Thursday, July 23, 2009


CANADIAN POLITICS/CANADIAN LABOUR:
ANOTHER 'PRIVATIZATION BY STEALTH' ?:
Molly has recently received the following item from the Canadian Union of Public Employees (CUPE). I have never actually considered the hows, whys and wherefores of the allocation of takeoff and landing rights (known as 'slots') before this, but I can easily see how they may be one of the more valuable assets that an airline can possess. An airport, after all, cannot operate on a 'first come, first served' basis. There has to be an orderly allocation of who goes up and who goes down and at what time. I can also see very plainly how such a resource has to be regulated by someone outside of the airline industry, both for the good of individual countries and because of the fact that it would be hard to find another industry where so-called "free competition" would so rapidly result in monopoly.




Air Canada, of course, has staggered from one financial crisis to another in the past few years. Its main competition, Westjet, as an "imperfect producers' coop" runs circles around AC in almost all aspects. There is little doubt as well that its very existence, like that of the CBC, is anathema to those in the ruling Conservative Party who actually care more about economics than social conservative optics. Like the CBC those around Harper would gladly see Air Canada euthanized, and it seems they may have actually come up with a plan to accomplish this goal- without raising a political stink by doing it honestly. Selling off landing slots as collateral to private lenders is actually the best way imaginable to accomplish this goal. Sorta like the perfect murder. Here's what CUPE has to say about the matter..
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Don't pledge Air Canada's landing slots:
CUPE is asking Finance Minister Jim Flaherty to stop Air Canada from pledging its landing slots to a group of private lenders.
Email Finance Minister Flaherty

The landing slots - including some at Heathrow Airport in London - are the airline's crown jewels, says CUPE Air Canada Component president Katherine Thompson. "Once they're sold, they can't be bought back."

Reuters reports that Air Canada is seeking a $600 million loan from a group of private financiers and the federal government. To back that loan, the company wants to use the landing slots as part of the collateral.

But Thompson said the government should provide the entire loan instead. That way Canada would still control the landing slots if the airline failed or filed for bankruptcy protection.

The union also proposed guaranteeing only the government's portion of the loan with the landing slots.

"Without these slots, Canada would no longer be capable of supporting an international carrier," Thompson said.
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THE LETTER:
Go to the link above to send the following letter to Finance Minister Jim Flaherty.
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Air Canada flight attendants have made considerable sacrifices to keep Air Canada alive. For its part, Air Canada has agreed to extend its contract with CUPE.
As part of this deal, the company committed to protecting the landing slots it owns at airports around the world, especially London's Heathrow airport.
Without these landing slots Air Canada cannot function as an international carrier.
CUPE agreed to a pension moratorium in part because Air Canada committed to make its best effort to protect these slots and offer them as collateral only to a government lender.
Now I learn that the company has asked you to let them pledge these landing slots as collateral to a consortium of mostly corporate lenders.
That wasn't the deal.
For Air Canada, it's the equivalent of mortgaging the family farm.
Please ensure that Air Canada’s landing and takeoff slots are only pledged to a government lender, capable of keeping the public interest in mind.
Please also give serious consideration to providing of a fully collateralized loan to Air Canada, in a way that avoids the private loan and the risks it poses to both the company’s future and the interests of the nation.
I look forward to a personal response to this message.

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