The Air Canada Bailout

by Eric Rempel

As I write, it has just been announced that the federal government will bail out Air Canada to the tune of $5.9 billion. That is the beginning, because having bailed out the largest air carrier, bailout will also need to flow to the smaller carriers. It seems to me that implicit in this bailout, which includes a commitment to purchase new, additional aircraft, is the assumption that the world economy and world priorities will return to that of pre-pandemic days soon (whatever soon means). People will again fly as much as before the pandemic.

But is this a reasonable assumption? Is it reasonable to expect that prosperity manifest in means to travel on a whim is sustainable – that a holiday is not a holiday unless it entails significant travel. People relocate because return visits are easy. Is it reasonable to expect such prosperity to be sustainable?

Adventurers in the 15th-century age of discovery set sail in galleons loaded to the gunwales with supplies for voyages that might take years. Aristocrats on a “grand tour” in the 18th century trekked around Europe for months in horse-drawn carriages packed with trunks, servants and even furniture. The suitcase arrived at the end of the 19th century when spending several weeks abroad became more common for the wealthy. By the 1970s tourists and executives considered it commonplace to spend a few nights away, travelling through vast airports.

COVID 19 restrictions have shown us what is possible as an alternative. No one wants that alternative, and I’m sure we can do better. I desirable alternatve will only develop if the right incentives are in place. Incentives are largely a function of government policy. This is why I am disappointed in the bailout to Air Canada. It seems to assume that we should go back to the pre-pandemic days as far as air travel is concerned. The only controversial aspect of the bailout seems to be how costumers who cancelled their flights be treated.

In September it was reported that our Prime Minister spoke at the UN and said “This pandemic has provided an opportunity for a reset.” “This is our chance to accelerate our pre-pandemic efforts to reimagine economic systems…”

We found this statement very encouraging and devoted a column to that at that time. Unfortunately there is no evidence of this kind of thinking in the Air Canada bailout.

What would be a policy that moves us in the right direction? I’m sure there are economists out there who have some answers. Part of the answer needs to be that the cost of travel is more expensive than other activities. A tax shift from income to resource consumption is one such policy.

Let’s face it. Travel as we had come to regard it prior to the pandemic – you feel like going, you go – is a luxury. This applies to both travel by car as well as aid travel. We may find this acceptable to our pocket book, but the planet will not tolerate this on the long run. This lifestyle is not sustainable.