The Competition Bureau says it will launch a market study into Canada’s airline sector. People make their way through Pearson Airport in Mississauga, on March 14, 2023.Chris Young/The Canadian Press
Matthew Boswell, you’re such a tease.
As commissioner of competition, you want consumers to believe that improving airline competition is a priority for your office. In fact, the federal antitrust agency is conducting a market study that promises to delve into the dynamics of the problem and detail the solutions.
“More competition in the industry will mean lower prices, better services, and improved productivity,” you said in a press release.
It’s cute that you’re so earnest. Canadians, though, are tired of being given false hope.
The summer travel season is upon us and the sad reality is many of us cannot afford air travel within our own country. It is often cheaper to fly abroad. Canadians who can bear the cost of domestic flights, meanwhile, have become inured to junk fees and shoddy customer service.
Please stop murmuring sweet nothings. It’s cruel. We know the federal government is already clipping your wings. Don’t give them cover.
Although the Competition Bureau’s market study was announced with much fanfare – it was initially billed as the first to be conducted with new powers to compel evidence from companies – we are worried that you are losing your nerve.
Your underlings have suggested as much. Deputy commissioner Anthony Durocher said it “remains to be determined” whether the agency would flex its new muscle. Deputy commissioner Melissa Fisher, meanwhile, said the Competition Bureau would first consult with the transport minister on the scope of the study.
So much for being an independent law enforcement agency.
Industry Minister François-Philippe Champagne, of course, wasted no time to remind you that protecting the Air Canada-WestJet duopoly is the Canadian way.
Not only did Mr. Champagne’s missive stress “that market studies with compulsory power can be disruptive to businesses,” but he also pulled rank by stating that he is “well-placed” to help you determine whether your investigation is in the public interest.
“As you move forward, I trust that your study will be governed by a broad vision and pragmatic application of public trust principles, including as they relate to the long-term sustainability of the domestic airline industry for Canada’s sovereignty,” he wrote.
(Let’s not forget that Mr. Champagne is part of the same Liberal government that gave its blessing to Air Canada’s $180-million purchase of rival Air Transat before the European Commission had the good sense to block that deal.)
Mr. Champagne also took a page out of the incumbents’ playbook by pointing out that Canada has a vast geography, low population density and is home to remote and Indigenous communities. Had you forgotten those facts?
He also emphasized how the airline industry has suffered in the aftermath of the COVID-19 pandemic. (Unsurprisingly, there was no mention of how airlines tried to stiff consumers seeking refunds for cancelled flights during that same global health emergency.)
The House of Commons standing committee on transport, meanwhile, is pursuing its own study of airline competition because navel gazing is our national pastime.
Mr. Boswell, please put an end to this charade. The federal government doesn’t need more studies on improving airline competition.
The Competition Bureau provided legislators with the solutions years ago. As you’ve correctly pointed out in your draft market study notice, the federal government should allow foreign carriers to fly between cities within Canada.
As you know, airlines in the European Union have already adopted this practice. Similar agreements also exist between Australia and New Zealand and among some Caribbean countries.
Your office also recommended that Ottawa allow 100-per-cent foreign ownership of carriers that only fly domestic routes.
Currently, the foreign ownership limit is 49 per cent for domestic airlines. Even so, no single foreign investor is allowed to own more than a 25-per-cent stake.
Again, Australia and New Zealand have a 49-per-cent foreign ownership limit for domestic airlines that fly internationally but allow foreign investors to own up to 100 per cent of carriers that operate on domestic routes.
Canada should implement similar policies especially now that Air Canada AC-T and WestJet, which account for roughly 95 per cent of industry revenue, simultaneously reduced service on routes in Western and Eastern Canada. That’s not suspicious at all.
Most Canadians would gladly welcome competition from foreign carriers if it would save them money. The 2008 Competition Policy Review Panel said there’s “no evidence that foreign-controlled airlines would be any more or less inclined than Canadian firms in servicing Canadian routes.”
Other solutions are also self-evident. The government needs to slash the costs it imposes on the industry – such as taxes on jet fuel, landing charges and hefty rents paid by big airports – because they are eventually passed on to consumers in the form of higher prices.
Mr. Boswell, don’t lead us on. Your political masters already know what to do to remedy airline competition. They just won’t do it.