Madam Chairman, there is no doubt that the tragic events of September 11 had a very profound effect on the airline industry worldwide. Immediately following the attack, planes were ordered to land and the airspace was closed.
Many Canadians found themselves unable to return home from abroad to be with their loved ones. I was one of a number of Canadian provincial, territorial and federal parliamentarians participating in an international meeting of the Commonwealth Parliamentary Association in Australia at the time the attacks took place. We were unable to return home.
When the planes started flying and the skies over the United States were gradually opened, people who had been stranded slowly returned home. I must add that I was so pleased that I was able to return home aboard an Air Canada flight that would fly over American airspace. I knew it would be Air Canada and I knew I would be safe and eventually return home to my family.
However, after those initial returns traffic did not pick up. A week later the airports were visibly empty. I can say that because within a day of my return from Australia I was coming back to Ottawa and the flights were empty. People who did not need to travel and had returned home to their loved ones were no longer travelling.
Friends of mine cancelled their holidays to Europe, not for fear of flying but because they had a feeling that it was better to stay home to be with their families during these uncertain times. Today, getting on a flight to return back to Ottawa, almost three weeks after the attack, I note that the airports are still empty. There are no longer traffic jams outside departure levels at the airport. The lineups have disappeared. People are not flying.
The airline transportation system is an important part of our national and international economic infrastructure. Consequently, as the government has a key role in ensuring that our trade in goods continues to flow as quickly and efficiently as possible across our borders, so too I believe that our government has a role in ensuring that our trade in services continues to flow both nationally and internationally. It must ensure that the people who perform those services have access to the transportation they need in order to efficiently and quickly access their markets and perform those services.
Our trade in services is a foundation for our future prosperity. Our economy is largely service based, so much so that three out of four jobs in Canada are in the service industries. Last year services accounted for 90% of the 319,000 new jobs that were created in Canada.
On September 26 I received a letter from Air Canada, which I believe was also sent to all members of parliament, to advise of its recent appeal to the Government of Canada for direct and indirect assistance resulting from the terrorist attack. The letter noted that numbers of passengers heading to the United States were down by 30% and that Air Canada had reduced its overall network schedule by 20% and also had removed 84 aircraft.
Air Canada also advised that it approached the federal government for a financial package which would address the following: first, to offset the losses that occurred as a result of the three day service interruption; second, to help mitigate the anticipated medium or long term decline in passenger volume; and third, to compensate Air Canada for staggering new airport security and insurance costs.
With respect to the third request, I would like to note that Air Canada and WestJet have just added a $3 surcharge to each ticket to offset the increased insurance costs. Air Canada has acted quickly.
Before considering the requests I have just noted, it is very important to examine how other airlines are faring internationally and what other governments are doing to assist their airlines.
American major airlines suffered substantial losses. Two of the airlines lost four aircraft and all the passengers aboard those aircraft died on September 11. It is not just United Airlines or American Airlines that suffered losses. All major airlines announced layoffs and schedule reductions as a result of the decrease in traffic. The United States government provided airline industries with an equivalent of $7.5 million Canadian in cash payments and also $15 million Canadian in loan guarantees.
Let us look at what is happening in Europe. British Airways, Europe's largest airline, reduced a number of its scheduled flights as a result of the drop in demand for air travel since the United States attack. Transatlantic travel has fallen sharply.
Last week British Airways cut 5,200 jobs on top of the 1,800 jobs announced earlier and it grounded 20 aircraft. British Airways, similar to Air Canada, was suffering the effect of gloomy economic news with the result of a decrease in air traffic before September 11. Similar to Air Canada, it responded prior to September 11 by cutting capacity, jobs and flagging more job cuts in 2002.
Interestingly enough the government of Prime Minister Blair has not come up with a compensation package. Swissair is also struggling to stay alive. I use the example of Swissair because like Air Canada it is a national airline and it too was suffering losses prior to September 11.
The Swiss government indicated that it was willing to play a role in the refining of the airline but that role has not yet been defined. Jean-Pierre Roth, chairman of the Swiss National Bank, was reported as having stated that he did not think government action to bail out any company in difficulty was a viable long term solution.
It is also important to note that he did not rule out state intervention. He was quoted in the Sunday Toronto Star as having stated
State intervention may be necessary in a case of an emergency, in an extremely specific situation, but...in the end a private sector response will be the long-term solution.
Mr. Ross also stressed the importance of a national airline to Switzerland with Zurich as its main financial centre and Geneva, the European headquarters of the United Nations and home to many international organizations. However, notwithstanding what Mr. Roth said, this morning the shares of Swissair ceased to be traded.
It is important to note that the decline in the demand for air travel also affected those industries which support the airline industry. We read last week that Bombardier announced that it will be cutting 3,800 jobs and decreasing production for fear the airlines will not be able to come up with the cash being the gap between the amounts financed by third parties and the purchase price of the aircraft. There is a fear that whatever cash will become available will be used to cover operating costs.
Landing fees decreased due to less volume. Catering operations decreased by 18% and it is anticipated that fuel providers will also be affected.
Ensuring the long term viability of the airlines is important not only for the airline industry but for the many sectors that support that industry. The important question that arises is how to best ensure that viability.
There is a general feeling that a private sector solution is preferable. However we must bear in mind that the September 11 attacks were unpredictable and devastating. Canadians would generally agree that it is important for Canada to have a national airline because it is more than just a national symbol.
What should be done? First and foremost we should look very closely at compensating Air Canada for the losses it sustained in the three days it was not in service. How do we assess those losses? It could be done the same way that we prove losses in court by indicating direct consequences and losses resulting from that three day period.
The federal government and the airlines must continue to assess the impact of the events of September 11 on the airline industry. We must continue to examine all requests for financial assistance by Canadian air carriers carefully and in light of the global context of the industry.
The federal government would like Air Canada and the unions representing its employees to work together toward a solution acceptable to all parties. Canada, because of its sheer size, needs a viable aviation industry with an economically strong national carrier. I hope we in the House can work together to find the right solution.