Possible AC pension precedent worries feds

[dagger]

For many years that Amsterdam mini-hub was very profitable, too.

[Mitch Cronin]

Excellent post Dagger. (y)

[Guest M. McRae]

JAPAN

1. Date of Agreement

Legal Title: Agreement between the Government of Canada and the Government of Japan on Air Services

January 12, 1955

2. Other Instruments

November 24, 1954

Agreed Minutes between Governments (designation, traffic rights, change of gauge and tariffs).

July 20, 1955

Exchange of Notes (entry into force).

April 18, 1989

Canadian Diplomatic Note (Selecting Edmonton, as a point of origin in Canada and Nagoya and Hong Kong as destination in Japan and a point beyond Japan, respectively).

February 24, 1994

Agreed Minute (new Capacity arrangements).

February 28, 1994

Diplomatic Note (Canada selects Calgary in lieu of Edmonton as a point of origin in Canada).

June 2, 1994

Exchange of Notes (New route Schedule).

January 26 and 29, 1996

Diplomatic Note (Japan names Nagoya as point of origin in Japan).

June 24, 1996

Diplomatic Note (Japan designates All Nippon Co. Ltd.).

December 15, 1999

Diplomatic Note (designation of Air Canada which amends and supercedes June 3, 1994 Note.)

March 7, 2000

Agreed Minute on Code Sharing.

August 8, 2000

Diplomatic Note (Japan selects Ottawa and Montreal out of six (6) other points in Canada to be selected by Japan.

3. Characterization of Bilateral Agreement

A. Grant of Rights:

as specified in the Annex..

B. Designation:

multiple, Air Canada, Japan Airlines and All Nippon.

C. Tariffs:

single disapproval.

D. Capacity:

pre-determination

4. Routes and Associated Rights

The route schedules and associated rights have been agreed ad referendum and remain confidential until definitively entered into force.

http://www.cta-otc.gc.ca/air-aerien/agreements/html/japan_e.html

[Arctic Ace]

You know Dagger, you could have agreed with me with a lot less typing. If you re-read your post, you will find exactly what I have been saying.

"First of all, Air Canada was required to pay an annual dividend to the Crown, so if it was profitable, it didn't have the right to retain all of its earnings for corporate purposes."

1./ It obviously didn't need to be profitable or it wouldn't have been forced to maintain DC-9 service to Yarmouth and Sydney. (great reaction from the Yarmouth mayor when that service was replaced with Air Nova Dash 8's)

2./ Labour has an ingrained government owned mentality that exists today.

Really, we agree. Air Canada was unleashed on the market in no shape to compete. Its costs were way out of line with the private sector and it was operated very inefficiently. The only way it could survive was through the elimination of competition enabled by its deeper pockets and established market share. It needed to be a monopoly and subsidized this effort with its profitable routes.

"I happen to believe that if Air Canada had been allowed to behave like a private company after the Second World War, retaining earnings and performing only compensatory services and negotiating the labour agreements it wanted, it would be better shape today."

in other words

If the coach had been a little tougher on the team they would be performing much better.

Isn't that what everyone is trying to say?

[Don Hudson]

Re "Maybe it would have merged with CP three decades ago to form a truly powerful system."

This was first discussed in 196 by Gordon McGregor, when CP first began trans-con work.

Your observations are right on the money.

Not only that, but the investors who have done their homework know all about these factors. The DBank requirements did not emerge out of thin air.

Four government actions are required to slice through the apron strings:

- Get rid of the requirements of the ACPPA

- Get rid of the CTA's (Canada Transportation Act) foreign investment limits

- Rid the Competition Bureau of its unilateral powers over Air Canada

- Enable a seven-year pension pay-back period on a one-time basis and then deal with the outfall (from other companies) through the OSFI

- Either require other airlines to serve and compete on the smaller community routes or cease all pressures upon Air Canada to serve these communities. In short, if Air Canada is a "private" company, allow the market to determine who serves these communities and stop interfering with political pressure. Air Canada should no longer be an instrument of government policies, unless those exact same requirements apply to the industry at large.

I suspect in the end, the employees will be at the table. But one big problem since the beginning has been, if the employees hand over wages, does that relieve others, (the GTAA, NavCanada, the Federal Government, suppliers, lessors, creditors) from the pressure to do the same. The achievement of fairness in this has always been near the center of employee reluctance.

At the same time, the pilots, who have the most to lose and the most to gain, are once again leading be signaling their presence at the table. Hopefully, those who perceive that they have less to lose by being able to go "elsewhere" will see that such perceptions are exceedingly short-sighted and grounded in a narrow comprehension of their potential for finding work of similar reward.

[Don Hudson]

Re "Maybe it would have merged with CP three decades ago to form a truly powerful system."

This was first discussed in 1960 by Gordon McGregor, when CP first began trans-con work.

Your observations are right on the money.

Not only that, but the investors who have done their homework know all about these factors. The DBank requirements did not emerge out of thin air.

Five government actions are required to slice through the apron strings:

- Get rid of the requirements of the ACPPA. Just repeal the Act. What possible justification can be mustered by this or any government which requires a private corporation to adhere to the mandates of government social policies? What have administrative requirements got to do with making money as a private corporation?

- Get rid of the CTA's (Canada Transportation Act) foreign investment limits, (which are also present in the ACPPA).

- Rid the Competition Bureau of its unilateral powers over Air Canada and remove the arena in which Air Canada is singularly damned as "predatory" if it lowers fares and roundly damned if it raises them, (both of which have been required of Air Canada by the Competition Bureau, and in one case, on the very same route!!)

- Enable a seven-year pension pay-back period on a one-time basis and deal with the outfall (from other companies) through the OSFI, again on a one-time basis. Sunset it.

- Either require other airlines to serve and compete on the smaller community routes or cease all pressures upon Air Canada to serve these communities. In short, if Air Canada is a "private" company, allow the market to determine who serves these communities and stop interfering with political pressure. Air Canada should no longer be an instrument of government policy, unless those exact same requirements apply to the industry at large.

I suspect in the end, the employees will be at the table. But one big problem since the beginning has been, if the employees hand over wages, does that relieve others, (the GTAA, NavCanada, the Federal Government, suppliers, lessors, creditors) from the pressure to do the same. The achievement of fairness in this has always been near the center of employee reluctance.

At the same time, the pilots, who have the most to lose and the most to gain, are once again leading be signaling their presence at the table. Hopefully, those who perceive that they have less to lose by being able to go "elsewhere" will see that such perceptions are exceedingly short-sighted and grounded in a narrow comprehension of their potential for finding work of similar reward.

[Guest GDR]

Every MP in the country should read your post Don. Trouble is, they are all more concerned about getting re-elected right now.

Greg

[Mitch Cronin]

I know a man who wrote to every MP in the country about this topic....

He received 3 (.... count'em, Three!) responses.

[Don Hudson]

Mitch;

Two items, connected to obtain a response:

The best way to address an MP is in one's own handwriting. It can't be read or parsed by a computer and therefore must be dealt with by a human.

That addresses the second problem: A response by an MP to a Constituent is required by law I believe.

[IFG]

... I'm a little confused. Of course AC carried many burdens during its Crown Corporation days; while of variable merit, they were part and parcel of being an instrument of public policy, and again AC's performance record during that time is a proud one. I don't think anybody should question that. Of course it's another matter to piggy-back a claim that AC was profitable all through that time. No I still can't prove the contrary, but we can surely be skeptical about the governmental accounting, and perhaps the blind faith in it shown by those that continue to cite it (which faithfulness I doubt would extend to any of the government's other ledgers). But that is a historical issue, let's try and avoid confusing the current discussion.

Once all of this is resolved (& I think it will be), fairness should dictate that discriminatory obligations be removed. This may not prove to be quite as financially rewarding as is claimed, but regardless it should be done. Your points:

• ACCPA - as to ownership restrictions above and beyond those of other carriers, I'd agree. Also, no dictums about Maintainance bases & HQ location etc. On the bilingualism issue, while all carriers should have the same obligations, the cost to AC here may be exagerated, certainly if you recognize that otherwise unnecessary double staffing (which featherbeds senior employees unqualified under ACPPA) is a collective bargaining issue and not inherently required by ACPPA
• CTA's foreign investment limits - What is the effect on foriegn bilaterals, if AC becomes a foriegn-owned company? Are you prepared to accept 100% foriegn outsourcing of maintainance, RES, IT etc. that maybe would flow to a foriegn owner? There may be a pandora's box here, at least in totally unrestricted ownership.
• Competition Bureau - AC should not be singled out as AC, but IMHO oversight should certainly be maintained on any carrier with the sort of market domination that AC has had. This may be less of an issue now that competition has grown, but the debilitating effect of Competition Bureau's work on AC is grossly overstated (again IMHO), in spite of the isolated but lamentable example you cite. The oversight remains weak in Canada, and thriving competition owes more to AC's weakened state than the very few and mostly unresolved complaints.
• Pension pay-back period - I think this will be resolved, but for now the issue is contentious for the government. One possible end-of-the-tunnel light: rising interest rates combined with future payout obligations lowered by reduced pay levels. I think the next actuarial valuation may provide some relief.
• Smaller community routes - Again, fine, but the fact is that AC has fought tooth and nail many attempts to serve smaller markets. I commute from Northern Ontario, and I've seen it, and seen the pricing games. As for these alleged obligatory routes, can you provide a more current example than YRQ 40 years ago?

  

Don, I'm glad you still cut the union leadership a little slack, and surprised, Dagger, at your stridency the other way. I'm certainly not saying they're perfect, but whether they've fumbled or succeeded, time will tell; with your background, tho', I'd have thought you'd at least appreciate both their obligation to protect as much as they can, and the danger of unilaterally and publicly conceding anything in advance of a negotiation. IAC, tough times for AC folks in particular, but also somewhat uncertain for the rest of us.

Cheers, IFG

[Don Hudson]

IFG;

Again, as for Dagger's above, thank you for a really thoughtful post. I'd like some time to put together a response equal to your contribution.

Re cutting the leadership some slack...well, been there as you know, and I have no doubts whatsoever in my leadership's ability to balance the membership's needs (and legal requirements of the executive to represent those needs) with the political and economic needs of those looking at our airline with a view to a partnership which is profitable to both.

Because anyone who has either represented the membership or has studied labour relations in combination with some knowledge of the techniques of propaganda and who also may have studied labour history, it is an extremely difficult call to make to know when the demands are sufficiently real so as to say 'uncle' and to arrive at the table prepared to talk instead of obfuscate or posture.

That's what this discussion is largely about and it is important to be aware of the requirement to balance that need with the needs of the present 'dire' circumstances in which the airline finds itself. Its partially a trust issue, partially a gut issue and partially a numbers-rational issue. The manufacture of consent is as alive in this discussion as it is with any news media outlet these days on any one political (Iraq?) issue and so one must exercise due diligence very carefully in assessing how serious the circumstances are and respond accordingly.

I do not envy those who are actually charged with sorting it out.

[Don Hudson]

IFG;

Again, as for Dagger's above, thank you for a really thoughtful post. I'd like some time to put together a response equal to your contribution.

Re cutting the leadership some slack...well, been there as you know, and I have no doubts whatsoever in my ACPA Executive's ability to balance the membership's needs (and legal requirements of the Executive to represent those needs) with the political and economic needs of those looking at our airline with a view to a partnership which is profitable to both.

Anyone who has either represented the membership or has studied labour relations in combination with some knowledge of the techniques of propaganda and who also may have studied labour history, will know that it is an extremely difficult call to make to know when the demands are sufficiently real so as to say 'uncle' and to arrive at the table prepared to talk instead of obfuscate or posture. In my opinion, a broad membership (most members outside the airline) in the CAW, CUPE and the IAM may lend a false comfort in this arena.

That's what this discussion is largely about and it is important to be aware of the requirement to balance the needs of the present 'dire' circumstances in which the airline finds itself. Its partially a trust issue, partially a gut issue, partially a numbers-rational issue and partially an historical issue - Who wants to be recalled as the leadership which rolled back the contract?.

The manufacture of consent is as alive in this discussion as it is with any news media outlet these days on any one political (Iraq?) issue and so one must exercise due diligence very carefully in assessing how serious the circumstances are and respond accordingly.

I do not envy those who are actually charged with sorting it out.

[Guest Marion Vanderlubbe]

Study a wee bit of history. Grant McConachie met with Gen McArthur in Tokyo in 1946, long before Ottawa had any arrangements with the Sunrise Land, nine years before the agreement McRae thinks makes a difference. Agreements signed by the Military Governor cannot be revoked, price they pay for losing the war. Some had drop-dead dates, this one did not. That's what got CP Air into Japan, not Ottawa, which had no hand in the deal, none whatsoever.

[Guest M. McRae]

Yes the original rights were granted by the US Military Gov. to Canadian Pacific Airlines (not CPAIR) then as is normal in the world ....... things changed.........

My post was a reply to your post in which you said "The only way Ottawa could have removed those rights would have been to revoke CP Air's license to operate. There was no arrangement between Ottawa and Japan." That statment would have been true in 1949 but def. no longer valid...you have to stop living in the past

[Guest Marion Vanderlubbe]

Not exactly, the rights are grandfathered and Ottawa had no legal ability to change that, then or now. Japan can change it, Canada cannot. Besides, I like living in the past so I can remember having both hair and a jump shot.

[Guest Marion Vanderlubbe]

Not exactly, the rights are grandfathered and Ottawa had no legal ability to change that, then or now. Japan can change it, Canada cannot. Besides, I like living in the past so I can remember having both hair and a jump shot.

[Guest M. McRae]

They are called "Bilateral" Agreements for a reason. Changes indeed do have to be agreed upon by both sides but it would be highly unlikely that Japan would not agree to a change initiated by the Gov. of Canada afterall, Japan has no loyalty to foreign carriers.

[Fido]

...and I doubt that the agreement with McArthur (an interesting story that I had never heard), restricted the routes to only Canadian Pacific.

[Guest Marion Vanderlubbe]

You're both missing the point. There was no bilateral agreement, that came eight years later. There was an agreement between a private company and a military government, which had to be respected by the subsequent soveriegn government. Ottawa was not involved in any manner. At no time was any one else blocked from Japan, but Air Canada (TCA) was not in the habit of getting their own rights, Ottawa did that for them.

[Guest M. McRae]

No you are ignoring the fact that your post stated "The only way Ottawa could have removed those rights would have been to revoke CP Air's license to operate. There was no arrangement between Ottawa and Japan. " so why not admit you were wrong????

You debate like another on this forum whose name starts with "FRA" , surely this is him under yet another identity????

[Guest Marion Vanderlubbe]

I stand by the statement: how can Ottawa revoke an agreement to which they were not a party? Ottawa was not a signatory, they had nothing to do with it. Who is "FRA," Frankfurt?

[Guest M. McRae]

End of dialogue

[Fido]

Canada would not need to revoke the Japanese agreement.

They would just need to withhold their own authority. An airline needs both countries to agree to start an international service. I think it is cool that it was Douglas McArthur, but before Canadian Pacific started flying the route, they had to get authority from the Canadian government also.

[Guest Marion Vanderlubbe]

I'm not sure why this is so hard to understand, so I'll try it one more time: Ottawa was NOT involved in CP Air's rights to Japan. Ottawa was neither asked nor required to give permission. They were NOT involved in the negotiations in any way, shape or form. There was NO arrangement between governments. Is that clear enough?

[Fido]

I guess you are the one that does not understand. NO air carrier leaves Canada without government approval, NO matter where it is going.