Bailout of the Airline Industry
The airline industries in the U.S., Canada and Europe have been quick to press for huge bailouts with public funds in the wake of the September 11th terrorist attack against the United States. In the U.S., over 70,000 job cuts have been announced in the last week by the largest airlines. Both British Airways and Virgin Airlines also announced the elimination of thousands of jobs.
Estimates of airline losses associated with the tragedy are in the $1-$2 billion range in North America (with Canadian losses of about $100 million).
Nevertheless, in the U.S., the airline industry has lobbied for $15 billion in bailouts. All signs indicate that they will receive this.
In Canada, Air Canada president Robert Milton has asked for $4 billion from the federal government. Transport Minister David Collenette has not indicated how much money will be given to the airlines, but he has stated they will receive some public funds.
Air Canada has been posting losses steadily since it took over Canadian Airlines last year. In the most crass and self-serving manner, Air Canada is using a tragedy which resulted in the loss of thousands of lives as leverage for a government handout.
Two things are quite clear. First, the airlines are not able to guarantee the security of their passengers. In the U.S., over two decades of deregulation has left airlines vulnerable to attack. Driven by the goal of increasing profits at all costs, the airline industry has expanded with no checks in place, including lack of steps to ensure adequate security measures. In fact, to speed through the ever-growing numbers of passengers, security checks have actually been relaxed to the point that security audits of several American airports during the past year reported that up to 80 percent of weapons went through undetected. In Canada, airport authorities have been privatized, and while Transport Canada plays a regulatory role, its involvement seems to revolve around handing out fines after safety violations, as was witnessed recently in cases involving Air Transat.
Secondly, Air Canada cannot operate at a profit without government subsidy. Even with the abandoning of less profitable routes, which has caused enormous problems in smaller communities throughout Canada, the airline continues to bleed money.
When Air Canada was sold off by the Mulroney government, all kind of claims were made about how this would save the taxpayers money. The reverse has been true, and now the taxpayers are being hit up once again for funds while service continues to deteriorate steadily. Instead of a $4 billion handout, the federal government should nationalize Air Canada and ensure that Canadians throughout the country have access to safe and affordable air travel.