Singapore succeeded by being reliable, and well-educated, in a flaky world

Singapore, the Asian city-state of 5.5 million people crammed on to several islands of not much more land area than metropolitan Winnipeg, has a decidedly illiberal streak. Travelers entering the country at Changi Airport must turn their chewing gum, a prohibited good,  over to Customs officers, and submit any foreign newspapers, books or magazines, which are considered controlled goods, for inspection. Journalists, filmmakers and bloggers who irritate the government can easily find themselves being sued for libel, and the domestic servants who made up four percent of the Singaporean population in 2012 had to wait until 2013 to get the legal right to a one-day weekend despite their employers’ collective fury.

Yet amid this heavy-handedness, Singapore has made strides matched by few nations in the world to secure a higher quality of life for its citizens. When it obtained its independence in 1965 — unusually, by being expelled from Malaysia — it was an impoverished country with a GDP per capita of $500 U.S.

Nearly fifty years later, in 2013, Singapore’s GDP per capita was equivalent to $55,000 U.S. It is unequally distributed wealth, to be sure. But just a kilometre away, across the narrow strait that separates the two countries, Malaysia’s per capita GDP was just $10,000 U.S. that same year.

The gap between Singapore and Indonesia, just 10 kilometres away in the opposite direction, is even more extreme: at $3,475 U.S. per capita, Indonesia was as poor in 2013 as Singapore was at independence in inflation-adjusted terms.

Much of this will be credited to Lee Kuan Yew, the prime minister who ruled Singapore directly from 1959 to 1990, and then indirectly as “Senior Minister” and then “Minister Mentor” until 2011, who died at age 91 today.

What was so special about Lee’s rule that allowed a tiny island country that seemed to have everything going against it in 1965 to achieve a level of success that eluded its neighbours just a few kilometres away?

A 2013 op-ed by Prof. Calestous Juma of the Belfer Center for Science and International Affairs at Harvard University noted that Singapore’s success largely came down to focusing on the right priorities. Most important among these were the fact that Singapore offered a far more honest and reliable system of government than its neighbours, and a well-educated and largely bilingual English- and Mandarin Chinese-speaking workforce. As Juma wrote:

In fact, governance distinguished Singapore from its neighbors. As Lee Kuan Yew says: “They are not clean systems; we run clean systems. Their rule of law is wonky; we stick to it. We become reliable and credible to investors.”

His key message on the driving force behind Singapore’s success is simple: “The quality of a nation’s manpower resources is the single most important factor determining national competitiveness. It is the people’s innovativeness, entrepreneurship, team work, and their work ethic that gives them that sharp keen edge in competitiveness.”

He emphasizes the importance of knowledge in economic transformation but also rejects the classical separation between scholarship and entrepreneurship. “Those with good minds to be scholars should also be inventors, innovators, venture capitalists, and entrepreneurs; they must bring new products and services to the market to enrich the lives of people everywhere.”

This lesson from the evolution of Singapore’s educational system poses great challenges for most developing countries. They run outmoded educational systems that do not reflect the entrepreneurial demands of modern times.

Juma also notes that Singapore succeeded by having transportation and communications links to the rest of the world that not only worked reliably, but would not have been possible without the rule of law:

One of the critical areas that require tough decisions include large infrastructure investments that lay the foundations for economic growth. Singapore built “world-class infrastructure…good communications by air, by sea, by cable, by satellite, and now over the Internet.”  But such long-term investments demand not only having long-term economic vision, but consistence and predictability in the rule of law.

That offering reliability — reliable administration, reliable rule of law, reliable education, reliable communication, and reliable transportation, among other things — is the key to national success should be a surprise to no one. It is by the same formula that Denmark, Switzerland, New Zealand, Finland and Norway came to make the Top Five in this blog’s World’s 10 Best-Managed Countries list in December, 2014.

And they did so without Singaporean-style illiberalism: in fact, those top-five countries are about as small-l liberal as they come.

The Singaporean lesson offers ideas for consideration here in Manitoba, a province that perceives itself to be an economic under-performer.

Manitoba already benefits from some of the same attributes that allowed Singapore to grow: reliable communications links to the rest of the world and the rule of law most of all.

But Manitoba lags most in producing healthy, well-educated people —  the “single most important factor” in building a competitive economy, as noted above.

Manitoba regularly ranks lower than almost every other province in terms of educational outcomes. While 68 percent of the Canadian labour force aged 25 years and over had a college diploma, trades certification or university degree in 2014, Manitoba’s 60 percent was not only well below the national average, it was the worst of the 10 provinces.

The 11 percent of the age-25-plus labour force who never finished high school was the second highest rate in Canada, just below Prince Edward Island’s 12 percent and somewhat higher than the Canadian average of eight percent.

To be fair, improving Manitoba’s performance in this area is something that Manitoba governments have been working away at for the past 20 years or so, recognizing not just that poor educational outcomes condemn not just the living to a lower quality of life, but that a parent’s educational outcome is one of the best predictors of their children’s eventual outcome.

This has also been helped by Manitoba’s eager intake of immigrants, whose children “were much more likely to participate in postsecondary education than students with [Canadian]-born parents”, as Statistics Canada noted in 2013. This suggests that in addition to meeting current labour market needs, immigration could also change Manitoba’s core culture from one that until the ’50s largely disregarded higher education to one that eagerly embraces it.

While it won’t necessarily produce an economic miracle of Singaporean proportions, sticking diligently to improving educational attainment rates among those born here and bringing in as many newcomers with great ambitions for their children as we can accommodate would serve Manitoba well.

The wisdom of (smaller) crowds

Conventional wisdom has it that political disengagement and low voter turnout is a threat to democracy. But is it really? This past November, Anna Lo Prete and Federico Revelli of the University of Torino in Italy published a working paper testing the theory that lower voter turnout would lead to worse governance.

To do this, they compared voter data from 82 Italian municipalities, covering the decade 2001-2010, to data assessing how well each community was seen to be doing on a ‘city score’ based on “a large number of variables including green space availability, air quality in terms of pollutant emissions and its consequences on human health, drinking water quality, public transportation systems, energy consumption and waste recycling performance.”

The results, in fact, suggested that communities with lower voter turnout tended to be better governed. As they wrote on page 18:

[I]t is apparent that turnout and city performance are negatively correlated . . . [A]n increase in turnout of ten percentage points is accompanied by 3.6  percentage points worse performance in the earlier wave, and by a 4.2  percentage points worse performance in the later wave. This negative correlation holds also in regressions that include time dummies for the years when turnout was recorded in order to account for year-specific nationwide influences on local elections.

Later in the report, they discuss a comparison between voter turnout data and the professional qualifications of the mayors elected. Again, they found that “turnout has a negative impact on the probability that high professional status mayors are elected, thus confirming that where participation is low due to high costs of voting, it is more likely to elect a competent candidate.”

Thus, they conclude that “a switch from low to high voter turnout that would be favored by a decline in voting costs might not always be beneficial in terms of candidate selection.”

Unless there is some factor to suggest that it is more incompetence that leads to higher turnout, Lo Prete and Revelli’s study leaves us with an intriguing possibility: that far from threatening democracy, lower voter turnout thanks to those who find even a walk to the polling station to be too high a cost to pay might represent the opting out of those who have never taken the issues all that seriously.

These less-serious voters’ self-exclusion, in turn, could be shrinking the electorate down to a more engaged, more discerning and less easily manipulated crowd. In short, what is being bemoaned as a threat to democracy could actually represent a slow reawakening of the true democratic spirit: of informed voters making an informed choice.

25 minutes with Jim Adelson

As 1967 ended and 1968 began, television in Winnipeg was limited to what little viewers could receive over-the-air: the two local CBC and CTV stations, Radio-Canada’s French-language station, and a weak signal from a U.S. border station in North Dakota.

But in the summer of 1968, Winnipeggers’ television choices expanded dramatically. A group of businessmen erected TV antennas near the Minnesota border, and relayed three new U.S. TV signals back to Winnipeg via an intercity microwave link to provide content for Winnipeg’s two new cable TV systems: Videon in the western half of the city, Greater Winnipeg Cablevision in the east.

As viewers became familiar with the new offerings — NBC affiliate WDAZ, ABC affiliate KTHI and CBS affiliate KXJB, all from North Dakota — they also became familiar with the local personalities on those stations, who soon became as well-known in Winnipeg as they were south of the border.

One of those personalities was Jim Adelson, KXJB’s affable sports director and program host, who was a familiar face to a generation of Winnipeggers who watched the station’s channel 4 signal from the introduction of cable TV in 1968 until it was dropped from the lineup in 1986, when more reliable satellite signals from Detroit came available.

Last year, Adelson — now in his late eighties and long since retired to Arizona — visited Fargo and KXJB to reminisce on the station’s 60th anniversary. In a 25-minute interview that might bring back memories for Winnipeggers who remember the days when KXJB had a large audience in this city, Adelson shows that he remains a good story-teller.


Click on image to open video in a new tab. (Might take a moment to begin.)


On dealing with controversy:

“I did the live studio wrestling, and that was a kick. I mean, people would come in and sit around the ring and the wrestlers would put on a show.”

“My favourite was . . . I can’t think of his name now, but he was the bad guy and he wore a swastika . . . So we got some boos and I was in the ring with him, and a couple of months later, my boss gets a letter . . . ‘How can you let Jim Adelson, a Jewish boy, stand in the ring with that terrible Nazi-looking guy.’ So the boss calls me in, and, I don’t know, I’ll call him.”

“I called the office and got Vern’s buddy, his assistant, and he started laughing. I said, ‘What’s so funny about this? The boss is madder than hell, you know!’ He said, ‘Do you know what the guy’s name is really? Jerry Goldberg — he’s one of your boys!’ I said, ‘Huh?!’ So, I went and talked to the boss, and he said, ‘Oh, forget it . . .'”.

On the risks of live programming:

“I did a half-hour talk show at 5:30 . . . you could call and visit. And we had a blizzard. It lasted for about three days, and I was stuck out there, and that was the one communication people had. As a matter of fact, I was doing a show and a kid called and said, ‘Say, I’m at the Westward Ho in Grand Forks. I’m single, and I’m looking for a girlfriend to get through this blizzard with me. Have them call room such-and-such!’ Live on television. I said, ‘I’ll try.'”


New flag was hated by some — but life went on

Top: The Canadian Red Ensign, which was the unofficial Canadian flag until the current flag was adopted on Feb. 15, 1965. Middle: The design initially favoured by Prime Minister Lester Pearson, dubbed the "Pearson Pennant". Bottom: The Canadian flag recommended by a parliamentary committee tasked with finding a new, distinctive Canadian design, and later approved by Parliament as the official flag of Canada.

Top: The Canadian Red Ensign, which was the unofficial Canadian flag until the current flag was adopted on Feb. 15, 1965.
Middle: The design initially favoured by Prime Minister Lester Pearson, dubbed the “Pearson Pennant”.
Bottom: The Canadian flag recommended by a parliamentary committee tasked with finding a new, distinctive Canadian design, and later approved by Parliament as the official flag of Canada.

Almost fifty years after it flew over Parliament Hill in Ottawa for the first time on Feb. 15, 1965, the Canadian flag is one that the vast majority of us cannot imagine being replaced by any other design.

But the months leading up to its creation, from Prime Minister Lester Pearson’s announcement in Winnipeg in May 1964 that a new Canadian flag was on its way to the final parliamentary vote on the new design that December, were some of the most politically divisive months in Canadian history.

For nearly a full century after Confederation in 1867, Canada had no official flag of its own aside from the British Union Jack. The federal government improvised, however, by treating various versions of the British Red Ensign over the years (the final version of which is shown above) as the unofficial Canadian flag.

This was a comfortable arrangement for many Canadians, who even into the ’60s continued to view Canada as a culturally British country within North America, and particularly for many of those who had fought under the Red Ensign as the de facto Canadian flag during World War II. For others, however, the Red Ensign was seen as a colonial holdover that ought to be replaced with an unambiguously Canadian flag.

Prime Minister Pearson, a World War I veteran who came to office in 1963 vowing to pursue a new flag, was one of those Canadians who felt the time was right for such a change. Speaking at the Royal Canadian Legion’s national convention in Winnipeg on May 17, 1964, Pearson announced that he intended to push ahead to legislate “a flag designed around the maple leaf [that] will symbolize, will be a true reflection of, the new Canada.”

As Rick Archbold described in A Flag for Canada: The illustrated biography of the Maple Leaf, Pearson faced a hostile reception from his audience:

Pearson tried valiantly to stay with his text and on his message. “Would such a change mean disrespect for the Union Jack?” “Yes!” the crowd roared back, drowning the prime minister’s answer. He plowed forward, vowing not to abandon the Union Jack but arguing that it should become “a symbol of our membership in the Commonwealth of Nations and of our loyalty to the crown.”

The audience had now reached a pitch of rowdiness that made it difficult for the prime minister to be heard. “You’re selling us out to the pea-soupers,” someone shouted. Came another: “God save Diefenbaker.” And another: “Keep the Red Ensign.” And yet another: “Go home!”

It was a taste of what was to come in the following months. Though it might be difficult to believe today, both Pearson’s proposed design of three red maple leafs and two blue bars at the side (see above), and the red-and-white design adopted later in 1964 by a parliamentary committee, were greeted with a torrent of hateful comments.

“The new flag looks like a fancy dish rag,” one North End resident wrote to the Winnipeg Free Press. “I suggest that [the prime minister] have the Houses of Parliament moved from Ottawa to Montreal to complete the picture of ‘surrender’ as the flag indicates,” wrote a reader from Winnipeg’s West End.

The heated comments that appeared in newspapers around the country were, at least, fit enough to print by the standards of the time. Many other letters containing more crude comments flooded the prime minister’s office, as well as those of every Member of Parliament.

In 1986, John Ross Matheson, an Ontario Liberal MP who led the 1964 parliamentary committee charged with finding a new Canadian flag design from among the many serious and not-so-serious public submissions, included in his memoirs* a selection of letters the public sent to Parliament Hill, illustrating how controversial the idea of a new flag was.

From Victoria, B.C.: “Please discard the new flag and do it quickly. When the flag is in a drooping position it (especially in the large sizes) will look like a bed sheet with menstruation stains on it, and our Canadian flag will be laughed at all over the world.”

A June, 1964 letter: “Your ‘pushing’ of that three maple leaf abortion is, I feel, just another of your efforts to play up in any way you can to that narrow-minded, ignorant, impossible bunch of crazy Quebec extremists . . . The more those ignorant, priest-ridden Quebec extremists get, the more they want and will want.”

From a Presbyterian minister in Montreal: “. . . I earnestly deplore design of projected new flag as pagan and a flat rejection of Canada’s Christian heritage. The glory of the Union Jack is the union of three Christian Crosses. How unworthy, how unfeeling to replace so inspiring a symbol with one reminiscent of a hockey team or an Indian tribe.”

From Val Caron, Ont.: “I will never salute a flag forced upon me. I am not a worm but a teacher.”

From Orillia, Ont.: “You have turned us in on ourselves like an onion growing in a paper bag, puny and smelly. You have yielded our heritage to a rabid minority. The dreadful indictment I lay on you as a mother of Canada. You are a Judas and, like Judas, the sooner you retire the better.”

From Toronto: “Your new Canadian Flag is just a disgusting, disgraceful disguise. It is a disgrace to the country. As you, Pearson, are known as a communist sympathizer — so is your new flag — it stinks from communismus — Moskow [sic] is the place for you and your flag.”

Yet despite the rancour of the time, the flag quickly grew on Canadians, rendering the passionate feelings of 1964-65 little more than a faded memory. Whether they preferred a new design in 1964-65 or wanted to retain the Red Ensign, life just calmly went on for Canadians once the decision was made — as it so often does after the conclusion of a brutal political battle, no matter how loud the cries of impending doom by partisans on both sides.

Fifty years on, it is safe to say that the flag that some vowed never to salute turned out to be a flag that has served us well — and will continue to do so for many years to come.

* – John Ross Matheson, Canada’s Flag: A Search for a Country (Belleville, Ont.: Mika Publishing, 1986)

The other “hidden city” trick that could shave $100 or more off your airfare

Many people had never heard of until news broke in January that United Airlines and the Orbitz travel web site were suing Aktarer Zaman, SkipLagged’s 22-year-old founder, for damages. Zaman’s sin in the eyes of the industry: to create a search engine that takes advantage of the fact that airlines often price connecting flights cheaper than non-stop flights. As a feature in The Economist explained:

At the time of writing, Delta’s cheapest one-way fare from Atlanta to Cincinnati on February 6th is $252. However, to get from Atlanta to Dallas-Fort Worth with a connection through Cincinnati—on that same initial flight—costs just $197. This is because Delta is the only airline to fly direct from Atlanta to Cincinnati, which are both Delta hubs, and so it can charge what it likes. Two other airlines, meanwhile, operate flights between Atlanta and Dallas. This limits Delta’s pricing power. For anyone wishing to fly to Cincinnati, therefore, the best bet is to book the connecting flight and walk out of the airport in Cincinnati (the “hidden city”), simply failing to show up for the second half of the trip.

But, there are strings attached to using SkipLagged. All of your baggage must ride in the cabin with you, as any checked baggage will be tagged to your final destination. Return trips must be booked separately, as going AWOL anywhere en route will automatically cancel the rest of your reservation.

And if anything goes wrong, such as overbooking or a cancellation forcing the airline to rebook you, they will only help you get to the city you’ve paid to be flown to, not to the hub you were planning to duck out at. So, the hypothetical passenger above planning to sneak away at Delta’s Cincinnati hub could be in trouble if Delta automatically rebooks him on a nonstop flight to Dallas instead, or on a flight via the Minneapolis/St. Paul hub.

There is, however, another version of the “hidden city” trick that could work well if you do wish to check your baggage. This involves booking a legitimate round-trip between your home airport and your intended destination, plus an onward future flight from your home airport that you have no intention of taking.

Consider the following example of a hypothetical Winnipeg-London round trip, departing on the randomly chosen date of July 11 and returning on July 24. It’s not a particularly cheap itinerary as you can see, at a price of $1,714.83.


But check out what happens if you make a multi-city booking, taking the same flights from Winnipeg to London and back again, and adding an onward July 25 flight from Winnipeg to Calgary, a market in which Air Canada competes head-to-head with British Airways. Yes indeed, the total price actually drops to $1,603.08 — a saving of $111.75. Having collected your luggage 20 hours earlier in Winnipeg, just don’t show up for the July 25 Winnipeg to Calgary flight.


This technique might also be useful for booking one-way flights in foreign lands, as well as for Americans looking to escape the extortionate fares that both U.S. and foreign airlines charge for international flights. Nonstop flights from Chicago to London, for example, currently sell for $2,471 (Cdn.) round-trip on the same July 11-24 dates noted above. Tacking on a July 25 flight from Chicago to Calgary via Denver reduces the price to $2,167 Cdn., a handsome $304 saving.

Cheaper still: making two separate bookings, one for a Chicago-Toronto July 10-25 round-trip, and the other for a Toronto-London July 11-24 round-trip, for a total of $1,877 Cdn. Even with two nights in an airport hotel factored in, the savings could easily amount to $400 per individual, or more than $900 for a couple sharing a room.

But before you do book such an itinerary, check out these cautionary words from the same Economist article quoted above:

. . . [S]ince most airlines’ conditions of carriage expressly forbid the practice, people who do it often enough to attract the company’s attention can have their frequent-flier accounts suspended, miles voided and any elite status revoked.

To search for hidden city itineraries for yourself, see Google Flights.

Too many beds, too few bums?

The former Carlton Inn, with the Winnipeg Convention Centre visible in the background. (Source: Google Maps)

The former Carlton Inn, with the Winnipeg Convention Centre visible in the background. (Source: Google Maps)

When CentreVenture Development Corp. bought out the Carlton Inn in downtown Winnipeg in 2013, it was expected that the lacklustre property would be demolished and replaced by a “signature hotel” of up to 300 rooms around the end of 2016.

As 2015 gets under way, there is little more than a vacant lot where the Carlton Inn once stood, adjacent to the RBC Convention Centre Winnipeg, which is in the midst of a major expansion — and no specific plans for what should be built on that lot.

As the Winnipeg Free Press noted Saturday, construction of such a hotel would be expected to take two and a half years, meaning that the original target of a late-2016 opening will be overshot by at least a year.

Yet, as political pressure increases to “get the job done”, care must also be taken to step back and consider what the effect of adding, say, a 300-room hotel to the Winnipeg market might mean to the overall health of the local hospitality industry.

In a 2014-15 industry outlook released last September by PKF Consulting Canada, which specializes in analysis of the hospitality and tourism industries, it was noted that the Winnipeg market is expected to have the lowest average per-night guestroom revenues in 2015 among the 13 major Canadian markets examined: $76 per room-night, 20 percent lower than the Western Canada forecast of $95 per room-night.

This calculation, known in the hotel industry as revenue per available room, or RevPAR, is based on dividing the total revenues extracted from the renting out of a hotel’s rooms on a given (or average) night by the number of rooms available for rental, regardless of whether or not those rooms were occupied. It is a basic measurement of a property’s health and productivity, but it does not include revenues from out-of-room services such as restaurants.

With occupancy rates expected to average out to about 60 percent, Winnipeg is also expected to have the lowest percentage of occupied rooms over the course of 2015 among the 13 markets examined in the report.

This news sends a signal to hoteliers that, compared to other large Canadian cities, Winnipeg is not hungering for new hotel capacity.

Indeed, the expansion of the Convention Centre could be seen as justification for the hotel industry to sit on its hands instead of adding additional rooms, hoping that more visitors will push occupancy rates up five or ten percentage points, bringing fatter profits for all and putting smaller players like The Marlborough in a better position to invest in upgrades. Then, if Winnipeg’s average occupancy rates start to hit 70 percent or revenues exceed $100 per room-night, then the industry could start questioning whether there’s a shortage of rooms at peak times.

Alternately, we could go ahead and build a large hotel next to the Convention Centre, adding perhaps 100,000 annual room-nights to the Winnipeg hotel market. The construction would be good for some: for the Convention Centre certainly, as well as for the tradespeople needed to undertake such a grand project. But if new visitors don’t come to Winnipeg with the same alacrity, there is a risk that adding so many hotel rooms could cause occupancy rates and average revenues per room-night to fall even further. That could leave Winnipeg’s hotel market looking downright sickly.

Globalized world stuck with parochial airline rules

Imagine you’re one of a still small, but growing, number of global road warriors. You’re based out of Vancouver, but have business to do in London and Tokyo, and wish to make things as simple as possible by doing it all in three hops, taking nonstop flights.

On the surface, this should be easy enough to arrange. London is British Airways’ global hub, and Tokyo serves the same purpose for Japan Airlines. Both belong to the Oneworld airline alliance, one of three that purpote to offer seamless worldwide connections, and both fly from their respective hubs to Vancouver, so booking a Vancouver-London-Tokyo-Vancouver trip should be a piece of cake, right?

Not necessarily. Oneworld, like the other two alliances, offers suggested itineraries and even a few package deals; but you cannot book directly through the Oneworld site; you must deal directly with a member airline.

An amusingly bad Tokyo-Vancouver routing suggested by the Oneworld web site: Fly from Tokyo's Haneda Airport to Osaka,  then fly back to Tokyo, landing at the less-central Narita airport this time, then fly to Vancouver. (Click to enlarge.)

An amusingly bad Tokyo-Vancouver routing suggested by the Oneworld web site: Fly from Tokyo’s Haneda Airport to Osaka, then fly back to Tokyo, landing at the less-central Narita airport this time, then fly to Vancouver. (Click to enlarge.)

Fair enough. So you try booking online with British Airways, but come to a dead end because their web site won’t let you book a nonstop Tokyo-Vancouver flight on Japan Airlines, despite being alliance partners. BA’s web site demands that the Tokyo-Vancouver leg be via London Heathrow, a journey of more than 24 hours.

Then you try making the booking with Japan Airlines, but get no further because their web site requires that your first leg be from Canada to Japan.

Frustrated, you check out your options on Google Flights, and find out that, ironically, the only way to reserve all three flights on a single booking is to book through the American Airlines web site — rather counterintuitive, given that your itinerary neither involves ever stepping aboard an American Airlines flight, nor setting foot in the United States.

Even once booked, your hassles aren’t necessarily over. Prefer an aisle seat for those long flights? Even within an alliance, airlines might have drastically different seat-selection policies, and almost all require that seats be arranged through their own web sites or call centres. Hate waiting in line to check in? Sorry, but many of those computerized airport kiosks still tell you to go find an agent to personally get you checked in, as the software can’t handle bookings made through other carriers’ reservation systems.

The airlines know this is a clunky and exasperating way of doing business, and some within the European Union have merged while retaining nominal national brands. British Airways and Spain’s Iberia, for example, might look like two different airlines; but both are really divisions of the London-based International Airlines Group (IAG). The same applies to Paris-based Air France-KLM, which owns the French and Dutch airlines which go by those names.

But among the airlines that have their hubs in other global business capitals, not only has little consolidation taken place — it’s not even allowed to happen.

Although the International Civil Aviation Organization (ICAO) has acknowledged that laws restricting foreign ownership of domestic airlines are of questionable relevance today, Canada remains one of many countries whose laws are based on the assumption that foreign ownership of an airline, no matter how sterling the foreigners’ reputation, is somehow a bad thing. As the Canadian Transportation Agency notes on its web site:

The CTA requires that air carriers operating or proposing to operate a domestic air service be Canadian unless they obtain an exemption from the Minister of Transportation, Infrastructure and Communities . . . With respect to a corporation, partnership, proprietorship or other legal form of business enterprise: It must be incorporated or formed under the laws of Canada or a province; At least 75% of its voting interests must be owned and controlled by Canadians; and it must be controlled in fact by Canadians.

But Peter Davies, a former Air Malta CEO notorious for referring to his own troubled airline as “crap”, is pitching a solution. In an interview published Jan. 8 on, a travel industry news site, he suggests that smaller airlines in different countries keep their national identities on the surface, but merge their back-office operations:

[Davies] proposes a “hotel management style, where airlines have maintained their brand but the whole back office is managed by the management company.” The hotel management company would be invisible to passengers. The airline’s customers would experience the local airline brand, not a chain identity. But the national carriers would benefit from the same cost advantages of their larger competitors.

“Your back office costs, your revenue counting, maintenance, aircraft purchasing, insurance—all these expensive ticket items would be transferred [to the management company] which yields economies of scale,” Davies says. “That company takes on a percentage of the fixed-costs basis of these smaller flagship airlines, which would make a significant difference in terms of profitability. The key is to make sure you maintain the brand. I do believe fervently in the brand, particularly for a destination airline.”

Though Davies promotes his idea as a means by which to save small national brands — the same week as one such carrier, Cyprus Airways, bit the dust — it raises another possibility: adapting this model to finally allow the Star, Oneworld and Skyteam alliances to become to global air transport what Crowne Plaza, Holiday Inn and Sheraton have become to lodging; namely, a global network of regionally owned franchises.

Under such a model, it would be possible for airlines to respect the foreign ownership laws of their respective countries. Unlike in the hotel industry, it would even be possible to keep the planes painted in national colours and the flight attendants in the same uniforms that they wear today.

But the pricing and marketing functions, the policies on such things as baggage allowance and seat selection, the fee structure, the product offerings and innovations, and the reservation systems would all become merged and run out of Star’s Frankfurt headquarters, Oneworld’s New York City headquarters and Skyteam’s Amsterdam headquarters.

Thus, if you were to fly Oneworld’s British Airways from Vancouver to London, and then on to Tokyo, and then fellow alliance member Japan Airlines from Tokyo to Vancouver, it would be the truly seamless experience that the airlines had in mind when they began forming alliances in the ’90s.

It’s a move that would make sense in a world that’s more internationally mobile than ever, though some carriers with excellent reputations in their own right, such as Star Alliance member Singapore Airlines, might rightly resist any tarnishing of their brand.

Yet the airline industry is also closely tied to nationalist sentiments, and can end up taking a bashing by politicians for not being reverential enough to these sentiments, as British Airways painfully learned when it tried removing the Union Jack from the tails of its aircraft years ago. That alone might be enough to slow any progress down.


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