Originally Posted by
Ben Smith
Nobody is forcing you to select rouge and the Canadian Gvt is not subsidizing rouge. I believe the value proposition of rouge is competitive in the markets it serves. From YUL you have WG TS WS and C6 that compete very effectively in the leisure market. Many of the airplanes flown by the above mentioned carriers also have 29" pitch and some have 16" width seats. rouge offers numerous attributes not available on the above mentioned airlines. Are you suggesting the marketplace would be better served without rouge? Are you against AC being allowed to compete for this market?
Never said the Canadian Gvt is "subsidizing" Rouge.
Just suggested that Canadians might be better off if we nationalized Air Canada. Why? Simple:
1. Can you imagine the public reaction if a government-owned airline unleashed AC Rouge on the flying public? Far more likely to result in change than the current set up.
2. There are all types of direct and indirect taxes imposed on AC. Your CEO indicated its to the tune of $700-$800m in 2012; you or the other Ben suggested that its close to $1bn. Unfortunate, but right now that cost is being passed on to pax and the Gvt has no motivation to put that money back in the airline. That would probably change if AC moved back into Gvt hands.
3. Given the remarkable level of public antipathy between labor and AC management over the past 2-3 years, I don't think it would be a stretch to say that labor conditions under public service employment would be better.
4. A government owned entity would have to have its MRO done exclusively in Canada = more high-skilled jobs. They would probably keep the entity within the airline. The high cost of doing that could be covered by the high taxes imposed on AC.
And so on.
As you've probably discerned, I'm a free marketer through and through. So why would I advocate nationalization? Well, its because Canada isn't a free market; its a controlled market. One that favors suppliers so much that the Gvt now has to apply band aid solutions because of supplier misbehavior (no fee bank accounts, investigations into wireless roaming charges, fourth wireless carrier policy). IMHO, Rouge is very much an airline version of similar misbehavior.
These Gvt policies appear to be aimed at bringing the Canadian market, as a whole, in line with the rest of the world. When the Gvt sets about seeking no bank fees, it doesn't seem to be moved by the fact that all banks charge the same fees, or that there are niche companies that already charge no fees. Its the same with Telecoms - there may be niche carriers charging very low fees, but they aren't 'national' enough. However, at the end of the day, the Gvt has determined that most Canadians are not as well served as they should be, based in part, on what similar products go for in other parts of the world.
All of which is to say that the value-proposition relative to other actors in the Canadian market is irrelevant when you're considering the state of the Canadian market relative to other markets in the developed world. The status quo is not working for Canadian consumers/taxpayers; we're overpaying for terrible products, regardless of who the supplier is. The options are fairly obvious - even the Competition Bureau supports the unilateral granting of cabotage rights to foreign airlines regardless of reciprocity. That's obviously not going to sit well. The other option is nationalization. There might be more appetite for this. So why not? I would love to see the voting public's reaction to comments about needing 'education' on degraded products that are being advertised as comfortable.