Business Beat by Heather Robertson
Like the rest of the airline industry, Air Canada has responded to the shutdown of airspace following Sept. 11’s terrorist attacks with projected revenue losses in the millions.
This comes on the heels of one airline, Anset Australia, folding and another, Swissair, halting all flights after its parent company filed for bankruptcy protection.
Once again, this leaves Canada’s largest airline in dire straits. Air Canada has requested a $2-billion subsidy from the Canadian government, an amount based on the $20 billion requested by its American counterparts. The federal government, however, has offered $160 million total to all Canadian airlines as the first phase of a two-part bailout package.
Air Canada is not such an integral part of our Canadian identity to justify financially supporting the beleaguered airline.
Air Canada was losing a lot of money before Sept. 11; appealing to the government for aid immediately after the attacks was a convenient time for the airline to announce lost revenue.
Over the past nine months, the airline has lost a total of $550 million. In the past 12 months, Air Canada has cut 7,500 jobs in addition to the 5,000 layoffs announced last month.
More layoffs are expected within the next week, and it is not even certain whether the current bailout from the government will save jobs.
Even after all this, the government wants to give more money in a long-term package of financial support.
Although the $160 million falls far short of the original sum requested, it also begs the question: where is this money coming from?
Must we keep subsidizing the troubled airline? Canadians will not support the bailout if it means taking money away from education or social spending by reducing what some say are already meagre transfer payments to the provinces. This leaves the government in somewhat of a predicament.
The federal government is offering $160 million to companies in the private sector while university tuition prices are rising, elementary schools don’t have enough money to buy textbooks and waiting lists for medical procedures are several months for even critical conditions.
How long will we have to bail out Air Canada before Canadian taxpayers finally say enough is enough?
The Canadian government should not financially support Air Canada. Instead, we should promote competition in the private sector and allow other major carriers into the Canadian air travel market.
It would ease the significant financial burden on Canadian taxpayers and the competition would push down the sky-rocketing price of domestic air travel.
The most important question for Canadians to consider is not whether Air Canada will ever be profitable, but rather how much Canadians are willing to sacrifice in order to sustain an airline that is barely thriving.