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The Globe and Mail

Pension reprieve for just Air Canada would hurt competition: group

A Sky Regional Express Q400 turboprop aircraft is photographed on the tarmac at Billy Bishop Toronto City Airport on April 29 2011.

Fred Lum/Fred Lum/The Globe and Mail

Air Canada shouldn't be granted any additional reprieve by the federal government on financing its pension deficit unless Ottawa also gives similar relief to all Canadian carriers, the Air Transport Association of Canada, which represents small Canadian regional airlines and flight training groups, says.

In a letter dated Feb. 12, the association's president and chief executive officer John McKenna argues that this pension assistance would give Air Canada an unfair advantage.

"While we are happy that the government is finally considering helping the Canadian air transport industry, we are convinced that granting relief to only one carrier would seriously and adversely impact the balance and the competitiveness of our industry," Mr. McKenna says in the letter. On Tuesday, the Air Transport Association of Canada sent out a press release publicizing its statement.

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Air Canada is currently asking Ottawa for a reprieve for its huge pension deficit, which stood at $4.2-billion at the start of 2012. The carrier wants permission to cap its pension funding obligation at $150-million a year over 10 years, beginning in 2014. The general expectation in the industry is that Ottawa will grant some kind of reprieve from this debilitating pension obligation, as the government did in 2009.

"What we're saying basically is, please, whatever solution you can come up with, make it applicable to everyone," Mr. McKenna said. He noted that the association hasn't yet received a response to the Feb. 12 letter sent to Prime Minister Stephen Harper, Minister of Finance Jim Flaherty and Transport Minister Denis Lebel.

Air Canada didn't officially comment Tuesday, although it had been alerted to the letter and the association's position, the Air Transport Association said.

The carrier isn't a member of the Air Transport Association of Canada, which represents approximately 170 members across Canada. Air Canada, WestJet Airlines Ltd., Air Transat and Jazz Aviation LP are members of the National Airlines Council of Canada, a separate organization founded in 2008 to address issues more pertinent to larger carriers such as trans-border policy.

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