Deregulation in Canada

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shurshot17
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Deregulation in Canada

Post by shurshot17 »

I am doing a report for a university class on aviation history in Canada (1980-Current). I have been looking for solid information on deregulation. Most information I have found is good old Wikipedia and other sites do not seem very reliable. (And textbook is american based..)

Aware of any good websites dealing with deregulation?

Anything helps!
Thanks
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Re: Deregulation in Canada

Post by cncpc »

Deregulation took place in 1984 for southern Canada. It was done under the Liberals and Transport Minister Lloyd Axworthy. It was still necessary to show public convenience and necessity in northern Canada. I forget what part that was, but north of 60, I suspect.

At the time, the system had Class 1 through 3 sked services, Class 4 Charter, and flying schools were some other class.
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Re: Deregulation in Canada

Post by Ki-ll »

The Max Ward Story: A Bush Pilot in the Bureaucratic Jungle.
This book will have some information on effects of regulation/deregulation, although somewhat biased but nevertheless interesting.
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Re: Deregulation in Canada

Post by bmc »

The paper the govt issues was called, "Freedom to Move".
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Re: Deregulation in Canada

Post by Old fella »

bmc wrote:The paper the govt issues was called, "Freedom to Move".

Correct me if I am in error bmc but wasn't the pre- deregulation bases on government intervention, in that airlines had to show any planned/new route structures were financially viable as determined by the government agency CTC. Also major Canadain airlines like Air Canada(government at the time) were held to the east side like Europe while Canadian Pacific did the Pacific/far east and neither could compete against each other for the most part. Ditto for Regionals like EPA/NordAir/Quebec Air and Pacific Western were held to their own specific locations/areas. There was very little competition in those days as the Federal Government had a hand in it all and in early/mid 80's they saw the light in that competition wasn't a bad thing at all for this industry.
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Re: Deregulation in Canada

Post by Scout44 »

Ki-ll wrote:The Max Ward Story: A Bush Pilot in the Bureaucratic Jungle.
This book will have some information on effects of regulation/deregulation, although somewhat biased but nevertheless interesting.
Yup, I did a similar project in my last year of high school using this book. It's a good read for what you're looking into.
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Re: Deregulation in Canada

Post by bmc »

Old fella wrote:
bmc wrote:The paper the govt issues was called, "Freedom to Move".

Correct me if I am in error bmc but wasn't the pre- deregulation bases on government intervention, in that airlines had to show any planned/new route structures were financially viable as determined by the government agency CTC. Also major Canadain airlines like Air Canada(government at the time) were held to the east side like Europe while Canadian Pacific did the Pacific/far east and neither could compete against each other for the most part. Ditto for Regionals like EPA/NordAir/Quebec Air and Pacific Western were held to their own specific locations/areas. There was very little competition in those days as the Federal Government had a hand in it all and in early/mid 80's they saw the light in that competition wasn't a bad thing at all for this industry.
A couple of interesting tidbits. At one time before deregulation, no single airline could compete on more that 30% of Air Canada's route structure.

As for filing of fare increases, we had to submit them for approval. We had to build a business case and then wait for approval.

Air Canada took the European routes because that's where the traffic was. CP was given less than sexy routes until the 80's when Asian traffic boomed.
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Re: Deregulation in Canada

Post by goldeneagle »

bmc wrote: Air Canada took the European routes because that's where the traffic was. CP was given less than sexy routes until the 80's when Asian traffic boomed.
We went as a family to europe twice when I was a youngster, first time in 68, second time in 72. On one jaunt, the aircraft was painted in PWA colors, and the other it was CPAir paint. If memory serves correctly, the first time was a 707 in pw colors, and second was a diesel 8 in CP paint job. I dont think AC had a lock on the european travel from the west, because we left once from Vancouver, and once from Edmonton, went to Amsterdam both times, and didn'r ride on AC for either trip.
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Re: Deregulation in Canada

Post by teacher »

Wasn't the end of deregulation also the end of salary increases for pilots?
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Re: Deregulation in Canada

Post by x-wind »

The Canadian Encyclopedia has some information on deregulation in the subject "aviation".

http://thecanadianencyclopedia.com/en/article/aviation/
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Re: Deregulation in Canada

Post by bmc »

goldeneagle wrote:
bmc wrote: Air Canada took the European routes because that's where the traffic was. CP was given less than sexy routes until the 80's when Asian traffic boomed.
We went as a family to europe twice when I was a youngster, first time in 68, second time in 72. On one jaunt, the aircraft was painted in PWA colors, and the other it was CPAir paint. If memory serves correctly, the first time was a 707 in pw colors, and second was a diesel 8 in CP paint job. I dont think AC had a lock on the european travel from the west, because we left once from Vancouver, and once from Edmonton, went to Amsterdam both times, and didn'r ride on AC for either trip.
You are correct and I can't remember if there weren't another couple of other points. It's been a long time.
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Re: Deregulation in Canada

Post by Longtimer »

bmc wrote:
goldeneagle wrote:
bmc wrote: Air Canada took the European routes because that's where the traffic was. CP was given less than sexy routes until the 80's when Asian traffic boomed.
We went as a family to europe twice when I was a youngster, first time in 68, second time in 72. On one jaunt, the aircraft was painted in PWA colors, and the other it was CPAir paint. If memory serves correctly, the first time was a 707 in pw colors, and second was a diesel 8 in CP paint job. I dont think AC had a lock on the european travel from the west, because we left once from Vancouver, and once from Edmonton, went to Amsterdam both times, and didn'r ride on AC for either trip.
You are correct and I can't remember if there weren't another couple of other points. It's been a long time.
Not quite correct but : PWA was allowed to operate charters, CP was allowed to Serve Amsterdam, LISBON, Madrid and Rome. AC had a lock on the larger markets of FRA, CDG and London. CP in the 60s was only allowed to operate 2 Transcon flights from YVR to YYZ CP1 AND 2. TCA (now AC) had the others.
CP served Norther BC and the Yukon and TCA had the larger eastern Canada markets.
CP Pioneered the "great circle routes" to Asia and the polar route to Amsterdam.

http://cpair.blogspot.ca/2007/03/airline_8573.html
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Re: Deregulation in Canada

Post by CID »

We're better off with de-regulation but it's ironic that Max Ward, one of the biggest opponents to regulation, both at the operational level and the technical level, wasn't able to keep his airline afloat in the de-regulated environment. I guess sometimes you need to be careful what you hope for.
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Re: Deregulation in Canada

Post by Illya Kuryakin »

CID wrote:We're better off with de-regulation but it's ironic that Max Ward, one of the biggest opponents to regulation, both at the operational level and the technical level, wasn't able to keep his airline afloat in the de-regulated environment. I guess sometimes you need to be careful what you hope for.
Max made the same mistake that Germany made in WWII. He tried to fight on too many fronts! Like invading Russia in the winter, he should have stuck with what he knew. ie., be the very best charter operator in the country. If he'd stayed out of scheduled airline flying, WARDAIR would still be in business today. A sterling example of not knowing when you have it good.
The old saying, "Expand or die." can also read: "Expand and die...."
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Re: Deregulation in Canada

Post by GA MX Trainer Dude »

Deregulation – some good things – some not so good things!!


Before deregulation the aviation industry consisted of two groups – the big guys and the little guys.

Since the big guys had the government in their deep pockets – especially the government corporation of Trans Canada Air / Air Canada and they had the protection of the full extent of the government to step on anyone – legally – that attempted to “Infringe” on their territory.

Deregulation was supposed to level the playing field but that actually didn't happen until 911 blew aviation on its' collective ass.

Deregulation allowed the big operators to practice predatory actions – again all legal – against anyone who had the audacity to “Infringe” on their territory. The worst of the bunch was Air Canada but be well assured Canadian Airline, Pacific Western Airlines, and a host of others followed this practice. In some cases it might have even been a good thing that these airlines wiped out some upstart because there was some serious issues that the government overlooked – unknowingly or deliberately.

During so called regulated times there were always companies that operated what were referred to as “Chisel Charters” - where they would position an aircraft to pick up so called “Charter” work but was always done to undercut the local operator. These companies would arrive at the beginning of the busy season and depart at the end of it – leaving the local operator with a reduced income while still maintaining the services for the rest of the year during the lean times.

By operating without the need for costly infrastructures like hangars for maintenance and counter space / airport contracts, it was pretty easy to make some decent money for a little expenditure. Sure the government was “Supposed” to give you legal protection but in reality just turned a blind eye to the whole practice – much to the detriment to many smaller operators.

In addition to routes allowed for each operator, there were aircraft size and type restrictions as well. Jack Lambs' book “My Life in the North” is a really good starting point for what went on in the north.

http://www.ourroots.ca/e/toc.aspx?id=6088

When deregulation hit it removed these restrictions – but because the restrictions were in place before deregulation restricting aircraft types – many operators didn't have a solid base to expand having spent all their energy and money into trying to make it all work under the restrictive constraints of the regulated system. More than a few – handicapped by the lack of ability to grow their business – either folded or tried to incorporate new technology with some pretty disastrous results. There have been very few companies survive from pre-deregulation until today.

The concept behind deregulation was pretty simple – level the playing field so any company had the potential to fly any route / operate any way (like helicopters) as any other company and that the financial constraints of normal consumer demand and industry supply would after a brief period of stabilization determine who would service the sector.

The events of 911 effectively closed the door on the struggle for equality in the airline industry with many of the marginalized airlines folding – remember Canada 3000?
After 911 everyone was on a level field in Canada – there were no handouts to the big airlines like in the US but there was definite support for Air Canada.

You need to read the book by Peter Pigott – Air Canada – The History for some insight into what happened. It is a very good read – but at all times keep yourself aware of what were often wins for Air Canada were losses to other airlines. Without a doubt Air Canada has received preferential treatment.

http://www.winnipegfreepress.com/arts-a ... 05981.html

The reality of deregulation was that it was both a blessing and a curse!!

You need to understand the aftermath of the deregulation process and three aviation events that you must include are as follows:

1. - The Dryden Commission Investigation into the F28 Crash.

http://publications.gc.ca/site/eng/42668/issues.html

2. - The Grant Notley / Wapity Air Crash – October 19, 1984.

http://www.quillandquire.com/review/int ... and-a-cop/

3. - The Terrace crash of Skylink Airlines Metro III – September 26, 1989.

http://publications.gc.ca/site/eng/3962 ... ation.html

You will have to do some serious homework to get to the real story about the owner of Skylink but I know if you ask on this site you will get some very interesting information. without deregulation this individual would most likely not obtained an operating certificate - so the first link in the chain of events has to start with this!


Deregulation opened the door to many good people and as the above look into the industry will tell you – some not so good ones. That also includes the folks at Transport Canada!!

In addition one of the things many don't think about is the impact on the maintenance industry. At the end of Canadian Airlines long run was the big problem they had with the cost of maintenance. Their strategy in regulated days was to build one of the best maintenance departments in the world – and they did!!

However when competing airlines were using out of country maintenance facilities to perform aircraft maintenance then Canadian had much higher maintenance costs – big difference when someone from another country makes $20.00 per day vs someone at Canadian who was getting $20.00 per hour!!

Finally one has to have a look at the state of the industry today – some 25 years into the deregulation side of the equation and compare what was with what is. Some areas to look at are:

Who runs the big companies now – it used to be pilots etc – now it seems to be the bean-counters.

What has happened to the wages for everyone concerned – are they actually better than before?

Has the life-style / satisfaction changed? Better or worse?

What is the profit margin? - Better or worse?

Did the deregulation process actually make things better for the flying public?

Good luck with your project and I hope you get a lot more input from others on this forum.

Mx
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Re: Deregulation in Canada

Post by bmc »

Excellent post.

I worked for Canadian and had a meeting in YVR one morning with the owner of Skylink. I can't remember his name but knew his military flying background with another nation.

Anyhow, I got to the south terminal and went to his office. While waiting to see him, I learned about the Terrace accident that happened hours earlier. When he came to get me, I told him I'd come back another day. he insisted I stay. We went into his office and he started to tell me what happened and how many were killed. Then he said, "Terrible, I know. And I just spent $250,000 (the number I remember) upgrading the airplane". I thought to myself that next of kin may not have all been notified and your upset about money you just spent? Cold.
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Re: Deregulation in Canada

Post by Panama Jack »

Illya Kuryakin wrote:
Max made the same mistake that Germany made in WWII. . .
If he'd stayed out of scheduled airline flying, WARDAIR would still be in business today. A sterling example of not knowing when you have it good.
A little presumptious but, all the same, enticing to imagine Wardair still existing.

The nature of the airline business has changed so much since Wardair went out of business, that it is hard to say that they would have made all the right moves to stick around. In any case, I don't think Max would still have been at the helm, but rather his son Kim. Business acumen is not genetic. Who knows?
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Re: Deregulation in Canada

Post by chu me »

Just a small correction here from someone who was actually alive at the time. Although the liberals under Pierre Trudeau had been exploring the possible benefits of De-regulation of the the airlines in Canada, it was not until Brian Mulroney and the P.C. party with John Crosbie ( as Transport Minister ) were elected that the bill C-18 was passed in 1987. Please people when you post make sure you know the facts!

Sincerely

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Re: Deregulation in Canada

Post by GA MX Trainer Dude »

Chu Me

Thanks for reminding me of Bill C-18 - like you I lived through the process - having worked in the industry since 1973. As is usual the Bill got passed after the deed was actually done and the process was designed to be gradual. New regulation introduced in 1986 Bill C-18) - finalized in 1988 ( National Transportation Act, 1987) - but was in progress from the late 70s. That fact can be seen in the timeline below.


Regulation Timeline

10 April 1937 – Trans‑Canada Airlines (TCA) was created by Act of Parliament on a common‑stock basis, with the CNR as the sole shareholder.

1942 – CP Air was formed by the CPR’s amalgamation of 10 local air carriers (mainly bush pilot services).

27 March 1967 – CP Air was to be allowed gradually to increase its transcontinental services until it was providing 25% of the total transcontinental capacity by 1970.

19 September 1967 – The Canadian Transport Commission (CTC) was created under the National Transportation Act, with an Air Transport Committee to regulate the airline industry.

November 1977 – Parliament passed the Air Canada Act, which had as its core the financial restructuring of the airline to make it more responsive to the competitive marketplace.

March 1979 – The government removed route restrictions from CP Air and allowed it to compete with Air Canada.

15 July 1985 – The government released its position paper, Freedom to Move. This set out policies for transportation deregulation based on increased competition, reduced economic regulation, and greater reliance on market forces.

18 December 1985 – The Standing Committee on Transport tabled in the House of Commons Freedom to Move: Change, Choice, Challenge, which made recommendations for inclusion in the new legislation but basically agreed to the thrust of the Freedom to Move policies.

26 June 1986 – The government introduced Bill C‑18, legislation to establish a new National Transportation Act, 1987.

1 January 1988 – The National Transportation Act, 1987 came into effect.

18 August 1988 – The Air Canada Public Participation Act was passed, authorizing the sale of shares to the public.

October 1988 – Air Canada was privatized by the government.

19 October 1989 – The Royal Commission on National Passenger Transportation was established to enquire into the needs of passengers into the 21st century.

April 1991 – Canada-U.S. bilateral air negotiations began.

3 November 1992 – Air Canada withdrew its offer to merge with Canadian Airlines.

19 November 1992 – The Royal Commission on National Passenger Transportation tabled its final report, calling for a user-pay policy for transport services.

24 November 1992 – Ottawa offered PWA a $50-million loan guarantee.

29 December 1992 – Canadian Airlines signed a conditional deal to form an alliance with American Airlines.

28 April 1993 – Air Canada bought $235 million of Continental Airlines’ votes and shares for a 25% voting interest in the airline.

27 April 1994 – American Airlines paid $246 million to acquire one third of Canadian Airlines, and Canadian Airlines agreed to pay AMR $115 million a year for 20 years for use of AMR’s technological services.

February 1995 – Canada and the United States signed a new agreement on Transborder Air Services.

1 July 1996 – The Canada Transportation Act came into effect, removing the remaining economic regulation of air transport in northern Canada.

Summer 1999 – Canadian Airlines announced that it had enough money to operate for only one more year. The Minister of Transport suspended sections of the Competition Act to allow various parties to discuss restructuring of the airline industry.

August 1999 – Onex Corporation made a bid to acquire both national airlines with a goal of merging them.

October 1999 – Air Canada proposed to take over Canadian Airlines.

October
to December 1999 – House and Senate transport committees examined the issues involved in airline restructuring.

October 1999 – The Minister of Transport announced a new policy framework for restructuring the airline industry. The policy focused on the concept of a “dominant” airline.

February 2000 – The Minister of Transport tabled legislation to allow Air Canada’s takeover of Canadian Airlines – An Act to amend the Canada Transportation Act, the Competition Act, the Competition Tribunal Act and the Air Canada Public Participation Act and to amend another Act in consequence (Bill C-26).

May 2001 – The House of Commons Standing Committee on Transport examines the state of the airlines industry a year after Bill C-26 came into force and issues a report, Canada’s Airline Industry: After the Acquisition.

July 2001 – The Canada Transportation Act Review Panel issues its report, Vision and Balance.

18 December 2001 – An Act to Amend the Air Canada Participation Act (Bill C-38) is passed, removing the 15% limit on individual ownership of shares in Air Canada.

September 2002 – The Independent Transition Observer on Airline Restructuring issues her final report.

Above is from this document: http://publications.gc.ca/Collection-R/ ... /892-e.htm

Another good site: https://www.cba.org/cba/submissions/pdf/06-43-eng.pdf

And here: http://www.thecanadianencyclopedia.ca/e ... egulation/

And it looks like someone did what the OP is doing here: http://www.sauder.ubc.ca/Faculty/Resear ... bucci.ashx


Hope this helps!

MX
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Re: Deregulation in Canada

Post by chu me »

Dear GA MX Trainer;

I was merely pointing out that dererulation took place under the Tories and Brian Mulroney, not Pierre Trudeau and the liberals. I will now acknowledge that it was only 95% of deregulation that took place between 1984 and 1993 when the tories were in charge. I am not arguing for either party as I believe they are all the same now anyway! thank you for the info.

Sincerely

Chu me
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