Madam Chairman, the world airline industry is in turmoil as a result of events of September 11. The repercussions of plummeting passenger loads are widespread. Travel agents, hotels, restaurants and taxis have all been impacted by cancelled reservations and the decreased numbers of people willing to travel by air.
Unless the decline in passenger travel is reversed, manufacturers of aircraft and their components will also soon be impacted. It is a huge blow to our economy given present circumstances. The slowdown is affecting carriers worldwide.
American Airlines, the world's largest carrier with over 110,000 employees, is contemplating layoffs of 20,000 people. Last month American Airlines went through $1 billion in cash and is now working aggressively to arrange additional financing so it can keep its doors open, according to its chief executive officer, Donald Carty. He also stated that the primary challenge is survival, not profitability. He noted that as of last week the scaled back system of American Airlines had a load factor of about 50%, the equivalent of operating the pre-September 11 schedule with a 40% load factor.
The Swissair group could also go out of business within the next few days if a last minute rescue initiative fails to materialize. The chairman and chief executive officer, Mario Corti, said on Swiss television that the company will be threatened with bankruptcy without the recapitalization it expects in the next few days. Its problems, like Air Canada's, predated the September 11 tragedy but the outlook is not much different without some sort of assistance.
Air Canada is in trouble and that is the reason for this debate. The job of the government is to fix the problem. Air Canada must be kept afloat because we need a safe and dependable national carrier to do business. If Air Canada flounders, given the state of the world's airlines,no one is likely to come in to fill the gap. There will be a huge disruption which will be very costly to business.
What we should do? Some have urged the government to take an equity position in Air Canada. I reject that position on the premise that government's role is to regulate. The job of private enterprise is to maintain the successful operation of a business. All too often the success of private enterprise is dependent on good regulations. That is the case now. Turning the clock back and making Air Canada a crown corporation will not help.
In their comments on the Air Canada crisis, fundamentalists if I may use that term, the free market, no rules and no regulations theorists, would allow the hangar to burn along with all the planes. They would have us believe that some free market good fairy would put it all together again at a lower cost, with increased levels of safety, and so on. It does not quite work that way in the real world.
Air Canada's problem prior to September 11 centred on the failure of the government to provide leadership for the airline sector. Its problems after September 11 were no different. Bolstering consumer confidence in the safety of our skies is the surest way to help Air Canada recover from this difficult time. The government must take action on this front now.
Since the tragic events of September 11 airline bookings in the country have plummeted, resulting in huge shortfalls not only for the airlines but also for others. Despite repeated requests for increased and improved airport security, the use of sky marshals and additional security procedures aboard Canadian commercial aircraft, the government has refused to take action.
Let us compare this inaction with the resolve of the Americans. President Bush is expanding the use of armed and plainclothes officers aboard commercial airlines, restricting access to the cockpit, developing aircraft tracking equipment that cannot be turned off, and putting the federal government in charge of all airport security and screening, including the purchase and maintenance of all equipment. In addition the U.S. government is committed to stabilizing its industry with $22 billion Canadian.
Given the direct losses and increased costs related to the events of September 11, given the dislocation to the Canadian economy and the job losses, both direct and indirect, the government must commit to ensuring the stability of the Canadian airline industry with prudent cash support, appropriate security regulations and a reasonable regulatory system.
If the government took this common sense approach to restoring public confidence in air travel, it would go a long way toward saving jobs threatened by the current situation. A healthy airline industry would have a positive influence in these troubled times.
What we need from the government is a commitment to the success of a national carrier, commitment to the success of regional carriers and commitment to the success of the independent carriers. Commitment to success in the airline industry has long been lacking in Canada. It is time for a change.