The Privatization Of Air Canada

Air Canada, one of the largest airlines in North America, has had substantial ownership and management changes since its founding in 1937. The airline, which initially began as a government-owned entity, had a monopoly on domestic air travel in Canada for many years before it was eventually privatized in the late 1980s. At the time, the transition towards deregulation was controversial and sparked intense debate across the nation about whether a significant change was necessary. However, there was also a need to take into account the growing demand for less governmental regulation, more industry competition, and shifting global trends that favoured unregulated aviation sectors. As a result, the decision to privatize Air Canada helped to overcome

The airline reportedly put pressure on the government during that year because it could no longer wait to receive the $250 million needed to exercise options on a fleet of new aircraft. Hence, conservative prime minister Brian Mulroney decided to sell 45 percent of the government's shares in Air Canada rather than increase the government's $23 billion annual deficit.2 Deregulation was viewed as a way to make the airline more financially responsible for its operations and profitability by releasing it from bureaucratic regulations set by the government. Consequently, Air Canada was able to make decisions quickly and respond to the industry’s changes faster. When Air Canada was still a Crown corporation, it was restricted by the rules of the Financial Administration Act of 1985, which required that the airline seek government approval before making any corporate or financial decisions.1 This was a lengthy procedure, which would have prevented Air Canada from quickly investing in new technology, routes, and other

In 1988, Air Canada sold its 45 percent shares for $8 each, earning $225.8 million. However, the next year, it sold the remaining stock, totalling 41.1 million shares, representing 57 percent of the ownership, for $12 per share. This rise in revenue was another advantage of deregulation which allowed airlines to operate more profitably daily and to spend more money on new technology and routes that would increase passenger traffic. For instance, Air Canada used electronic ticketing in the 1990s, which eliminated the need for paper tickets and made the process of booking and managing more efficient for both customers and the airline. By making such investments in innovative products and services that enhance the travelling experience for passengers, Air Canada was able to compete with emerging private airlines that also provided more affordable and effective air travel