SUBMISSION OF AIR TRANSAT TO THE
CANADA TRANSPORTATION ACT REVIEW PANEL
Air Transat is Canada's second largest independent air carrier in terms of passengers carried.
Since commencing operations in November 1987 with one aircraft, we have grown to a fleet of
24 large jet airliners serving a network of over 85 destinations in Canada and in over 31 countries
worldwide. We are based in Mirabel, Quebec and currently employ approximately 2700 people.
In 1999, Air Transat carried approximately 2 750 000 passengers.
As a wholly-owned subsidiary of Transat A.T. Inc, Canada's largest holiday-travel company, the
focus of Air Transat's commercial strategy has been, and will remain, the serving of the
leisure/holiday travel market, both domestically and internationally. Despite the highly
publicized and fundamental restructuring which has taken place in the Canadian airline industry
over the last twelve months, it is not our intention to re-invent ourselves, nor to pursue or
experiment with other business models or plans. We will remain committed to our strategy of
serving the discretionary, leisure travel segment and will pursue opportunities where they occur
in this respect.
It is in the above context that we make the present submission to the Canada Transportation Act
Review Panel. Our objective in this regard is to ensure that Canada's air transportation
legislative framework, as well as resulting policies and regulations, are properly adjusted and
responsive to the new reality in the Canadian air transport industry. Specifically, it will be
necessary to ensure the following:
1. That a highly competitive environment, with as few barriers to entry as possible, is
maintained within the industry context of a single dominant player and several smaller
carriers.
2. That the federal government be mandated to play a role in ensuring that essential aviation
infrastructure is managed in a manner consistent with the public interest and with the
objective of ensuring that competitive access is maintained and promoted.
3. That federal government air policies be reviewed on a regular basis.
4. That the oversight powers of the Canadian Transportation Agency, while being enhanced
to protect the consumer from the abuse by Canada's largest carrier of its dominant
position, be nevertheless tempered in scope in order to avoid undue regulatory and
administrative burden on smaller competing carriers or new entrants.
To this end, we recommend that the following additions and/or amendments be made to the
current legislative text:
/...2.-2-
Art. 5 - National Transportation Policy
ú Paragraph (b) should be amended in order to ensure that competition is the primary factor
for providing viable and effective transportation services which are in the national
interest. In the context of a Canadian airline industry which satisfies the generally
accepted definitions of a monopoly, the legislation must be absolutely clear and
unequivocal in its commitment to fostering and promoting competition. Consequently,
the caveat "whenever possible" should be deleted.
ú A provision should be added which recognizes that the proper management of critical
transportation infrastructure and related assets is a key component to ensuring a viable
and efficient national transportation system. In the case of air transport, it also has a
direct impact on effective competition.
Consequently, where such infrastructure is managed by non-governmental authorities
e.g. airports, air traffic control services, etc., the federal government should be expressly
obligated to adopt policies or regulations which:
- ensure that carriers have access to appropriate airport facilities and that the most
desirable of such facilities are not monopolized by the dominant Canadian carrier.
- ensure that airport charging practices are transparent and that fees and charges are
reviewed regularly in order to avoid airports costs from becoming a barrier to
entry or to competitive expansion.
ú A provision should be included which provides that administrative transportation policies
adopted by the Governor-in-Council be subject to mandatory reviews on a regular basis
e.g. every 5 years, or on a more frequent basis should circumstances warrant. This will
ensure that administrative policies remain effective and constitute an important tool
towards the realization of the policy objectives outlined in this section. Examples of
where the current policy review system has failed include the international charter policy,
which had become completely ineffective before it was amended last spring after 22
years, and the international air policy, which currently precludes effective competitive
entry in many cases and can not be reviewed immediately as a result of an agreement
between the government and the dominant Canadian carrier.
Art. 47 - Extraordinary Disruptions
Although this provision is designed to deal with urgent situations or circumstances which may
cause serious disruption to the national transportation system, the fact remains that the powers
accorded to the minister of transport to act are extraordinarily broad. At a minimum, and given
/...3.-3-
past experience, para. (2) should be amended in order to place greater onus on the minister to
consult as many affected parties as possible prior to taking or imposing potentially drastic
measures.
Art. 66 - Unreasonable fares or rates
Para. (2) of this provision causes Air Transat concern because it provides the Agency powers to
deal with the "inadequacy" of the range of fares or rates which may be offered by a carrier. Air
Transat has a very simple fare structure. In general, on domestic routes we offer a small number
of fares which are usually at the level of typical advance purchase excursion fares offered by
larger carriers but with relatively few restrictions e.g. no advance booking or minimum stay
requirement. Would this constitute an "inadequate" range of fares, even though the small number
of prices offered are at the lower end of the scale and quite competitive?
In order to avoid the possibility of being forced to set up and maintain a much wider range of
fares and, consequently, a more complicated and expensive fare structure overall, the Agency's
powers to act in this case should only be triggered when the range of fares offered is clearly not
competitive or in the public interest.
November 9, 2000