The Airline Industry

The topic in which I chose to do a scrapbook on was "How the government affects the airline industry in Canada". Specifically I chose articles that related to the aftermaths of the September 11th tragedy. This event affected airlines in an enormous manner. Many airlines were facing economical problems and in turned asked the government for assistance. As a result, Canada 3000, which was Canada's second largest airline carrier filed for bankruptcy protection on October 11th.

Air Canada was also faced with many hard to make decisions. They turned to the Canadian government and asked for financial assistance. The Problem Solving Method will be examined to determine how the government came to the decision of actually granting Air Canada some assistance.

Problem Solving Method

1. Decide on the "Issue" (Define it carefully to avoid arguments later.)

The issue that is being discussed in whether or not the government should help Air Canada out financially. As can be seen in the articles presented in the scrapbook, it is known that the government controls many of the operations at Air Canada.

2. Examine various points of view and the opinions they have.

* Your own

In my opinion, I think that the Canadian government should help Air Canada with financial assistance. I believe that if the government wants to have control over their fare prices, whether or not they can open a discount airline, and the amount of workers they are able to hire, that they have an obligation to the airline to help them out in these types of situations.

* Those of key groups or individuals (stakeholders)

a) Air Canada Union Representatives - This group feels that the government should be active in financial aid relief. During the events after September 11th, the union stated in many national papers, that they felt that they deserved the same amount of support and relief that the US government was giving their airlines.

b) The Canadian Government - The government had essentially three choices:

i) They could help the airline.

ii) They could do nothing and let the airline claim bankruptcy.

iii) They could buy back into Air Canada.

With the first choice, the government has to allocate some of their resources to the airline. The second option was not feasible for the government to partake in because of the fact that Canadian citizens would be losing

the biggest airline carrier. The third option, which the government did consider, involved two options. The government could either buy a minority of the shares or they could buy the entire operation and that would result in Air Canada becoming a crown corporation.

c) The Shareholders - This group has major concerns since they own stocks and have invested their money into the struggling company. The shareholder's opinion counts a great deal. They would like to see basically anything done in order to save the company, even though the value of their stocks had dropped drastically in the weeks after the September 11th terrorist attacks in the US.

d) Canadian Citizens - Although much of the population fall into one of the above groups, it is important to discuss the views of those who do not. Canadian citizens had varying views on what the government should do with respect to Air Canada. Some felt that the government is not responsible for what happened and that they shouldn't be involved.