As a federal Crown corporation, Air
Canada is bound by federal official languages policy, and
the fact that it serves passengers 'in the official
language of their choice' has undoubtedly encouraged
other airlines to follow suit. Indeed, when the Planning
and Priorities Committee of the federal Cabinet decided
to put the privatization of Air Canada on hold at a
meeting in Edmonton in September 1987, the Crown-owned
airline's role as a vehicle for national language and
development policies was cited as a critical factor in
the decision. See Nichols, Marjorie, "The Language
of Privatization", Language and Society,
Number 21, Winter 1987, p. 5. Of Course, the government
has changed its mind since then. See note 239.
Air Canada became the first North
American airline to serve glamorous but unprofitable
Moscow on November 1, 1966. See Smith, Philip, "It
seems like only yesterday: Air Canada", Forces,
Numéro 75, Automne 1986, p. 12, and Collins, David H., Wings
Across Time The Story of Air Canada, Griffin House,
Toronto, 1978, pp 62-63, 83-84.
Air Canada, having moved first its
headquarters, then its maintenance base to Montréal,
"the fortress and symbol of Liberal
hegemony"(Stevenson, supra,note 14,p. 52.) in the
1960's. Prime Minister Trudeau promised to reopen the
Winnipeg maintenance base during the 1974 Federal
election campaign.
Otto Lang, then Minister of Transport,
got Air Canada involved in the Nordair debacle.
Stevenson, ibid, pp. 155-156. See also footnote 14, supra.
From 1947 to 1961 Air Canada operated
29 Canadair North Stars at the urging of the federal
government. This "Canadian" aircraft was purely
an American DC-4 airframe with British Rolls-Royce Merlin
engines. See Stevenson, ibid, p. 16, and Collins,supra,
note 36, p. 88. Air Canada's
choice of the American-made DC-8 jet over the Canadair
CL-44 was accepted based on needs at the time, but the
DC-9 v. Caravelle controversy in 1964 is particularly
interesting. See Stevenson,ibid, p. 51, Corbett,supra,
note 2, pp. 281-283 and
"The Caravelle Uproar", Maclean's Magazine,
vol 77, 1964. Air Canada's choice of the DC-9 was
probably a wise one, even without considering the plane's
technical abilities. All of Air Canada's Caravelles would
have been built at Canadair in Montréal, whereas
McDonnell-Douglas promised that the wings for all DC-9s
sold worldwide would be built in Toronto. Air Canada
bought approximately 50 of the latter, but more than
1,108 had been sold worldwide by 1981. Of course,
McDonnell-Douglas now builds wings in Toronto for most of
its commercial aircraft types. See also Green, William,
and Swanborough, Gordon, An Illustrated Guide to The
World's Airliners, Arco Publishing, New York, 1982,
p. 157, and Collins,ibid, p. 91.
Smith, Phillip, "It seems like
only yesterday: Air Canada", Forces, Numéro
75, Automne 1986, p.12.
41 Stevenson, supra, note 14, p. 46, quoting Prime
Minister William Lyon Mackenzie King.
ibid, p. 48.
43 Canadian Aviation, October
1980, p. 10. Two things must be observed here: 1. Air
Canada was an all-jet carrier at the time. 2. Given
Hamilton's proximity to Toronto's Lester B. Pearson
International Airport and the wide availability of
flights there, even Nordair, which dropped Hamilton in
September 1985, (Canadian Aviation, September
1985, p. 8), was suffering losses on its Hamilton routes.
Of course Nordair had only started Hamilton service in
order to get the Montréal-Ottawa route, and had
continued its service because the Canadian Transport
Commission would not let it serve Toronto from Montréal.
44 Canadian Aviation, June
1983, p. 6.
Lloyd Axworthy, talking about
subsidies in the middle of the 1984 federal election
campaign, was quoted in Canadian Aviation, July,
1984, p. 23.
Corbett, supra, note 2, p. 32 writes that by 1936
the federal government had created a Department of
Transport with an Air Services Division responsible for
Policy.
Stevenson, supra, note 14, p. 46. The Board, of
course, was comprised of men who had for years
implemented national railway policy in a spirit of strict
impartiality between the public and private sectors,
staunch in the belief that no two carriers could compete
on the same route.
ibid, p. 49. See National
Transportation Act, S.C. 1966-67 c. 69 s. 14.
Schultz, ibid, p. 37.
The Canadian Pacific Railway had
bought complete control of Canadian Airways and nine
smaller carriers to form Canadian Pacific Air Lines which
by 1942 accounted for seventy-eight percent of all
aircraft miles performed by the private sector.
Stevenson, supra, note 14,
p. 45.
Bain, supra, note 22, p. 29. The forecasts were
right, the route did not make money for twenty years, but
Canadian Pacific Air Lines saw it as a stepping stone to
greater opportunities, and persevered. See also Smith, supra,
note 36, p. 12.
Fortunately for Canadian Pacific Air
Lines, at the time of making its decision, the federal
government was labouring under the myth that Air Canada's
lack of interest in the Australia route extended to
Japan. See Stevenson, supra, note
14, p. 47. Canadian Aviation, June 1977, p. 23
suggests Canadian Pacific Air Lines' international routes
are mainly those "Air Canada did not want or Ottawa
did not want Air Canada to have." Service on three
of the company's routes, to Athens, Madrid, and Tel Aviv
was later suspended for lack of traffic. In the fall of
1987 these routes were traded to Air Canada which
commenced service to Madrid via Lisbon in October 1988
and started Toronto-Athens service in April 1989. See
also note 104.
Chorley, Desmond, "CP Air; A
Loveable David among the Airline Goliaths", Canadian
Aviation, June 1977, p. 23 at 47. The company has
never since served the Québec Capital. Even today,
Québec City is the only provincial or territorial
capital without service by Canadian International, being
served instead by a Canadian "Partner",
Inter-Canadien.
"Europe had been reserved for Air
Canada and it took special action by the Cabinet to
change the policy." Edwards, L.D., "Air
Transport", Canadian Aviation, 50th
Anniversary Issue 1978, p.28.
Corbett,supra, note 2, p.171. Surely, this is one
of the few times in Canadian history where a route has
been justified on the basis of expected sixth-freedom
traffic!
Curiously, this put Canada in a unique
position. It had two international carriers, but only one
domestic carrier. This was in direct contrast to the
situation which existed in most of the other countries of
the world, which had one chosen instrument for
international travel, but permitted competition on
domestic routes. For example, Japan had two domestic
carriers, All Nippon Airways and Toa Domestic Airlines,
and one international carrier, Japan Air Lines. Australia
has its international carrier, Qantas, which is
prohibited from flying on domestic routes, and Ansett
Airlines and Australian Airlines, which serve the
country's domestic routes. Interestingly, when British
aviation economist Stephen Wheatcroft recommended in 1958
allowing Canadian Pacific Air Lines to provide limited
competition on the transcontinental route, one of his
reasons was to permit the company to provide service
between cities from which its international service
radiated. See Corbett, ibid, p.167, and Stevenson,
supra, note 14, p. 56.
Stevenson, supra, note 14, p. 55. Significantly the
first announcement that the Government would consider
giving Canadian Pacific Air Lines a share of the
transcontinental traffic was made during the 1958
election campaign.
British airline economist Stephen F.
Wheatcroft was commissioned on February 4th, 1958, by
federal Transport Minister George Hees to "inquire
into and report upon, the desirability and economic
consequences of competitive services on the
transcontinental air routes". The minister, who
favoured increased competition and hired Mr. Wheatcroft
largely at the insistence of Deputy Minister John Baldwin
(who became Air Canada President ten years later), did
not wait for the Wheatcroft Report, but instead announced
the new policy three days later while campaigning in
Timmins. Mr. Wheatcroft's recommendations however played
a very significant rôle in shaping and influencing the
gradual increase of competition on the
Vancouver-Montréal route.
73 Edwards, supra, note 66, p.29. Service started
May 4, 1959.
74 Corbett, supra, note 2, pp. 176-177. By 1964
Canadian Pacific Air Lines was making a profit on the
route and charging lower economy fares and higher first
class fares than its rival. See Stevenson, supra, note 14, p. 56.
75 Chorley, supra, note 64, pp.23, 30. Restrictions
which forced Canadian Pacific Air Lines to turnaround
flights at a point west of Edmonton or Calgary, in
western Canada, or in Toronto, Ottawa or Montréal in
eastern Canada meant that the company was forced to
operate certain local sectors (eg. Vancouver-Edmonton) of
some flights at times which were undesirable for the
travelling public. See also Part VIII D) of this paper.
Bain, supra, note 22, p. 34. The first flight
was via Edmonton. The carrier added Edmonton and Calgary
to its national route network in 1968 and added Ottawa in
1969. See Canadian Pacific Air Lines Empress, supra, note 16, ibid.
Consolidation would have the effect of
permitting it to link directly or non-stop any points in
its route system giving it much of the freedom which Air
Canada then enjoyed. See Hunnings, G.B., "Canadian
Government Aviation Policy Involving Canadian Pacific Air
Lines", in Reschenthaler, G.B. and Roberts, B.
(eds.) Perspectives on Canadian Airline Regulation,
Institute for Research and Public Policy, Montréal,
1979, p. 166.
Bain, supra, note 22, p. 38, and Roy, and
Cofsky, supra, note 14,
p. 1. Canadian Pacific Air Lines was allowed thirty five
percent market share by 1977 (effective 1978) and forty
five percent in 1979. Canadian Pacific Air Lines actually
had a 35.8% share when the restrictions were lifted. That
year Canadian Pacific Air Lines was given permission to
serve Halifax, (explored in Part VII B) of this paper)
Saskatchewan, and Victoria. (See Canadian Pacific Air
Lines Empress, supra, note
16, ibid.) 1979 also saw Canadian Pacific Air
Lines introduce its Vancouver-Ottawa and
Vancouver-Montréal non-stop flights, increase the
frequency of its Alberta-Toronto non-stop services and
become an innovator as the first Canadian airline to
introduce discount "SKY-BUS" service without
advance purchase requirements in 1979. See also
Reschenthaler, G.B., and Stanbury W.T.,
"Deregulating Canada's Airlines: Grounded by False
Assumptions", Canadian Public Policy, June
1983, p. 211.