Please fasten your seatbelts


This morning Air Canada said it will lay off 2,000 employees as it grapples with soaring fuel costs. The airline is also reducing its capacity by an overall average of 7 per cent, with capacity on flights to the U.S. cut by 13 per cent.

If this all seems eerily familiar, there’s good reason. It was only in 2003, with the U.S. gearing up for war in Iraq, that Air Canada invoked “force majeure” to lay off 3,600 workers. This oil-triggered round of layoffs is arguably much deeper. For one thing, Air Canada is a far leaner operation than it was back then. It’s total workforce, at 24,000, is nearly one-third smaller than it was in 2003.

Nor is this likely the end of the pain.

According to an Air Canada statement, high oil prices will cost the company $1 billion more this year than in 2007. And that’s with the price of oil at $140 a barrel. With many experts projecting crude could hit $200, it’s hard to imagine the company is finished slashing jobs.

So it strikes me as somewhat odd to see the Feds planning to introduce a passenger’s bill of rights. Don’t get me wrong, I’ve had run ins with flight attendants in this country who make that stewardess with the nicotine fit seem downright heart warming. But if Ottawa really wants to do something to improve service and lower fares, it should start by scrapping restrictions on foreign takeovers and reigning in skyrocketing airport fees at Pearson, which are the highest in the world. A bill of rights is an easy way to score political points, but not when the industry is literally fighting for its survival.

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Please fasten your seatbelts

  1. Look to your current government as part of the problem. Everyone is quick to moan and complain about add-ons to ticket prices but do Canadian Air Carriers make any money on the security fee, or fuel surcharges or fuel taxes or landing fees or high airport rents?

    Part of the problem is the ongoing costs of running an airline in Canada and a federal government who can’t wean themselves from these revenues.

    Canadians in my part of Canada have figured out it’s cheaper and more convenient go to the US, by car, to avoid Canada’s taxation on air travel. Too bad for Air Canada and Westjet. Too bad for Canada.

  2. Airlines *definitely* make money on the fuel surcharges. They are not government-mandated fees, but a way to pass a business cost onto the customer while maintaining more marketing-friendly prices — that is, they are in fact fare hikes that are not included in the advertised fare but added on afterwards.

    Imagine if other companies did this — say you go to McDonald’s for a $2 BigMac but get charged with a “$1 beef fee” that goes to the company — how long would you put up with that? My local sandwich shop just raised their prices b/c input costs went up. I’m paying a higher advertised price, not a $0.30 additional “bread surcharge” at the till.

    This fuel surcharge business has bugged me for a long time, b/c I suspect many people think it’s a tax — but it’s not. The airlines are getting gov’t to take the blame for a voluntary increase in their own prices, and pocketing the proceeds.

  3. Look to your current government as part of the problem.

    To be fair to the Conservatives, the fee structure and YYZ rent issue predates them.

    Of course, if they thought it was a big deal they would have had it fixed by now — clearly, they think the current strucure is how it should be.

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