Thursday, November 18, 1999

OTTAWA - Today, at a hearing of the Commons Transport Committee on the future of Canada's airlines, Democracy Watch detailed why an independent review of the effects on competition of any proposed mergers or takeovers is needed, and proposed the creation of an Air Passengers Organization (APO) to ensure that passengers have a strong voice in policy-making and the marketplace.

Democracy Watch released its 19-page analysis of the highly questionable history of the Competition Bureau's review of changes in Canada's airline industry. In the late 1980s, the Bureau failed to enforce the Competition Act to prevent the merger of Air Canada's and PWA Corp.'s computer reservation systems which led to a high degree of concentration in the industry; and failed to challenge abuse of market power by Air Canada and PWA that led to the demise and takeover of Wardair by PWA. The expansion of PWA through takeovers contributed to its ongoing financial difficulties, leading to the suspension of the Act last August by Transport Minister David Collenette, an unjustifiable move the Bureau also failed to challenge in any way.

"The Competition Bureau's past failure to enforce Canada's competition law has helped create the current mess in the airline industry," said Daniel Martin Bellemare, Counsel for Democracy Watch and former counsel in the Department of Justice's competition law division, "An independent review is needed to ensure the industry flies right in the future."

Democracy Watch's proposed Air Passenger Organization (APO) would be created by the method used in some U.S. states to create utility watchdog groups. To set up the APO, the government will require Canada's airlines to distribute a one-page pamphlet to passengers when they board a plane and also through frequent-flyer mailings. The pamphlet will describe the APO and invite passengers to join at an annual membership fee of $20-$30. If only four percent of the estimated 10 million annual airline passengers in Canada join the APO, it will have 400,000 members and an $8-12 million annual budget. With these resources and large membership base, the APO will be large and strong enough to help airline passengers and hold airlines accountable.

"Consumer protection laws are not enough to ensure all Canadians are served well by the airlines," said Duff Conacher, Coordinator of Democracy Watch, "Air passengers need a strong organization to ensure laws are enforced and airlines held accountable for poor service."