Collenette tells Air Canada to reduce market share
By STEVEN CHASE
Globe and Mail Update
Ottawa — Ottawa will re-regulate the airline industry unless Air Canada yields domestic market share to smaller competitors, Transport Minister David Collenette warned Tuesday.
"We have said to them ... we're going to have to find ways to basically reduce your domestic [market] share. Otherwise, frankly, Parliament's going to have to re-regulate the entire industry," he told a Senate transport committee Thursday.
"We cannot have one operator out there without competition."
Mr. Collenette was addressing the fact that Air Canada has a domestic market share of about 80 per cent in the wake of the demise of rival Canada 3000 — a situation he described as "untenable."
Under federal legislation, Air Canada is required to fly smaller routes until the end of next year. Mr. Collenette said smaller airlines could take over those routes, leaving Air Canada to fly the larger ones.
"That's something we have to discuss," he said. "You can't continue to force them to serve those communities and then also say: 'You have to make a deal with us to reduce your market share.'"
Air Canada's market share fell from about 80 per cent at the time it acquired Canadian Airlines to about 70 per cent before the Sept. 11 terrorist attacks, because of quick growth at WestJet and Canada 3000.
Last month, Mr. Collenette said Canadian travellers shouldn't count on foreign airlines to provide domestic competition.
Mr. Collenette also said that, despite the competition challenges arising from the demise of Canada 3000, he has no immediate plans to open Canada's skies to U.S. carriers.
But he said the Canadian industry still deserves a chance to fix the gap before turning to outside the country. He said he would expect Calgary-based WestJet Airlines Ltd. and Air Transat, a subsidiary of Transat A.T. Inc. of Montreal, to expand services to provide competition for Air Canada.
Air Canada executives, who followed Mr. Collenette at the committee, said they are as anxious as the government to reach a solution.
"Eighty per cent market share is a curse in many ways," said senior vice-president Peter Donolo. "It sets us up as a target, as everybody's favourite whipping boy."