The Canadian and European Union’s Transport Regulations and Policies

Answer

The Canadian and European Union’s Transport Regulations and Policies

Regulation plays a significant role in the transport sector owing to the imperfect markets within various modes of transport.  Since 1985, the air transport sector has witness significant regulatory reforms that are aimed at improving its operations (Janda et al. 2015). According to Finger & Holvad, (2013), reforms within the airline transport and other sector have majorly focused on four principal elements/areas that include liberalization, unbundling, ownership transformation, and independent regulation. In Canada and many European nations, the development in the transport regulations and policies resemble each other in terms of increase private participation/ownership, liberalization, consumer protection, and competition, with differences only existing in their coverage and application (Finger & Holvad, 2013). As such, considering the great similarities between the EU and Canadian transport regulations and policies, it can be argued that the application of the EU transport regulation and policies can be effectively accomplished within the Canadian context.     

The EU and Canadian transport regulations and policies advocate the liberalization of air space or airline market. In Canada, air transport happens to be among the predominant means of transport that have experienced significant liberalization processes over the past thirty years  (Finger &Holvad, 2013). The process of liberalization has been coupled by re-regulation, resulting into the establishment of sector-specific regulatory agencies/authorities whose principal aim is to liberalize and sustain/maintain markets for the benefit of customers and users. In Europe, liberalization happens to be the most prominent reform aimed at opening up or liberalizing the market for competition. An example of the approaches employed to accomplish this goal is allowing companies/firms to exit or enter the market at their will. The implementation of liberalization programs and policies by EU member states to liberalize their air transport sectors has subjected the international airlines’ operating market to a significant transformation, while the strategic responses of the industry (i.e. airline industry) have been constantly evolving. Besides, the uncertain commercial and economic opportunities have been the major influencers/triggers of regulatory adjustments and changes.

The implementation of the single market policies (i.e. liberalization) by EU member states and Canada has led to significant growth within the air transport sector, particularly by creating novel job opportunities and offering more choices as well as better value for customers. Considering the immense benefits associated with the liberalization of airline sectors, the Canadian administration and EU member states continue to explore other mechanisms of improving competition, quality, and efficiency in the single market. For instance, while the EU member countries focus on developing a single European Sky, the Canadian administration focuses on establishing more trade agreements that are aimed at opening up the nation’s airline market farther. Jeanniot (2016) also points out that while several agreements have been attained, some are under negotiation between Canada and other parties such as Europe and the U.S, as well as emerging markets such as Russia, China, and India. The state’s Ministry of Transport seems to exploit the present international trends, which focus on the liberalization of airline markets, to proceed with the liberalization of Canada’s market. For instance, the ministry considers the possibility of permitting foreign to conduct their operations between Canadian cities such as Manitoba and Winnipeg among others. Besides, the Canadian Administration has made a significant step towards liberalizing the Canadian airline market by integrating it into the European Union (Jeanniot, 2016). Canada has also succeeded in broadening its bilateral agreement with China in the international airline market.

Airline transport policies and regulations embraced by Canada and EU advocate the privatization or ownership of government-owned by members of the public airlines. Van-Waeyenberge & Pecho (2014) point out that the privatization of government-possessed airlines happens to be one of the pre-eminent transformations within the air transport in Canada and EU member states, and its motives have been greatly diverse. In these nations, the motives of privatization range from solely economic considerations, to try to advance operating competitiveness and efficiency, to a more pragmatic need to minimize the hefty financial burden for administrations/governments for funding capital investment within the new equipment. For instance, Canada’s Ministry of Transport considers raising the restriction/limit on foreign ownership/possession of airlines within Canada. Currently, this limit is at 25%, and its raising will be excellent news for the nation’s economy and for the consumers (Van-Waeyenberge & Pecho, 2014).

The privatization of government-possessed/owned airlines has led to a more commercially inclined outlook in the liberalized competitive environment. According to Van-Waeyenberge & Pecho (2014), it is vital to note that the accomplishment of privatizations in Canada and EU member states has not been an easy task/undertaking.  Most of the initial/former privatization plans/strategies had to be postponed or deferred due to the complexities met in the course of privatization or the economic circumstances of the concerned airlines, or even the local circumstances. However, the intention of privatization continues to remain in many of these countries. For instance, Edwards (2014) informs that many nations within Europe have subjected their airports to privatization, and most of the employ the services of private airport screening. Edwards (2014) adds that Canada has also managed to privatize its air traffic control, and airports, as well as its largest airline. Moreover, Canada employs private screening organizations/firms at its airports. According to Edwards (2014), these reforms (i.e. privatization reforms) have enabled the governments to retain the oversight for aviation as well as open doors to greater innovation and efficiency within the formerly bureaucratic industries. It is also significant to note that the uncertainties surrounding the process of privatization are exemplified by a small counter trend renewal, which is often employed as a temporary mechanism/measure, of the government possession as a national concern response to the possible demise/end of a privatized airline. Janda et al., (2015) point out that since 2004, examples of airlines that were privatized by their governments, as a means of raising their shareholdings are Air Tanzania, Air Mauritius, BWIA West Indies, and Aerolineas Argentina. In 2013, the Polish administration enacted a policy that allows the privation of the LOT Polish Airlines.

Canada and EU also embrace air transport policies and regulations that create favorable environment for competition or enhance the level of competition within the airline market. As the spreading of liberalization continues in many nations across the world, the question concerning the mechanisms that can be employed in maintaining and promoting fair competition within the air transport emerges as a significant issue. According to Janda et al., (2015) approximately 90 states have implemented competition policies with several antitrust enforcement corporation treaties/agreements, particularly between the developed nations such as Canada, the U.S, and UK. The employment of competition policies for the sector of air transport has happened with more frequency and has covered various issues. These issues range from abuse of the dominant/central position like predatory pricing and capacity dumping, collusive mannerism including the consolidation of airline of alliances and coordination through acquisitions and mergers, vertical business relationships, price fixing, to State aid.

The EU and Canada’s air transport policies and regulations also resemble each other in the sense that they focus on the protection of consumers. Janda et al., (2015) inform that the protection of the interest of consumers covers several elements with the inclusion of contractual relationships/associations between airline users and airlines, as well as air passenger rights. In some circumstances, competition cannot guarantee a minimum standard of service levels/standards that consumers can expect due to lack of information as well as their weak negotiating position. Janda et al., (2015) add that certain elements might not be considered significant when it comes to competition between airlines. In relation to this, concerns about standards of competitive response have triggered many countries in Europe including Canada and other regions of the world, to ask the industry to establish voluntary commitments (i.e. non-legally binding self-regulation). Some countries have also proposed the adoption of direct regulatory approaches that address the interest issues of consumers such as denied boarding compensation, access for incapacitated consumers/passengers, and flight cancellations.  For instance, the ATConf/6 (The Sixth Worldwide Air Transport Conference) recommended that ICAO (International Civil Aviation Organization) establish a series/set of high-level non-prescriptive core guidelines/principles on the protection of consumers, which would create a suitable balance between consumer protection and industry competitiveness (Janda et al., 2015). Besides, the conference also recommended that such standards should take into consideration the states’ need for flexibility granted the differences in State political, economic, and social characteristics.

While there are many similarities between the EU’s and Canada’s air transport regulations and policies, there are minimal differences that only exist in terms of coverage and application. For instance, while EU air transport policies overs nations within EU and other nations across the world, Canada’s policies are limited to certain countries such as China and the U.S. Despite the existence of many similarities between the Canadian and the EU airline transport regulation and polices, the implementation or application of the EU airline transport policies is still confronted with certain challenges. According to Huderek-Glapska et al., (2016), there still exist differential implementation and interpretation of policies and regulations among members of the EU, with the national regulatory agencies/authorities retaining power. Nevertheless, the EU airline transport policies and regulations can still be directly applied in many nations such as Canada. According to Van-Waeyenberge et al., (2014), the applicability of the EU’s liberalization policies to various nations in the world including Canada is attributed to the fact that these policies are in line with the airline growth/development strategies embraced by many nations. For instance, the aspect of single market that embraces EU member states also covers ECAC (European Civil Aviation Conference) member states.  When it comes to the creation of a competitive environment in Canada’s airline sector, the employment of EU’s policies of regulation can also be accomplished in an effective manner. However, a challenge can be met when it comes to creating a distinction between normal and unfair competitive behaviors. Nevertheless, Van-Waeyenberge & Pecho (2014) assert that this goal (i.e. distinguishing between normal and unfair competitive behaviors) can be accomplished by means of analyses/assessments and establishment of standards/guidelines via case-by-case approach. Unlike many competition policies that are meant for general applications, certain regional groups established aviation-specific policies/rules. For instance, in 2004, the EC (European Commission) was granted an extra mandate. The first authority was to extend the coverage of its competition policy to agreements/treaties between third country airlines (i.e. covers counties such as Canada) and community airlines. The EC was also given the mandate to protect community airlines against predatory pricing and subsidization practices of third nation/country airlines. Furthermore, many regional agencies/bodies such as the ACAC (Arab Civil Aviation Commission), LACAC (Latin American Civil Aviation Commission, and the AU (African Union) have been establishing provisions/policies on fair competition using the ICAO guidance (Huderek-Glapska et al. 2016). As such, Canada cannot be an exception to this development.

In conclusion, the air transport policies and regulations applied by EU and Canada resemble each other in the dimensions of privatization, liberalization, consumer, protection, and competition. However, there are minimal or insignificant differences between these policies, and these occur only in terms of coverage and application. Considering these findings, it can be argued that the application of the EU air transport in Canada can be accomplished in an effective manner. As such, the Canadian administration should embark on implementing measures that ensure the integration of EU’s air transport regulations and policies, which have proven beneficial in terms of spurring the growth of air transport sectors, in Canada.