Oh!, Canada
Canadians were relieved to wake up Tuesday to the news that Air Canada had reached a tentative deal with the union representing its 10,000 flight attendants, and that their flagship airline could go back to aggravating them the usual way.
But the entire episode – the strike that began on Saturday, Ottawa’s failed attempt to order the employees back to work on Sunday, the tens of thousands of passengers abandoned to indifferent customer service – was more than a simple labour dispute.
Put as succinctly as possible, it was the sorry spectacle of a publicly traded airline overseen by a weak passenger-rights regime in a government-protected concentrated market, clashing with a public-sector union representing workers in a duopoly who are subject to a Canada Labour Code provision that limits their ability to strike according to the political needs of the federal cabinet.
And this is the vibrant economy that’s going to take on the world in the post free-trade era? Good luck with that.
Let’s start with Air Canada. The federal Competition Bureau recently undertook a market study of the airline industry, and the conclusion wasn’t pretty.
Thanks to limits on foreign competition imposed by the government, Air Canada and WestJet control as much as three-quarters of the traffic at the country’s major airports. Canadians have few options and pay high prices for indifferent service that faces very little competition. On some domestic routes, there is only one choice.
The fix, of course, would be for Ottawa to lift foreign ownership limits, as the Competition Bureau recommended (and this space endorsed) in June. European countries have done so and the result has been lower fares and higher traffic.
But in a country that tends to favour the needs of incumbent businesses over those of consumers, and where nationalistic market protection is all the political rage (look at supply management in dairy), doing so here would require courage on the part of Ottawa that is lacking.
Ottawa has been similarly feckless about giving airline passengers effective rights when flights are cancelled or delayed. Compensation is limited and hard to access, making it too easy for airlines to dodge liability.
Canada also continues to bleed airlines and passengers with the highest airport fees in the world, sometimes amounting to 35 per cent of a ticket cost.
This is an industry stuck in a government-plowed rut – which is great for CUPE, a public-sector union accustomed to representing employees who don’t work in a free market.
CUPE’s leverage in the dispute with Air Canada was magnified by the fact the airline’s customers had little alternative to turn to – a situation similar to strikes by postal workers, civil servants and teachers.
It also helped CUPE that Air Canada was under no pressure to do more than offer last-minute refunds or credits to passengers whose flights were cancelled.
Which is why Ottawa, faced with exasperated voters, resorted to its attempt to force workers back on the job through binding arbitration.
It’s something the federal government does all too often with federally regulated companies (as it did with WestJet last year). It short-circuits the bargaining process and can result in settlements that leave no one happy. (It’s a relief this strike ended with a negotiated settlement, but that only happened because of CUPE’s defiance of the law. Hardly a win-win.)
Then again, if a federally regulated industry and its unionized employees are protected from market forces by the government, is it fair for either side to draw out a labour dispute in an effort to win concessions? No.
Ottawa provides Air Canada and WestJet with a closed and cushy market, creating high costs for travellers and giving unions a disproportionate amount of power in a strike, which inevitably leads the government to try to end labour disputes for political reasons, further distorting the market.
What is needed is foreign competition, better passenger protections and lower airport fees. But none of what happened in the Air Canada strike was indicative of a vibrant, confident and open economy led by politicians with the courage to challenge the status quo.
On the contrary, it was all very Canadian. And that should worry everyone in the age of Donald Trump. |
