With the recent collapse of the charter airline Canada 3000 the time has come to reconsider what has become the unthinkable.
Amongst the nation’s economic punditry the favoured solution to our current air transport crisis would seem to be the welcoming of foreign capital and foreign owned firms. The unthinkable alternative would be to nationalize Air Canada making it once again into a Crown corporation.
I realize, of course, that one is not supposed to have such sacrileges thoughts in this neo-liberal era. That vigorous competition results in more efficiency, more choice, lower prices and more innovation has become an article of faith no longer open to discussion.
But that mantra is based largely on the uncritical acceptance of contemporary economic thought which relies heavily on abstract theory and studies, utilizing techniques based on dubious assumptions.
On the ground, it is clear that the performance of airline companies operating under competitive conditions varies widely. On the other hand the market does compel competitors to ruthlessly cut costs and in the process, important services.
The September 11 tragedy has revealed the deep downside of a cut-rate airline security system. Even after all the soul-searching in the wake of September 11, this past week Jan Wong was still able to board an Air Canada flight with miscellaneous sharp instruments.
Competitive pressures were also, no doubt, partially responsible for the Air Transat fiasco in August in which one of its planes ran out of fuel in the middle of the Atlantic Ocean.
Nationalization would have some marked advantages over dependency on the market. First and foremost, there would be more control over safety and performance dimensions of air service. There would also be more dependability.
The flash airlines economic commentators currently point to as examples of the efficacy of the market include, Canada’s Westjet, Ryanair of Ireland and Great Britain’s Easyjet. All of which are prospering at the moment by using combinations of creative pricing, service and marketing strategies.
But, since deregulation became fashionable two decades ago, several such airlines have come and gone.
In the late 1980s the American based airline, People Express made a big splash for a few years by offering discount prices, profit sharing for employees and having all personnel, including the pilots, chip in with such tasks as loading baggage.
Eventually, People Express ran into a crunch and evaporated just as six airlines in Canada have done since 1993, and that doesn’t include Canada 3000.
Deregulation is based on the proposition that government owned organizations simply cannot perform as well as those subject to market discipline.
That proposition has no rational basis.
Knowledge on how to efficiently run any organization is readily available. The ownership of the corporation and the environment in which it operates should be irrelevant to competent managers with first-rate business training. Whether the corporation is public or private, the managerial challenge is precisely the same.
In fact, the market is a kind of feet-to-the-fire ordeal imposed because of a lack of faith in corporate managers to do what they have been trained to do.
Serving the same function of ensuring proper behaviour as that of the chastity belt in the middle ages. It is out of the same school of philosophy as the one believing that people are naturally lazy and thus must be threatened with starvation to entice them to work.
The entire neo-liberal movement of the past two decades is beginning to be called into question. Economic performance since its advent around 1980 has not markedly improved but has, instead, on many dimensions, deteriorated. Distributional equity has suffered as wealth and income has increasingly become skewed towards those at the top.
The pendulum often swings too far. Regulation certainly stifled organizational managers in the Soviet Union and its satellites. It probably went too far in many Western nations during the 1960s and 1970s. But now the reaction against over regulation has gone too far in the other direction.
Marketizing everything in sight does not lead to the best of everything. The challenge to our democratically elected economy managers is to get the balance right.
In Canada today, nationalizing air transport is a viable option that deserves serious consideration.