Why It Is Bad for Air Canada Monopoly in Air Business in Canada
Since the Canadian Airline was bankrupted in 2001, thus Air Canada became the only giant airline in Canada and monopoly in the air business for over a decade. According to the Air Canada’s Annual Information Form 2012 that Air Canada occupied approximately 55% market share of domestic air business and 37% for international flights (excludes flights to the US) departure from Canada (Air Canada’s Annual Information Form, 2012). However, throughSkytrax servers that the Air Canada show low satisfaction for its services due to incredible high price, poor staff services and maintenance and high frequently delay even though it is a monopoly in Canada (Canada, March 22, 2013).
The evidences of monopoly and high price relative to other same route service.
Air Canada has a market share of over 37% alone as compared with other airlines plying the same route under the international scheduled capacity market share (McArthur, March 23, 2004). This is a big market share as compared with the other airlines, and it is, therefore, ample evidence that Air Canada has monopoly over the other airlines. Furthermore, its annual operating income keeps decreasing year in year out. For example in the year 2010, the operating income was $252. This figure fell down to $179 in 2011 and in 2012 it fell further down to $175.the airline is therefore not stable. This shows a downward trend that is not healthy for an organization that should be growing exponentially. Air fare to different destinations has been fluctuating day in day out and, therefore, not reliable at all. It is apparent that the airline is, therefore, troubled and has become the laughingstock. To illustrate this, it is important to evaluate the extent to which the airline has hiked its airfare. The reason as to why the airline changes its fare statement often is that it does not have competition from other airlines. Competition among other airlines would have enabled it to lower its prices substantially because if it does not, it would lose on customers. There is need for more airlines to emerge and offer competition to the airline. It does not put into account the welfare of its customers. The airline, therefore, takes advantage of the situation to hike its fares as it deems fit to do so (Kazi, Dec 5, 2012).
The idea of cost-cutting, on the other hand, has led to a reduction and deterioration in the quality of service accorded to passengers by the airline workers. The passengers find themselves spending a lot of their money yet for poor quality services. There has been many complaints from passengers who use the airline most of whom complain of having been exploited by the airline. All this has been as a result of the fact that there is not healthy competition from other airlines (Allan, 2012).
Workers attached to the airline have resorted to industrial action as a way of voicing their grievances to the management of the airline. In most of the occasions that there have been strikes, the grievances have been that the workers are poorly paid, they are never given their allowances on time, and that the management does not hear their grievances whenever they voice them. It may require the intervention of the government to come up with a policy within which the airline should operate or a framework that best suits the airline business. The focus should be on enabling a plan to balance between the airline input and output. This situation has been aggravated by the fact that the airline’s maintenance provider, who goes by the name Aveos, was declared bankrupt. In fact, this aspect of mismanagement was one of the reasons that led to the failure of Canadian Airways. The Canadian airways did not fail due to shortage of market; it failed due to poor management of the company by its top management team. There is, therefore, the need to come up with a long-lasting solution to the Air Canada problem. There is the need to neutralize the monopoly that is being enjoyed by Air Canada for the good of the passengers who rely on the airline for transport (S., 1957).
The food the airline crew serves passengers aboard the airline has been in most occasions said to be of poor quality yet the passengers usually pay their fare promptly. This is a practice that could lead to total collapse of the airline because it exists to serve the passengers, yet the same passengers are being mistreated. Furthermore, passengers have in many occasions complained about poor or limited checking of their baggage. They usually compare the practice with the checking they experience from other international airlines any the conclusion they make is that Air Canada is a troubled airline. All this has been occasioned by the monopoly status of the airline. If there were competition, the services would have been better. Another common experience with the airline is frequent delays and cancellation. These are precipitated by disagreements between the management and its airline crew. They usually disagree on which crew should be going on board, how much they should be given as allowances and how many of them should take a trip. This again arises from poor coordination form the management and more so from the fact that the airline operates as a monopoly. There is a need to open up the market for more foreign airlines to start operating in Canada or the airline be privatized.
It is even more disastrous that the planes are poorly maintained, and the passenger experience has been that they are hardly ever comfortable aboard Air Canada planes.
Monopoly is the reason that causes air Canada not to improve its service. Competition would have made the services better because any airline that does not improve on its services is likely to lose on customers.
Allan, T. (2012). Crown Corporation. The Canadian Encyclopedia. Historica Dominion.
Canada, A. (March 22, 2013). Annual Information Form. available at http://www.aircanada.com/en/about/investor/documents/2013_AIF.pdf
Kazi, S. (Dec 5, 2012). Wat Are Crown Corporations and Why Do They Exist. CBC.
McArthur, K. (March 23, 2004). Air Monopoly: How Robert Milton's Air Canada won-and lost-control of Canada Skies. Mcfarlane Waiter and Ross.
S., G. J. (1957). The Hudson's Bay Company As An Imperial Factor 1821-1869. Berkeley & Los Angeles. University of California Press.