Terrence Corcoran in the Post

[Guest GDR]

Air Canada's bankruptcy officially takes off today, Captain James Farley of the Ontario Superior Court in the cockpit. It's a flight packed with more service list lawyers (115 by my count) than we've seen in one place since the last staff meeting at the Ontario Securities Commission. What a fest! Let's hope Mr. Justice Farley, an experienced judicial pilot, quickly begins to cut through the creeping fog of self-serving claims that are building up all over the runway.

--------------------

Terence Corcoran

National Post

Tuesday, April 22, 2003

http://www.nationalpost.com/financi...49-F73644705CF1

--------------------

What with the unions, NAVCAN, leasing companies, food service providers, competitors, airports and potential investors -- all angling for as big a piece of the carcass as possible -- the airline is now totally dependent on Justice Farley to save it from its enemies, which these days is just about everyone. Trashing Air Canada is now a national sport, even among people who know nothing about the airline industry and should have other things to do.

A good indicator of what Air Canada is up against appeared yesterday in the Toronto Star. In a juicy commentary, Michael B. Decter, whose regular job is chairman of the Canadian Institute for Health Information, weighed in with a typical blast at Robert Milton, Air Canada's CEO.

Mr. Decter's commentary began where self-indulgent non-expert commentaries often begin, with personal experience. Mr. Decter said he recently returned from a ski holiday in Montana to find Air Canada in full bankruptcy protection. More bewildering, he said, was the discovery that Toronto's Pearson airport had been closed recently due in part to a shortage of de-icing fluid. But "wait just a minute," Mr. Decter said in italics. "It is difficult enough to run a near monopoly such as Air Canada into bankruptcy; but run out of de-icing fluid! Something is badly wrong in Milton land." After laying the de-icing fiasco "squarely at the feet" of Mr. Milton and Air Canada's board of directors, Mr. Decter concluded it "is time for Air Canada president Robert Milton to take that lonely, one-way trip to somewhere else."

Now Mr. Decter, a former Ontario deputy health minister, is an expert in health care monopolies, so he would not be expected to know that Air Canada is not responsible for de-icing airplanes at the airports it uses. De-icing is an airport service, and it was Pearson's Greater Toronto Airport Authority that actually ran out of fluid during a recent unseasonal ice storm.

The job of the chairman of the Canadian Institute for Health Information is to gather data and info on Canada's health care monopolies, the idea being that if we have more facts, we'll be able to run a better system. The same is true for writing op-eds that call for somebody else to lose his job.

It is also fashionable, in Mr. Decter's circle and especially at the Star, to target Robert Milton and Air Canada's board and management as the root causes of the airline's perennial crises. To health care insiders, there's nothing wrong with the health system that new and better management can't fix. The system is perfect; it's the doctors and our information banks that need fixing. So to, apparently, with airlines. While Mr. Milton and his colleagues certainly can't be blameless in Air Canada's decline, it is also plenty obvious that Air Canada is the victim of a colossal series of political and economic games that have helped destroy the airline.

No airline in Air Canada's structural straitjacket could have survived Sept. 11, the Iraq war and now the SARS scare on top of a global meltdown of the monopoly airline business model that has dominated air travel for 50 years. The airline's failure was inevitable. Any company locked by law into doing business with so many near-monopoly players was bound to end up in a crack up. Another burden is a federal Transport Minister who cooked up schemes designed to favour Air Canada's competitors while driving Air Canada's market share down.

For a list of the principal players behind Air Canada's decline, see the parade of big-name claimants who are today trying to influence Justice Farley. An autopsy of Air Canada's financial history would show the airline's unions, a world-class collection of professional rent-seekers cashing in on the remnants of national air travel monopolies, are probably the leading culprits in Air Canada's demise. Justice Farley would be doing the country a great service if he could spend a little time looking into the role of unions in the global airline crisis.

NAVCAN, itself a legislated monopoly, joins airport managers and the federal government in being all too willing to treat Air Canada as a cash machine. NAVCAN, for example, says it wants the power to cut the airline's access to navigation systems if the airline does not pay its bills. Sounds justifiable, but at some point, NAVCAN is going to have to wake up to the fact that air travel isn't what it used to be, no matter how much it promised its bond holders that air navigation was a sure thing.

But today is just the beginning of a long process to unravel the mess that is Air Canada -- a mess that belongs mostly to the people and institutions who are lining up to file their motions before Captain Farley.

© Copyright 2003 National Post

[Guest givemeabreak]

"For a list of the principal players behind Air Canada's decline, see the parade of big-name claimants who are today trying to influence Justice Farley. An autopsy of Air Canada's financial history would show the airline's unions, a world-class collection of professional rent-seekers cashing in on the remnants of national air travel monopolies, are probably the leading culprits in Air Canada's demise. Justice Farley would be doing the country a great service if he could spend a little time looking into the role of unions in the global airline crisis."


Couldn't have said it better!!