Dubai: Global aviation watchdog, the International Air Transport Association (IATA) called on the Canadian government to improve its global competitiveness in air transport, travel and tourism by working with industry to address issues of taxation and regulation, security and the environment, instead of trying to restrict its airspace to foreign carriers.
“Air transport is key to Canada’s economy.Canada is a great place to visit and to do business, but the country is losing its competitive edge. Canada needs a comprehensive strategy to keep it competitive in the world market,” said Giovanni Bisignani, IATA’s Director General and CEO.
Bisignani outlined short and long-term opportunities for Canada in a speech to the Montreal Council on Foreign Relations.
His comments comes a few weeks after the Canadian government entered into a controversy with the UAE on allowing traffic rights to the UAE airlines, especially Emirates. Its national carrier Air Canada had, in 2006, sought a revenue sharing model to give access to Emirates to its key gateway cities.
Canada dropped from the 8th most visited country in the world in 2002 to the 15th in 2009.
He also said that governments around the world are too involved in the industry and are preventing airlines from operating like other industries.
“Airlines need the freedom to consolidate wherever it makes business sense. Airlines that facilitate globalization are stunted national businesses because of government protection,” he said.
“The industry is structurally sick and traditional leaders like Canada will be challenged to improve competitiveness with change and innovation. Too often governments try to live off past glory by protecting the status quo and avoiding change. The challenge for Canada and governments around the world is to improve competitiveness on a level playing field that allows airlines to compete profitably like any other business,” said Bisignani.
Saj Ahmad, aviation analysts with the UK-based FBE Aerospace in London, told Gulf News, “The bottom line is that the wider financial crises in the US and Europe has meant that Governments have taken their eye off the transport ball and left incumbent and inefficient airlines at the mercy of more astute, nimble and more efficient airlines who are growing and fulfilling passenger needs.
“This too shows the disparity between funding costs in Europe/USA, which has a higher number of aging airplanes in contrast to the GCC – but of course, Europe/USA fail to consider these pertinent points when labelling their Middle East rivals as subsidised. This is a classic case of “crying wolf” all the time when these same critics do nothing about the quagmire they have made for themselves and equally do virtually nothing to alleviate the competitive pressures on their inefficient business models.”
The World Economic Forum’s Travel and Tourism Competitiveness report ranks Canada at 106 in terms of cost competitiveness, behind Japan (86), the United Arab Emirates (50), India (46) and China (20).
“Aviation is the engine for tourism, which accounted for 650,000 Canadian jobs and $71 billion in spending in 2009. But instead of having policies to welcome more visitors, Canada’s excessive taxes turn them away. Compared to the United States, a visit to Canada is $160 more expensive,” said Bisignani.
Bisignani took aim at Canada’s unique system of Crown rents as one of the root causes of weak cost competitiveness.
“Canada has good airports, but the $257 million annual Crown rent bill is an unnecessary competitive disadvantage. No other country in the world has such a system. It discourages visitors and encourages Canadians to start their air travels from the United States. It’s time to abolish it,” said Bisignani.
Ahmad says, “Europe and the United States lag far behind in support of their own airlines yet are swift to condemn those who are making the effort to build up a strong, stable business. If indeed, Middle Eastern carriers are being subsidised through fuel and airport fees, why aren’t European or US airlines lobbying for the same in their home markets? Why are they not seeking improved access to financing either?”