Market controls are killing airlines

[teacher]

I couldn't agree more..............

Market controls are killing airlines

Brad Gaetz, National Post
Published: Friday, June 12, 2009

In 1929, Charles Lindbergh got married. The first Academy Award was won by the movie Wings and Transcontinental Air Transport inaugurated its revolutionary new cross-country service. Flying by day and taking rail by night, Transcontinental took excited Americans from New York to Los Angeles in just two days for $351.94.

According to the consumer price index, the same ticket today should cost $4,345.60. In fact, the real cost for a similar trip -- Halifax to Vancouver on Air Canada -- has been going for about $275 (before taxes). And the trip would be dramatically faster and more comfortable than the 1929 version.

Free marketers argue that prices go down as the cost of production drops and technology is refined. In some cases, this is accurate, but the theory does not hold true for the airline industry: A new Boeing 777 costs around $180-million; fuel prices have increased exponentially; airport and navigation fees have gone through the roof. Air Canada enjoyed record load factors (i. e., bums in the seats) for almost all of 2008, and it still lost nearly a billion dollars.

Profitable carriers in North America can be counted on one hand. They are all niche airlines with simple formulas: one type of narrow-body aircraft, one class of service and limited networks. If you have business or interests outside the main North American centers, they can't get you there.

Everyone seems to agree that in a huge, thinly populated country like Canada, with an economy based on global trade and interprovincial movement, air transportation is integral to the economic and cultural fabric of the nation. However, no one, including the

government, wants to properly support the industry financially. Air Canada, simply by being the biggest Canadian airline, is most affected by this dichotomy.

Twenty years after its privatization, many Canadians still think Air Canada is supported by the federal government. The opposite is true: Air Canada is milked like a prize cow.

The airline alone pays nearly a billion dollars a year in fees to the so-called non-profit agencies created in the 1990s by the government to download its costs. In addition, airport authorities continue to increase landing fees as they turn airports into shopping malls. NAV Canada, responsible for air traffic control, would go out of business tomorrow without the fees paid to it by Air Canada.

No other industrialized country in the world asks its airlines to pay as high a percentage of basic transportation infrastructure as Canada. Still, every small town in Canada thinks that Air Canada should be serving its community six times a day -- with wide-bodied aircraft and choice of complimentary in-flight meals.

Indeed, there is no perspective in regards to air travel. People who think nothing about paying $200 for a steak and a full-bodied red howl at the prospect of paying a little more for a seat in a piece of equipment worth $150-million, filled with fuel that costs more than $100 a barrel. Along the way, they get to watch their choice of movie and have a drink, and then they arrive safely 2,000 kilometres away two hours later. But this isn't good enough -- and now passengers want airlines to pay for congested airports and bad weather, too.

At the same time, airline employee salaries have fallen dramatically. So any reference to labour costs as a source of the travel industry's woes is a cruel joke.

During a heated pilot's strike at the former Eastern Provincial Airlines (EPA) in the early 1980s, then-EPA owner Harry Steele infamously referred to pilots as "oversexed, overpaid bus drivers." Steele was wrong about one thing. Today, most municipal bus drivers make more money than a new pilot. And new flight attendants at Air Canada, working a normal schedule, make $18,000 a year.

The airline industry is emblematic of the disasters wrought when market controls are eviscerated. Airline employees have been subsidizing cheap travel for unrealistic Canadians and executive enrichment for two decades, thanks in large part to bad government policy. The idea, currently being debated in Parliament, of an airline passenger's bill of rights would almost be funny if it didn't demonstrate such a shocking ignorance of the real challenges facing the airline industry and an utter disregard for thousands of long suffering airline employees.

-Brad Gaetz is an Air Canada flight attendant and a past national executive officer of the former Canadian Airlines Component of CUPE.

http://www.financialpost.com/related/li ... id=1687860

[Osiris]

Great article.

[fortis risk]

Would some more seasoned forum members be able to remember some of the ticket prices in the 70's?

[red323]

I couldn't agree more. The public needs to see the reality of the business.

[bmc]

The Canadian public doesn't care about reality.

Airlines should have modern airplanes, charge peanuts for flights, offer lots of legroom, serve filet mignon, and have spare airplanes available when a flight is cancelled. Every community should see an Air Canada flight at least twice a day and they reserve the right to trash AC any chance they can. Then, when the public doesn't use the air service and it's withdrawn, the chambers of commerce roast them for abandoning them.

[.......]

Would some more seasoned forum members be able to remember some of the ticket prices in the 70's?

I'll have to get back to you on this because I need confirmation from by brother and his wife who were both flight attendants in the 70s with Nordair and Quebecair, but if memory serves right, $700-800 return to Shannon and Paris... Which would amount to about $2800 to 3100 in today's dollars

[Luscombe]

In 1978, I paid $500 for a return ticket from Toronto to Frankfurt on Wardair. That represented one month's gross income for me then.

[bmc]

In April 2009, I bought a Geneva-Victoria round trip ticket on AC for $871 incl taxes/charges.

[jetmech]

Yet these passengers have no problem paying $40.00 some odd dollars to take a sh!tty $6000.00 cab from Pearson to Downtown Toronto all 20 Km's of it, yet squak at the thought of paying $800.00 to take a $50,000,000 airplane 3000 miles away at a ridiculous speed separated from instant death by pop can thin aluminium. God forbid Pilots and AME's get payed a proper wage. I'm willing to take a pay cut if it means Joe Public can fly for damn near free

[seafeye]

Well right now you have to pay $1 million to go into space.
In twenty years that number will be $500,000, 50 years $100,000.

Shouldn't it get cheaper? But i agree the price should be within reason.

$250 from East Coast to West Coast is not realistic. Maybe double it?