free trade, and it is especially self-defeating to insist upon it now. Canadian travellers should not be held hostage to the interests of the airlines, or used as bargaining chips in Air Canada’s expansion plans.
Someday it will occur to someone in government to put the consumer interest first. The purpose of putting planes in the air, after all, is not to prop up airline executives’ stock options, or to give pilots something to do. It is to fly passengers from point A to point B as quickly, comfortably, safely and cheaply as possible. Whatever its many failings, Jetsgo understood that. Why can’t governments?
So whatever Jetsgo may have done or not done to precipitate last week’s messy collapse, and however shabbily it treated its customers and employees at the end, I for one am prepared to cut it a lot of slack. The airline, like its upstart rivals WestJet and CanJet, brought real competition to the skies at last after several years in which the federal government seemed determined to stamp it out, the better to nurture back to health its perpetually sickly child, Air Canada. The last time I flew the Toronto-New York route, it cost me something like $39. Amazing what a little competitive stimulus can do.
I suppose I’m happy that Ottawa has disavowed any intention of bailing out the airline. This is, after all, a system of profit and loss, in which companies are expected to bear the consequences of their own mistakes. And I’ve read all about the many errors Jetsgo made: the excess capacity, the aging fleet, and so on. Still, I can’t help thinking that if this was Air Canada, the government would not have been so quick to proclaim its devotion to free-market principle. How many times has Air Canada been bailed out, in one way or another, in the past? Four? Five?
And it is striking the many ways in which government contributed to Jetsgo’s demise. I don’t just mean the usual complaints of high fuel taxes, punitive airport rents, and excessive security charges, of which all the airlines complain. I mean specific actions by specific governmental and quasi-governmental agencies, all directed at Jetsgo. In particular, it is worth noting that what triggered the events of last Friday were the demands that Jetsgo, which had no prior history of missing payments to suppliers, should immediately pay all bills owing to two of its creditors, the Greater Toronto Airports Authority and Nav Canada, operator of the country’s air traffic control system. Two large quasi-governmental monopolies, facing little in the way of market disciplines themselves, but awfully concerned that Jetsgo should submit to theirs.
Why? Why was it so essential that Jetsgo pay there and then, right before March break, one of the airlines’ biggest annual revenue generators? What fiscal emergency were the GTAA and Nav Canada facing that they couldn’t wait a couple of weeks? We should mention also the contributions of Transport Canada. After a botched landing in the ice and fog at Calgary Airport in January, in which a Jetsgo plane skidded off a runway-- hardly an unknown occurrence, especially given the conditions -- the department threw a fit, putting the airline on a thirty-day notice of suspension, demanding it upgrade all of its training manuals and issuing restrictions that forced it to fly at low altitude, with consequent loss of fuel-efficiency. I’m all in favour of safety, but wasn’t this just a little bit of overkill?
But never mind. The issue now is what to do to sustain competition in the skies. Within hours of Jetsgo’s collapse, the other airlines had begun raising fares. One study has found they are already 20 to 50% higher on comparable routes than they were just a week ago. To his credit, the Minister of Transport, Jean Lapierre, had been talking even before all this about opening domestic air routes to foreign carriers, a practice considered so exotic in airline circles it is given a special name -- cabotage -- as if to suggest some sort of mild perversion. But, like the airlines, he insists it must be negotiated with the United States bilaterally, with reciprocal access guaranteed for Canadian airlines south of the border.
Hogwash. Don’t negotiate it. Just do it. If we wait until reciprocal arrangements can be made, we will be waiting until doomsday. The notion that trade should be liberalized only as and when it suits the domestic industry is the true perversion. It was never part of the case for free trade, and it is especially self-defeating to insist upon it now. Canadian travellers should not be held hostage to the interests of the airlines, or used as bargaining chips in Air Canada’s expansion plans.
Someday it will occur to someone in government to put the consumer interest first. The purpose of putting planes in the air, after all, is not to prop up airline executives’ stock options, or to give pilots something to do. It is to fly passengers from point A to point B as quickly, comfortably, safely and cheaply as possible. Whatever its many failings, Jetsgo understood that. Why can’t governments?
3/16/2005
