Roles of Government and the Term Paper

Excerpt from Term Paper :

S. no-fly list," n. d.)

Deregulation of Canadian airline industry has resulted in speedy consolidation, lack of consistent service, and high prices which is just the reverse of what the policy makers assured in 1987. Following the emergence of Air Canada as the sole national airline, Canadian travelers will possibly suffer more from excess booking. As against the primary markets, the regional markets encounter the double problem of falling quality of service standards and higher prices. For instance the analysis of costs, prices and profits recommend Air Canada's regular return air tickets from Thunder Bay, Ontario to Toronto could be lowered reduced by 75% in case they showed considerably efficient operating expenses. The fares for travel to far-off areas can be kept on the higher side as the operating airline usually enjoys a monopoly status. Apart from that, these higher than competitive prices subsidize the bigger regions and pose a threat to the long-term opportunities for business, employment and tourism in smaller centers such as Thunder Bay or St. John's. The issues for bigger markets can be solved with the help of conventional procedures. (Dadgostar; Poulin, 2001)

Air travel to remote markets requires a different procedure, since it is near to a natural monopoly, most efficiently catered by a sole operator. Monopolistic impacts can be alleviated through adhering to the auctioning the sole right to the service smaller markets. Higher stability of revenue gives the wining operator with the incentive to provide secured, quick, efficient and service that is reasonably priced. The huge distances between the various cities of Canada renders airplanes the most appealing option for personal and business travel. Even with single national airlines, competition in the important centers such as Vancouver. Toronto< Calgary, Edmonton, Winnipeg and Montreal can be encouraged through way of granting licenses to the companies to vie against Air Canada, or through bilateral agreements which permit foreign competition in exchange for giving Air Canada access to overseas destinations. (Dadgostar; Poulin, 2001)

In the aftermath of the Air Canada's acquisition of Canadian Airlines International, the capability of the domestic airline industry to render Canadian consumer superior quality service at a reasonable price emerged as an important focus of attention and trepidation. (i) Following amendment to the Canada Transportation Act, it gave Canadian Transportation Agency vehement authority to monitor prices on monopoly routes and supervise the terms and conditions of carriage. (ii) Amendments to the Competition Act rendered the Competition Bureau more powers to deal with the airline-specific anti-competitive acts and to guarantee potential entrants have the reach to essential facilities. It has been stipulated that airline must at present give longer notice in case they plan to stop extending service to small communities. Apart from that, the government built an Independent Transition observer on Airline Restructuring and Air Travel Complaints Commissioner at the Agency level. With the latest law aimed at controlling Air Canada's market power, Canadian policy has turned the opposite from the earlier years, at the time when Air Canada remained an instrument of government policy and the attention remained on safeguarding the country's national airline from excessive competition. Since the entire period of 1980s, government removed the majority of the limitation restricting the capability of the Canadian carriers to react to the market forces, making the route for developing of a competitive industry offering more and more frequent flights, fares which better showed airline cost and a considerable range of prices and service offering. ("Chapter 7: The Airline Industry," n. d.)


Complete deregulation and reduction of the monopoly-like situation from the Canadian airline industry will increase competition and ensure fair play bringing an overall improvement in service level and growth within the industry. The Canadian domestic airline industry has evolved from the point of being an Air Canada monopoly to become nearly deregulated. This makeover surfaced due to two factors. The first is because of the increased demand from the air carriers during mid 1970s for less government laws and heightened competition. The second factor was the deregulation of the U.S. domestic airline industry. The Canadian airlines began functioning during 1990s as a national competitor of Air Canada. The two companies merged their domestic business and joined themselves with the international alliances. The two companies faced resource crunch and by 1999, Canadian Airlines was faced bankruptcy. Ultimately, Air Canada merged with that of Canadian Airlines and came to the limelight as the controlling the rather unregulated national airline. Since then, the policy makers and the traveling public as well have been concerned with issues like adequacy of competition and protection for Air Canada. If competition is deficient, move must be made to make conditions which would produce adequate competition.


An industry in crisis: safeguarding the viability of the Canadian Airline Industry" (n. d.) Retrieved 30 May, 2007 at

Canadian Airlines won't abandon U.S. no-fly list" (n. d.) Edmonton Journal.

Chapter 7: The Airline Industry" (n. d.) Retrieved 29 May, 2007 at

Christopher, John; Dion, Joseph P. (2002, Nov 14) "The Canadian Airline Industry" Retrieved 30 May, 2007 at

Dadgostar, Bahram; Poulin, Bryan. (2001, Feb) "Small carriers in small markets better for customers" Canadian Business Economics, pp: 43-45.

Desjarlais, Bev. (n. d.) "NDP Minority Report on the Restructuring of Canada's Airline

Industry: Modern Regulation in the National Interest." Retrieved 30 May, 2007 at

Doganis, Rigas. (2002) "Flying Off Course: The Economics of International Airlines"


Doganis, Rigas. (2001) "The Airline Business in the Twenty-First Century"



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