Slipping Ottawa’s surly bonds
By Brian Lee Crowley
WHEN Tennyson “saw the heavens fill with commerce” when he “dipt into the future,” little did he know how prescient his 19th-century vision would be. As the new film about Howard Hughes, The Aviator, exquisitely details, the second half of the 20th century was deeply marked by commercial aviation on a huge scale. The reasons are many, but chief among them was the truth that speed annihilates distance.
Globalization, which gives us access to the world’s markets and brings their products to our doors, is made possible by the speed with which we can move around the world, meeting customers, partners and policymakers. I was struck recently, when reading a biography of the great Victorian British prime minister William Gladstone, at how long it took people and information to travel from one place to another. The Grand Old Man, as Gladstone was affectionately known, administered a globe-girdling empire from Whitehall using letters that could take weeks to reach naval commanders and ambassadors on the far side of the world. Now, air fleets of FedEx or UPS can deliver your urgent original documents most places in the world in a day or two.
Air travel has also revolutionized the way we transport goods, especially as information technology and materials like plastics have made many goods both relatively light and yet high value. As weight falls and value rises, air shipping becomes an ever more attractive option, not least for the demanding consumer who is only willing to wait a few days, not weeks, before getting his or her new product.
But of course, while goods and communications are important, it is air travel for people that has really revolutionized many aspects of our economy and society. Growing millions take the plane every year, while the inflation-adjusted prices have fallen over the decades since Howard Hughes helped to make commercial air travel practical on a large scale. Now, the new generation of airliner can carry 900 passengers, and smaller fuel-efficient craft are bringing air travel to smaller markets that larger aircraft could not serve efficiently before.
That’s why access to good quality and low-cost air links is indispensable to any plan to build the economy. I was recently at a conference where an expert on Ireland’s remarkable economic transformation of the past 15 years or so said that liberalizing air travel was a foundation stone on which his country’s future prosperity was built. Before that, Aer Lingus, the national carrier, had a virtual monopoly. Tickets were expensive and service poor. The vast majority of people travelling to Ireland were forced to do so by car or train and ferry from the U.K.
Then Dublin opened the market and a young upstart carrier called Ryanair rushed in and made it cheap and easy to get to Ireland. Suddenly, the Irish were on the global network. They never looked back.
Despite some modest opening of the Canadian market to new carriers such as Jetsgo, WestJet and Maritime-based IMP, however, there is little evidence that Ottawa has got this message. It is still preoccupied with saving Air Canada. Yet based on their own behaviour, consumers don’t care about whether they fly on a “national” airline or not. They care about price, and very secondarily about service; nationalist tokenism doesn’t signify. There is little doubt that by restricting outside airlines’ access to Canada, Ottawa is protecting Air Canada at the expense of consumers, whose interest lies in lower prices and more choice.
The usual rejoinder from the federal government is that if we had “open skies” (so that airlines from other countries, like the U.S. and Iceland and the EU, could enter Canada, stop in several cities to pick up passengers, and choose their own routes based on commercial considerations), service to Canadians would suffer. The Yanks would scoop up the profitable routes and leave the rest.
But the evidence for this is weak. In fact, in the U.S., service has been extended to many previously marginal markets because the small, efficient aircraft to make that profitable now exist. There is no reason to think that such communities in Canada would be any less attractive to serve. And major carriers will be much more difficult for Air Canada to shoulder out of the way.
Here, then, is a modest proposal for Ottawa to consider. Let’s make Atlantic Canada a test case for open skies. Let Air Iceland and Continental and Northwest and anybody else who can meet our safety standards fly without restriction into this region. Let them pick up passengers wherever they like, and let them decide what destinations they offer to attract customers. Not only is it good for Atlantic Canadian consumers, but based on Ireland’s experience, it will give the economy a helpful push. And we’re too small to affect Air Canada one way or the other.
Let the heavens fill with commerce.
Brian Lee Crowley is president of the Atlantic Institute for Market Studies (www.aims.ca), a public policy think tank in Halifax.