Fee increase partially due to AC's failure to

[Request deviations]

and so they should!

[Guest Airmail]

There is no link. The list of parties was provided in the Globe article (Air Canada, ATA, ATAC and IATA). The submissions are part of the public record during the hearings.

Westjet, Canjet, Transat and Jetsgo did not intervene by last Thursday's deadline for submissions. As of last Thursday, the Air Canada and the three industry groups were joined by UPS and Purolator.

[Guest Airmail]

MPK:

I am not trying to be confrontational so please take it for what it's worth:

One area to reduce costs is overhead and real estate.

Neither AC nor Transat nor Westjet have headquarters in the downtown core while NavCanada's is in a prime office location right smack dab in the middle of downtown Ottawa. This at a time when (as a result of the federal government's expansion over the past few years) downtown office lease rates in the nation's capital are near all time highs.

The other area, as Neo suggests, is reduction in employee pay just as many in this industry have lost their jobs or accepted massive pay/work rule concessions.

The final area is overhead. Nav Canada has a large bureaucracy rivaling that in some of the most bloated federal government departments. AC has reduced management and non-union ranks by 25% (including at the VP level), while no such reductions have been made at Nav Canada (and I'm not even talking about the pain our unionized colleagues have had to endure).

Air traffic is down year over year so why should life be stable at Nav Canada?

The so-called cost reductions Nav Canada introduced stalled three years ago as recently stated by Giovanni Bisignani, head of IATA so relying on those so-called savings is wearing a little thin when the airline world has changed over the same period.

[Guest rphydro]

For those interested, taken from NavCanada's guide to Customer charges, those who get a free ride are..

1. EXEMPTION FROM CHARGES

Some exemptions from air navigation services charges are provided for certain categories of flights. These are

listed below:

• gliders, ultralights and balloons;

• all aircraft weighing less than 617 kg (1,360 pounds);

• aircraft or flights dedicated to search and rescue operated under the direction of police or the

Department of National Defence;

• aircraft or flights dedicated to firefighting and related operational training;

• aircraft or flights dedicated to air ambulance operations paid by government;

• test flights performed exclusively for the following purposes (i.e. flights also serving any other purpose,

such as the return trip from the maintenance facility, do not qualify):

• testing aircraft following overhauls, modifications, repairs and inspections for which a certificate of

compliance is to be given; or

• enabling aircraft to qualify for the issue or renewal of a certificate of airworthiness;

• flights aborted (not reaching their next destination and returning to the point of flight departure) due to

weather conditions;

• flights taking part in air shows;

• flights operated exclusively for a registered charity as defined in the Income Tax Act (Canada) or

equivalent foreign statute;

• state aircraft of a foreign country, unless charging has been authorized by an Order-in-Council; and

• aircraft or flights operated under the authority of the Canadian Minister of National Defence.

[Guest neo]

Those are good points, texas, as far the market affects one aspect of running a business: getting enough good employees. Now, amplify that market force throughout the entire spectrum of influences that the market has on business. Whereas NavCan must attract employees, Air Canada must attract employees, customers and suppliers as well. Furthermore, Air Canada must attract them all in a way that the market will support.

NavCan doesn't. It can pay employees or suppliers whatever it deems necessary, and pass those costs on to its customers (airlines) through its monopoly hold on the market.

Every employee, and surely many of the suppliers at Air Canada have taken pay or revenue cuts because the market will not pay them what they had come to expect. That is the market, the force of supply and demand at work in its entirety. If Air Canada was in a monopoly position for its service, as is NavCan, it could pay its employees whatever it wished, and then pass the increased costs on to its customers. But Air Canada can't; NavCan, can.

I don't doubt you for a second when you say that controllers are quitting, retiring early, or moving on to more lucrative ATC jobs elsewhere. And that's a very good argument for paying them more here in Canada. But it has nothing to do with the overall market force into which you provide your service. Controllers want more, and who doesn't. But the passengers you ultimately serve want cheaper flights, and it's those customers that you have to answer to in the end, not to Air Canada. Market force has required AC's employees to take significant pay cuts, the company to lower what it charges customers, and its suppliers to cut costs. That's market force at work in its entirety, texas. Not just one aspect of it.

Best,

neo

[Guest texas]

Neo, If Nav was allowed to operate via market forces, we would not have the shift schedules rejected by 97% of the controllers in Canada, we would not have had our salaries frozen for eight years during the nineties, both of these events happened during good times in the aviation world.

If we have to take frozen wages and a reduction in our working conditions during good times,while we give millions to the customer, do we also have to take a hit in the downturns? We can't win! Remember even with the fee increases the fees are still much less than tha gas tax with the federal government

One last note, if we are talking about cost. To keep one more controller around, if it stops even one or two days of flow delays is cheaper than the costs in miissed flights, hotels and fuel of delayed flights. If we loose 40% of our already poor staffing, the costs to the airlines will be much more than 6.9%.

[Guest texas]

Neo, If Nav was allowed to operate via market forces, we would not have the shift schedules rejected by 97% of the controllers in Canada, we would not have had our salaries frozen for eight years during the nineties, both of these events happened during good times in the aviation world.

If we have to take frozen wages and a reduction in our working conditions during good times,while we give millions to the customer, do we also have to take a hit in the downturns? We can't win! Remember even with the fee increases the fees are still much less than tha gas tax with the federal government

One last note, if we are talking about cost. To keep one more controller around, if it stops even one or two days of flow delays is cheaper than the costs in miissed flights, hotels and fuel of delayed flights. If we loose 40% of our already poor staffing, the costs to the airlines will be much more than 6.9%.

[John S.]

Looks like basically non-rev is non-pay.

Hardly a 'free ride'.

[Guest neo]

Those are good points too, texas. What's more, they're similar to the arguments that Air Canada employees made to management. I.E. if you lay people off, it will mean insufficient staff to prepare a flight, which will mean costly delays, so where is the saving? Or, if you don't pay people well, you won't be able to hire good people. Didn't make any difference though. Thousands of people were laid off, and every remaining employee took a pay cut.

But more importantly, and unfortunately, this debate has lost its initial focus. The issue is that NavCan is trying to increase revenue by charging its customers more. That's what I take exception to. I don't have any beef with controllers getting paid well, or having reasonable shifts, or any of that. I'd like to see you paid and treated like the professionals you are.

I'd like to see the same for everyone in this industry, but there are forces at work that will not permit that. Those of us in the private sector are fully vulnerable to those forces. Those of you in ATC are not. I don't begrudge a single ATC employee a great wage, but I do begrudge YOUR EMPLOYER picking this time to increase fees. Doing so puts even more pressure on every single employee in the entire private sector, at a time when the industry can ill afford it.

Best,

neo

[Guest neo]

I'm sure there's many areas where you could validly criticize AC management and employees for the state the company is in today. But I think it fair to point out that there have been a considerable number of world-shaking events that contributed to our present situation. If 9/11, the Iraq war, SARS, etc, hadn't happened, would Air Canada be in the state it's in today? I think its reasonable to answer 'no' to that question.

But whereas Air Canada, and every other airline in the free world is disciplined fiscally by events like those above, entities like NavCan are not. And you have to ask yourself if the fiscal model NavCan works to even makes sense. Consider: if Air Canada had failed, it would have created an even greater shortfall in NavCan's revenue, at least until other airlines took up the slack. So in that case, NavCan would have had to raise their fees even more! So now ask yourself, why would the revenue model of NavCan be arranged to increase fees at precisely those times when the industry is hardest hit? Does that make sense to you?

Best,

neo

[Jaydee]

One way to reduce AirLines direct operating costs would be to give them an efficient ATC system in Toronto. Do you guys realize it costs about $ 100 a minute to operate an A-320 for example,and every time you screw us around ( daily ) any hope of a profit goes completely out the window?

Toronto ATC costs airlines MILLIONS of $$$$ in wasted fuel and labour costs daily because of their antiquated procedures. It's time someone in Nav Can realize that all those jokes they hear about Toronto ATC are NOT really jokes...but the truth.

It's time to send some observation teams to ORD or LAX or SFO to watch and learn for few days just how a real system functions. A system that realizes they are there to serve the Airlines,,,,and not the other way around.

[Fester]

Neo, I'm glad you've calmed down a bit. Your initial posting about just cutting all Navcan's employee's wages by 20% stank. Extremely arrogant too.

Now consider this: Navcan is (supposedly) a not-for-profit entity. Which also implies not-for-loss. Why do you think they are raising fees? If they don't, they will run a deficit. Which they already have, thanks to AC's hugh default. Or are you hoping for yet another federal bailout? The money has to come from somewhere. Last time I looked, a domestic airfare had an amount called Navcan surcharge on it, so it seems like the passenger is paying it anyway, and not the airline.

[Guest CDB]

"The money has to come from somewhere. Last time I looked, a domestic airfare had an amount called Navcan surcharge on it, so it seems like the passenger is paying it anyway, and not the airline."

Yikes

I would liken the situation somewhat to monetary policy in times of economic downturn, where a central bank will lower interest rates to help boost the economy.

Similarly, the aviation sector is in dire economic circumstances, and any attempt to increase the cost of doing business seems counter-productive, and will only make the situation worse.

[Guest neo]

Well, ya know Fester, I switched to decaf and all of a sudden, my pay cut was no big deal. What's more, I became much more philosophical about the downturn in the industry in general.

Then when I switched to a glass of wine, the Arab-Israeli conflict shrank in significance, terrorism seemed like a minor annoyance, and the war in Iraq just another tiny bump in the road. By the time I finished the bottle, I was even willing to grant ATC controllers professional standing and the right to a decent wage. I'm sober now though, so back to the salt mines for ya.

Best,

neo

[Guest texas]

I am not ususally one to defend Nav Canada, and I do agree their way of doiing bussiness is flawed. Increasing fees in bad times and giving millions back in good times is ridiculous, but this is what is mandated by their legislation. I didn't hear anyone complaining during the good times. (except controllers beiing forced to work ridiculous shifts.)

[CanadaEH]

I'm sure there's many areas where you could validly criticize AC management and employees for the state the company is in today. But I think it fair to point out that there have been a considerable number of world-shaking events that contributed to our present situation. If 9/11, the Iraq war, SARS, etc, hadn't happened, would Air Canada be in the state it's in today? I think its reasonable to answer 'no' to that question.

No offence Neo, Air Canada would be in the exact same position they are in now, only a few years later down the road.

[tsgas]

WRONG !

FYI the DND represents a lot of flights including our low life PM and Canada's answer to Former First Lady Marcous (Adrian Clarkson and her A-310 world tour).

Air Ambulance and fire fighting aircraft working for the Provencial governments are getting a free ride ,why?

Is this a user fee or really a tax grap.Why should airline passengers subsidize these government on top of paying income taxes like all other non flying Canadians?

[Guest neo]

No offence taken at all. But are you able to predict such a thing with that kind of certainty? It's my understanding that the shrewdest financial minds in the business can't make calls like that, because so many unknown factors enter into it.

There's lots of things that Air Canada and its employees will have to do differently, not because we weren't doing things right before, but because the world we serve has changed. Not so many years ago (1998?) Air Canada had it's most profitable year ever, to the tune of about $550 million dollars. Air Canada didn't just blunder it's way into a billion dollar swing in the bottom line; other events contributed mightily to that change.

It's events like those that you can't predict, no matter how clever you may be. That's why I feel your predictive claim concerning Air Canada's future (sans world-shaking events) is a little suspect.

Best,

neo

[Request deviations]

Not for a moment did I think that anyone was actually refering to air ambulance flights and flights involved in forest fire suppression! Surely these flights are for the benefit of all as citizens? But I suppose if there are those that think that this is a huge drain on the system then lets charge for them and with one fell swoop we shall collectively cure the ills of some airlines in this country.