in the middle of the last decade, I predicted Air Canada was not long for this world. I gave that forecast after a particularly annoying two-and-and-a-half -hour wait one Sunday afternoon in a check-in lineup in Montreal.
Back then, Air Canada, heavily unionized and based out of Montreal (so you'd think service would be at its peak in its home city), seemed to be unable to understand this basic fact of business: customers are your lifeblood.
Still, despite the shoddy service (I managed to board that flight, but barely), I was wrong.
These days, Air Canada seems to have fewer customer service problems and has garnered a better reputation.
Last year, it won an award for best airline in North America.
Of course, Air Canada never would have improved its customer service had it not faced competition for its customer base.
The rise of WestJet, started in 1996 by Calgary entrepreneur Clive Beddoe, and more recently Porter airlines (started in 2006), means there are domestic competitors who are ready to eat Air Canada's lunch.
That competition has been positive for consumers and is about to increase.
As I write, Air Canada is poised to roll out a new discount airline. Another competitor in Canada's marketplace, even if owned by an existing player, is great news for consumers.
But here's something else that Canadians deserve: full domestic competition of the sort that Europe has had for two decades.
In a survey of best prices conducted in June, I made some comparisons between Europe and North American airfares based on a five-city, return trip sample.
In Europe, if you booked return flights between London-Edinburgh, Paris-Toulon, Milan-Rome, Dusseldorf-Munich and Barcelona-Madrid and did it 21 days in advance, your total bill would be $689.68.
Taxes and fees account for 36% of that.
In the United States, return tickets between San Diego-Sacramento, New York-Washington, D.C., Buffalo-Chicago, Seattle-Spokane and Milwaukee-Des Moines would set you back $841.10.
Taxes and fees would be 16% of that cost.
Compare those totals for these five return flights in Canada: Calgary-Victoria, Toronto-Ottawa, Halifax-Montreal, Vancouver-Kelowna and Regina-Winnipeg.
The cost all in is $1,815.14, including taxes and fees at 28%.
In each of the three examples, total return kilometres flown were about 5,400 kilometres.
The difference in ticket prices can be explained in two words: fierce competition.
Some history: the European Union first began opening up its air travel market to competition in 1992, with full liberalization as of 1997.
Ever since, any carrier from any member country can pick up and drop off passengers anywhere, regardless of the airline's home country.
That's a policy known as cabotage.
But Europe's open skies are in distinct contrast to North America's.
Here, both U.S. and Canadian governments still prohibit foreign-owned airlines from offering wholly domestic flights in our markets.
The means, for example, that while Swiss Air (part of the German-based Lufthansa Group) can carry a passenger between Rome and drop her off in Milan (obviously, two non-German cities) an American carrier cannot fly a passenger from Toronto to Vancouver. Nor may a Canadian airline pick up someone in Denver and fly her to Chicago.
This anti-competitive policy by American and Canadian governments leads to North American consumers paying higher prices than they would in a fully open market.
The United States has better competitive pressures than does Canada by virtue of its large domestic market. Europe has it for that reason, too, but Europe also has the world's most open and competitive market for airline passengers (and, given the lower prices that result, thus creates more demand for flights).
Europe's embrace of open airline competition has, according to the European Commission, Mobility and Transport, the organization responsible for regulating European airlines, led to a plethora of low-cost carriers. They now constitute more than one-third of all European airlines.
That has led to lower prices and doubled passenger traffic since full competition arrived on the European continent. The EU also points to an extra 1.4 million direct and indirect jobs created from its open skies policy.
Some argue that Canada shouldn't duplicate such a course of action because we're a small market relative to Europe and the U.S.
But that's exactly the point: Canada should drop the barriers against competition and become part of a larger North American market and do the same vis-a-vis the European Union.
With apologies to Karl Marx, we have nothing to lose but our high airline fares. •
