No such thing as the General Public

Some years ago, I worked on a project that involved making appointments with and interviewing corporate staff at zoos and aquariums around North America. Out of all the interesting conversations I had, the single most memorable line was, if memory serves me correctly, from an aquarium executive.

“There is no such thing as the general public,” he told me, only individuals looking out for opportunities that appeal to their own interests. The goal of marketing was to get the attention of that small slice of the wider population, and get them in the door.

That seems to be the logic behind Manitoba: Canada’s Heart Beats, a new promotional campaign unveiled last week by Travel Manitoba to social media reactions that ranged from lavish praise to harsh criticism.

As noted in a pre-release presentation, the campaign is intended to reach two segments of the traveling public who have the highest probability of visiting Manitoba for a leisure trip. One group, known as “Cultural Explorers“, are interested in hands-on involvement in a culture — think here of people who prefer to stay in small, intimate homestay or bed-and-breakfast accommodations. The other, known as “Authentic Experiencers“, tend to favour camping, hiking, getting close to wildlife and other outdoors activities.

Both groups, which each consist of about one-in-ten travelers in both Canada and the U.S. according to the Canadian Tourism Commission, tend to travel further from home and more often, and to spend more per visit.

And the other four-fifths of the market? This consists of seven other groups, each of which also makes up little more than a fraction of the marketplace.

  • Cultural history buffs: These travelers don’t just travel for fun — they travel to learn, or to pursue a hobby. They might come here if they have a hobby or interest that has a Manitoba angle; otherwise not.
  • Free spirits: No shady hostels for these folks. They like to be comfortable when they travel — which is as often as possible — and to visit exciting or exotic places. (This is the group I’m most closely aligned with, according to the Canadian Tourism Commission’s online quiz). As they tend to be drawn to top-billed destinations, it’s a challenge to draw them to less prominent markets.
  • Gentle explorers: This is a more conservative group in the sense of preferring the tried-and-tested over the brand-new. They’re often looking for package tours and a sense of structure. If Manitoba is already familiar to them, then all the better; but they are more comfortable with their favourite past destinations than with new and unfamiliar ones.
  • No-hassle travelers: Like the Gentle Explorers, this group also tends to favour the familiar. They tend to take shorter trips closer to home, and like to spend time with family and friends. Look for these within a few hours’ driving distance.
  • Personal history explorers: The name pretty much says it all. These are the sorts of people who go searching for their roots when they travel, whether it be learning more about their ancestors or visiting their great-grandparents homeland. Since Manitoba is a “young” province in the sense that many are the children, grandchildren or great-granchildren of immigrants, relatively few will have deep enough ancestral roots here.
  • Rejuvenators: These travelers hit the road to rest up and recharge their batteries, so to speak. They tend to enjoy resorts and casinos, and frequently travel with their families. Las Vegas, Hawai’i and other sun destinations will be a stronger draw than anything domestically.
  • Virtual travelers: This group is more the “staycation” type, preferring to stay close to home and more likely to attend family events. More or less a captive market.

See also:

Observations, Reservations, Conversations: Manitoba: Canada’s Heart…Beats

A very clever Turkish Airlines ad, in which Argentine-European footballer Lionel Messi and U.S. basketball star Kobe Bryant — evidently both a couple of Free Spirits — try to outdo one another.

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New airline betting that hope will triumph over experience

“Starting an airline is like getting married for the second time,” goes an old joke. “The triumph of ‘hope’ over ‘experience’.”

Despite there being more than just a grain of truth behind that joke, there continues to be every so often a new attempt to launch an airline with the hope of making millions of dollars in profits.

The names of the startups have come and gone at Winnipeg Airport over the years. Canjet, Vistajet, Jetsgo and Greyhound Air each tried their hand at offering Winnipeggers a low-fare domestic alternative to Air Canada and the now-defunct Canadian Airlines. Zoom and Iceland Express did the same on international routes. Royal and Canada 3000 tried a mix of domestic and international services.

Of all the post-deregulation startups to fly into Winnipeg, only one still serves the city: WestJet, which launched out of Calgary in 1996 with three second-hand Boeing 737s, and is now the country’s second-largest airline.

The industry’s high infant mortality rate is not deterring Jetlines, a Vancouver-based corporation that hopes to begin flying around western Canada in 2014 as a self-styled “ultra low cost carrier”.

In a Nov. 14 business briefing, Jetlines outlined its plan to offer lower fares than either Air Canada or WestJet on routes from its Vancouver base, including a $143 one-way fare to Winnipeg. The airline would charge not just for food, baggage and seat selection as its competitors do, but even charge customers to call its reservations centre, to pre-board the aircraft, to get their bags put on to the baggage belt first, and even to pay.

Yes, that’s right: you would have to pay to pay. At least as long as you’re using a credit card, on which the airline will levy an extra service charge. Use a debit card instead, which transfers the cash directly from your bank account to the airline’s, and you can avoid the extra cost.

How much they would charge is not yet known, but Ryanair, a European low-cost carrier which Jetlines plans to emulate, charges $29 Cdn. to book through a reservation centre and $10 for priority boarding, and collects a two percent handling fee on the total amount charged to a customer’s credit card.

But while Jetlines follows a model used to some degree of success by other low-cost carriers such as Europe’s Ryanair and EasyJet and the U.S.A.’s Allegiant and Spirit Airlines, there appears to be a flaw in their early plans.

Ryanair and EasyJet succeeded in Europe in no small part due to their ability to sell the dream of travel: of London’s work-hard-party-hard City types being able to spend the weekend living it up in Latvia or to escape to second homes in France or Spain with the same ease that Winnipeggers flock to cottage country. Or of Germans and Scandinavians being able to fly to Poland for the cheap cosmetic surgery they can’t get back home.

It doesn’t hurt that European Union member-states have abolished limits on the value of goods that citizens can bring home from each others’ countries.

Jetlines, on the other hand, plans to start with a list of destinations that doesn’t exactly get the wanderlust going, as the Financial Post reported:

Jetlines would be based in Vancouver and aim to fly to underserved markets or those without any service. Potential destinations include Prince George, Winnipeg, Kamloops, Prince Rupert, Regina, and Edmonton.

Eventually, it aims to add international destinations like Orlando, Cancun, Las Vegas and Cabos San Lucas.

Why the airline does not start with the latter set of destinations is a bit of a mystery. Spirit Airlines has succeeded in the U.S. by focusing on taking northerners away to warm southern destinations. Allegiant specializes almost entirely on north-south travel.

Jetlines, on the other hand, is betting its early survival on being able to stimulate demand for flights to and from a set of cities of which only one — Vancouver — is among North America’s top 40 tourist destinations.

Stimulating demand for domestic travel within Canada by offering low fares will be difficult for other reasons as well. Unlike many European cities, which are densely populated, explorer-friendly and (particularly in the larger centres) blessed with an active nightlife, many North American cities away from the coasts are dreary replicas of one another. All but a few offer little more than a past-its-prime central business district that is deserted more than half the week, and little or nothing that is interesting to explore on foot aside from a somewhat revitalized old warehouse district.

Even cities like Atlanta and Dallas — cities with a population and head office base to (theoretically) support a cultural and nightlife scene that would make them tourist magnets on other continents — are barely thought of as tourist destinations at all outside of the smaller cities in their economic orbits.

Thus, Jetlines is taking a grand risk by focusing first on going head-to-head with Air Canada and WestJet to cities that have little price-sensitive, mass-market tourist appeal. Instead, it could be carving out a niche of its own selling the dream of cheap city-breaks in North America’s more attractive coastal cities (aside from its Vancouver home base), or even selling more imaginative packages, such as the ability to explore Havana — a city that should be a far stronger tourist draw and far more accessible than it currently is — before it emerges from its 1950s time warp.

Wish the new airline luck. Just by virtue of being in that industry, they will need it.

Era of cheap fares over? Yes, and no.

(Click for source)

(Click for source)

“The era of cheap airfares is on the wane,” Slate’s business and economics correspondent Matthew Yglesias wrote this past week in an article on airline mergers in the U.S. “Regulatory changes in the late 1970s and early 1980s opened the industry up to competition that was a boon to passengers but a disaster for the established airlines. In the aggregate, passenger aviation in the United States has racked up about $30 billion in losses over the years . . .”

Undoubtedly, the cost of air travel in the U.S. needs to rise if that country is to have an effective and competitive air transportation system. American Airlines, whose merger with US Airways was blocked by the U.S. Department of Justice this week, muddles along with some of the same Boeing 767s and MD-80s that it took delivery of during the Reagan administration; competitor Delta still operates DC-9s dating back to the Ford and Carter presidencies.

America’s major airports, many of which are still owned by cash-strapped local governments and thus unable to seek other sources of funding for much-needed modernizations without having to meet a long list of political considerations, are no better off. International-to-domestic and international-to-international connections for which one can confidently budget 90 minutes at Amsterdam or Singapore are reported to be taking up to four hours at major U.S. hubs. The economic cost of delays, cancellations and missed connections at these hubs: an estimated $15.3 billion.

But does this mean that affordable mass air travel is necessarily over? No.

True, the consolidation of the North American airline industry into just a handful of large players means that $99 deals will be even more difficult to find. But consider this: you can fly to the opposite end of the world and back for the price of a sofa. To previous generations, that would have been unimaginable.

That freedom to travel further for less might be about to get a boost thanks to technological advances.

If you’ve ever flown Air Canada’s Winnipeg-Toronto route, there’s a good chance you will have ended up on an Airbus A320 at some point. Despite the controversy that dogged the Mulroney government when the then-government owned Air Canada purchased 34 of the jets in 1988, it was a smart purchase: compared to the Boeing 727s that it replaced, the Airbus A320 burned only half as much fuel per mile.

After a quarter-century in service, Airbus has found a way to make the Airbus A320 even more fuel efficient. The newest generation of the aircraft, to be called the A320neo, is expected to have a range of about 4,200 miles (3,700 nautical miles, or 6,800 kilometres) when it enters service about two years from now.

Rival Boeing is also developing a Boeing 737 Max which will have the same range, and which will be similar in size to WestJet’s current Boeing 737s when it debuts in about 2017.

Either aircraft would, theoretically, be able to fly non-stop from Winnipeg to Honolulu or Paris.

One early customer is Norwegian Air Shuttle, which has ordered 100 Boeing 737 Maxes. You probably haven’t heard of Norwegian, but that could change: the company that started out flying regional routes in Scandinavia 20 years ago has ambitious plans.

The Oslo-based airline already offers enticingly low long-haul fares: some New York-Oslo round trips in October sell for as little as $604 U.S. after taxes and surcharges; a January New York-Bangkok round trip via Stockholm outbound and Oslo on the return sells for a reasonable $1,413. (Luggage fees and meals are extra.)

United Airlines, by comparison, charges $300 more to fly the same New York-Oslo route and back on the same dates, and charges about the same price as Norwegian on the Bangkok trip, but for a considerably longer outbound trip with stops en route in San Francisco and Tokyo.

When Norwegian’s new, smaller Boeing 737 Maxes enter service, they will be able to fly nonstop from the Oslo hub to any major city in Canada except for Vancouver and Victoria, and any U.S. city north and east of a line extending roughly from western Montana to the Carolinas.

After stopping and refueling, the same aircraft will be able to continue on to anywhere in Europe, the northern half of Africa, to the Middle East or to the northern half of India — all destinations that will be of interest to Winnipeg’s growing migrant community.

While it’s improbable that Norwegian will start direct service to Winnipeg — larger and more touristy markets will be first in line for service — the airline has been willing to enter codeshare agreements with other carriers, offering the possibility that Winnipeggers will be able to fly Air Canada or WestJet to Calgary, Toronto or Montreal and then transfer to a Norwegian flight at a relatively low add-on fare.

(For example, the difference in price between a direct Toronto-Warsaw round-trip flight on Poland’s LOT airline in October, and the same flight from Winnipeg, with the Winnipeg-Toronto/Toronto-Winnipeg legs operated by Air Canada, is the $283 that Air Canada apparently collects for acting as a taxi service — far below the normal Winnipeg-Toronto round trip price.)

The advent of smaller aircraft with the kind of range once reserved for jumbo jets could also bring new competitors to Canada.

For example, Portugal should be an attractive destination for Canadians due to its pleasant climate, scenery and coastal setting. But getting to Portugal is the problem: virtually all single-ticket itineraries between Winnipeg and Lisbon involve either early morning flights, tight connections, long connections, bad airlines or bad airports; sometimes even a mix of three or more of the above.

But what if Air Canada or its Star Alliance partner, TAP Air Portugal, which doesn’t fly to Canada, started a Toronto-Lisbon service requiring only one connection from Winnipeg using smaller jets?

Say goodbye to connecting through the United States or to having to make connections in out-of-the-way places like London, Amsterdam, Frankfurt or Paris.

Similar services could conceivably be launched to other popular destinations that currently only have seasonal or charter service, if any service at all, from Canada: Prague, Dublin, Berlin, Copenhagen, the south of France, even Croatia (which might be just within reach from Montreal).

Holiday operators, such as Sunwing or Air Transat, could also offer a wider range of destinations from Winnipeg if they ever purchase either aircraft.

Some will dislike the increasing use of narrow-body jets for trips of more than six hours in length; but will accept them as long as the price and the schedule are right. The growth in competition that new airlines flying to Canada could bring, using a long-haul aircraft that can make a profit with relatively small passenger loads, will give travelers access to both better schedules and reasonable prices. Don’t declare the era of affordable travel for the masses dead just yet.

Selling Winnipeg as a tourist destination a good lesson in economics

Images of Winnipeg (source: Wikipedia)

Images of Winnipeg (source: Wikipedia)

Oh, you’re thinking about taking a trip to the States this summer? Could I interest you in a nice holiday in Indianapolis? Baltimore? How about Houston?

Why not Houston? Frommer’s lists 21 noteworthy attractions awaiting those courageous enough to brave the Texas city’s notorious heat and humidity, including 10 “star” attractions.

Houston is, after all, a big city. More than two million people live in Houston proper, and six million live within commuting distance. Its local attractions include museums, a zoo, the famous Space Centre and — wait for this, Winnipeg! — the SplashTown water park. The fine folks at the Houston Convention and Visitors Bureau even offer a handy trip-planning guide, intended to ensure that the whole family has a great time.

Nice hotels will set you back more than $120 U.S. per night for a July visit, but if you’re willing to settle for a Super 8 just off the Interstate, it will cost you just $40 to $65 U.S. per night. That will offset the relatively high cost of airfare — ranging from $668 Cdn. after taxes and fees on Air Canada to $725 on Delta.

Still not interested? No problem. There are plenty of other choices out there.

That might very well be an understatement. Today’s vacationer has more choices than ever before, a point made on this blog last November, noting that a trip to Europe for a couple traveling together is now only just barely more expensive on an airfare-plus-hotel basis than a trip to the United States; and that Europe now routinely offers better value for the solo Canadian traveler than the much-closer U.S. does.

The fierce competition for the tourist dollar hasn’t caused local tourism authorities to give up, however. Virtually every city around with a metro area population of 100,000 or more — and many with less than that — have at least a web site dedicated to giving people good reason to visit. Larger centres, no matter how far down Virtual Tourist’s rankings of top North American destinations (Houston ranks 21st, Winnipeg ranks 79th), offer comprehensive trip planning services.

Indeed tourism was the topic of the week at a Mar. 27 Winnipeg Chamber of Commerce breakfast session, during which Tourism Winnipeg noted that visitors contribute more than $500 million annually to the local economy — more than the cost of police, fire and community services combined.

The tourist dollar is a nice thing to get ahold of. Tourists spend abundantly on meals, hotels, taxis and various other goods and services, and generally impose minimal costs on the hosts as long as the city isn’t overwhelmed by them.

But attracting tourists isn’t as simple as giving out trip planning guides. Tourism is an excellent example of the laws of economics as they apply to real life, and tourism marketing always must be done with economic principles in mind if it is to make any sense.

Cost: One important factor that vacationers take into consideration is the cost of getting to a destination and staying there, as this will easily be the bulk of their travel budget. The cost of staying in Winnipeg is comparable to other Canadian cities and slightly-to-significantly higher than similarly sized cities in the U.S. and even cheaper European countries such as Germany and Italy; while airfare ranges from $300 to $700 per person from most of North America.

Thus, the easiest markets to go after will be those who face the lowest costs getting to Winnipeg — such as those within easy driving distance, passing through on the train or the Trans-Canada Highway, or attending conventions and business meetings. Don’t count on flying people in from Toronto, New York, L.A. or Paris, who will find a visit to Winnipeg very expensive compared to other options. This leads us to our next factor.

Availability of adequate substitutes: Some places in the world are just so unique that they can command a premium by virtue of the fact that you can’t get the same thing anywhere else in the world. You can’t find the overwhelming grandeur of Paris anywhere but in Paris; there are a lot of cities in America, and a few that try to imitate Las Vegas, but if you’re looking for a sinful, over-the-top party town, there is only one Las Vegas.

By comparison, there are hundreds of cities where you can go to get something very similar to the Winnipeg experience. The Torontonian can always go to Hamilton or Buffalo, and the New Yorker can always go to Pittsburgh or Baltimore. So it makes sense to market Winnipeg in markets where you can’t easily swap Winnipeg for something else. For example, if you live in Brandon or Kenora, where else could you go to get a bit of a taste of bigger-city life for just the weekend? After Winnipeg, the next closest city with a population of half a million or more is Minneapolis, a seven-to-nine hour drive away. Those regional markets might be small, but their proximity makes Winnipeg more competitive as a tourist destination.

That being said, here’s where Winnipeg might make sense as a destination for a long-haul tourist. While Winnipeg itself might not be unique as an urban destination, it is the logical jumping-off point for adventurers in search of wilderness adventures in the north. Most of the world does not have easy access (if any) to big-game hunting, fishing, beluga whale and polar bear watching and the northern lights. For travelers from heavily urbanized Europe and Asia, these things have the potential to make for the cool sort of holiday they can show off to their friends and family at home. While on their way to and from the north, offering them things to do while killing a day at either end in Winnipeg makes sense.

Opportunity-cost and the allocation of scarce goods: Aside from the well-off-and-retired and the independently wealthy, tourism is an exercise in finding the best use of scarce resources. Many North Americans have only two or three weeks of holiday time at their disposal every year and, if they’re lucky, a budget of a few thousand dollars at most. Understandably, they will want the most bang for their buck: they don’t want to feel that their scarce vacation days have been wasted, and they want to have the most enjoyable experience they possibly can.

Thus, it’s vital to understand that much of that time and money will be allocated to winter holidays in the southern U.S. and the Caribbean, or to one of the Top 10 North American or international destinations. But there will always be those on more limited budgets that will be looking for a destination they don’t have to fly to or who will want to visit friends and family. For these people, a trip to Winnipeg might prove to be a good use of both money and time, while a trip to somewhere else might leave them with less money to spend on necessities or be a lost opportunity to see people who are special to them. Thus, these markets — the regional, low-budget and the “visiting friends and relatives” markets — are worth going after.

While Winnipeg will always be a small player in the hyper-competitive world of international tourism, it doesn’t necessarily mean that we should throw in the towel on tourism promotion. Tourism, even on a small scale, has spin-offs from the extra spending that people tend to do when they travel.

It is important, though, for tourism promotion to  be done with the “What’s In It For Me?” rule in mind if it is to be a good use of money. For most of the world’s tourists, Winnipeg is one of many hundreds of medium-sized cities that can’t really answer that question — and there’s nothing wrong with that. Even the world’s most prestigious destinations can’t provide a satisfactory answer to that question for everyone. Where there’s a group of potential visitors that Winnipeg can satisfactorily answer that question for, however, those visitors are worth going after.

Airline Deregulation at 35: Is foreign ownership the next step?

Attention, '70s passengers: Put your hands up if you want lower fares. (From BraniffPages.com; click for source)

Attention, ’70s passengers: Put your hands up if you want lower fares. (From BraniffPages.com; click for source)

Last Wednesday, Feb. 6, quietly marked a couple of notable anniversaries for Canada. One was the 61st anniversary of Queen Elizabeth II’s reign, which began upon the death of her father, King George VI, on Feb. 6, 1952.

The other was Stephen Harper’s seventh anniversary as Prime Minister of Canada, which officially began with his swearing in on Feb. 6, 2006. Although he is the country’s 22nd prime minister, he is only the ninth to make it to that milestone.

Yet Feb. 6 also marked the 35th anniversary of an event that didn’t actually take place in Canada, but nevertheless had a profound effect on how Canadians live today: the introduction of airline deregulation in the United States.

On Feb. 6, 1978, Nevada Sen. Howard Cannon introduced the Air Transportation Regulatory Reform Act in the Senate. The bill’s intention was to do away with a regulatory system that required airlines to apply for permission to add or delete destinations on their route maps or to offer seat sales below the prescribed price for a given route.

The regulations on airlines in the ’50s, ’60s and ’70s were so restrictive that the Civil Aeronautics Board, which then regulated America’s skies, was forced to intervene in a series of disputes over the minutiae of the airline business, such as the 1970 Elbow Room War (a.k.a. the “Inch War”), the 1971 Lounge War and the 1974 Booze War.

The regulations were no less absurd elsewhere. In Britain, affinity groups were allowed to charter their own aircraft and offer their members fares well below those charged by scheduled airlines. Regulators, however, became suspicious of how easily the so-called “Left Hand Club” had managed to fill a U.S.-bound Laker Airways jet exclusively with left-handed passengers. When officials arrived at the airport for a spot check, they found that 46 passengers were not left-handed, and slapped the airline with penalties.

Cannon’s goal of eliminating regulatory absurdities was not universally appreciated, however, as Thomas Petzinger, Jr. described in the book, Hard Landing:

As [American Airlines president Al] Casey spoke, Phil Bakes, sitting with the Cannon staffers at the front of the hearing chamber, noticed a member of the American delegation, a mean-looking fellow with pointed teeth and slicked-back hair who was turning the pages of Casey’s flip chart. At a distance the man struck Bakes as the kind of hoodlum he had always been instructed to stay away from growing up on the South Side of Chicago. A bodyguard, perhaps, Bakes thought.

When the day’s testimony was concluded and the hearing room began to clear, Bakes noticed the mean-looking guy stalking toward him with a scowl, as if he was getting ready to throw a punch. The man stopped in front of him, scowling.

“You fucking academic eggheads! You’re going to wreck this industry!” The man turned and left.

Who was that? Bakes asked.

It was Bob Crandall, someone said, the head of marketing at American.

Two years later, American promoted the sharp-tongued Crandall to president.

Despite Crandall’s hostility, the deregulation bill eventually wound its way through the American legislative process, and was signed into law by President Jimmy Carter in October, 1978.

With deregulation came a slew of cheap fares. A seat on a flight, the analogy goes, is a perishable product. Once the cabin door closes, every empty seat is a waste, a missed opportunity to make a sale. Under regulation, the airlines had been prohibited from disposing of their empty seats by selling them off for whatever they could get for them. With price controls gone, however, fares dropped and the skies opened up to a wide range of people who previously found flying unaffordable.

Canadians could only look on with envy. Canada’s airline industry was stable, but highly regulated and expensive. Air travel was for the business traveler, those who had saved diligently for a special holiday, or for family emergencies. If price was an issue, you either drove or endured a very long train or bus trip.

But by the ’80s, Canadian politicians were under phenomenal pressure to deregulate the industry by a public that desperately craved the new-found freedom to travel affordably that Americans had been granted.

Finally in 1984, in the twilight weeks of the Trudeau government and with an election just months away, federal Liberal transport minister Lloyd Axworthy announced the first stage in the deregulation of the Canadian airline industry. It wasn’t enough to get his government re-elected that September, but the incoming Progressive Conservative government was keen on deregulation as well, and passed the necessary legislation in 1987.

Years of chaos followed deregulation on both sides of the border, as start-ups came and went (sometimes shutting down within weeks or months) and traditional full-service carriers like Canadian Airlines, Pan Am and TWA struggled with unsustainably high costs and crushing debt loads for years before finally losing the fight.

Some came to believe that Crandall had been right about deregulation ruining the industry; even though Crandall had done quite well under deregulation by succeeding Al Casey as American’s president in 1980 and then growing the airline amid the chaos by being ferociously frugal and by buying valuable assets off cash-strapped competitors at bargain prices.

To be sure, the deregulation era was a disaster for those who entered the industry expecting that it would be not just a job, but a career until retirement. Over the past 30 years, they have repeatedly been through pay cuts, layoffs and job concessions. The years were unkind to shareholders, too, who saw their investments lose their value or even be wiped out entirely.

For travelers, it has been a mixed blessing. Planes and airports are more crowded than ever, and many are irked by the new “all the extras cost extra” pricing model adopted by formerly all-inclusive carriers. Yet deregulation has also opened new options for people to travel further from home than ever: between 2000 and 2009, the amount spent by non-American foreign visitors to Canada rose 29 percent, while the amount spent by Canadians visiting foreign countries other than the U.S. skyrocketed 72 percent; both figures being well above the 18.72 percent inflation over the course of the decade.

From a safety point of view, though, things have turned out well. ICAO/Boeing statistics show a total of 6,158 onboard fatalities in accidents involving U.S. or Canadian commercial jetliners between 1959 and 2010. Only 265 of those fatalities — or a mere four percent — happened during the last 10 of those 52 calendar years. (This presumably excludes the 9/11 terrorist attacks, which were criminal acts as opposed to accidents.)

As deregulation turns 35 this year, it might lead to calls to take the next logical step in the reorganization of the industry by allowing more airlines to merge across borders. This has been allowed in Europe for a number of years, which has permitted discount operators easyJet and Ryanair to grow as multinationals, Air France and KLM and British Airways and Iberia to merge while retaining separate national sub-brands, and Lufthansa to buy the national airlines of neighbouring Austria and Switzerland.

Similar mergers have taken place in Latin America, with most of Central America flying under the banner of Salvadoran-based TACA Airlines, and the Brazilian-Chilean LATAM Airlines Group now owning or having significant minority stakes in airlines in eight different countries.

Even Australia has opened the door to foreign ownership by allowing the Singaporean-owned Tiger Airways to compete with domestic carriers, though this might not last much longer as the once British-owned Virgin Australia is poised to take over Tiger’s money-losing Australian division.

Such a move toward foreign ownership of airlines would be controversial in Canada, particularly as a foreign owner would be more interested in taking over Air Canada or WestJet outright than in launching a third national airline.

Yet the difficulties that the airlines have had in finding the efficiencies they hoped to gain through membership in the three large global airline alliances — Star, Oneworld and Skyteam — suggest that North America’s relatively parochial airlines might soon start to press politicians for the right to purchase foreign carriers or, more likely, to sell themselves to foreign owners as a way out of financial trouble.

One can only wonder what Bob Crandall might think of that.

Related video: The 1979 BBC documentary series Diamonds in the Sky looks at deregulation’s first chaotic year in the United States. (50 mins.)

Would a tax credit make you trade in sunny Varadero for cloudy Vancouver this winter holiday?

Beach

Going here on holiday? No tax credit for you!

Does the blanket of snow now covering Winnipeg make you crave a winter holiday in Cuba, Mexico or Hawai’i? That’s understandable, but one Member of Parliament would rather see you set your heart on a holiday right here in Canada, instead.

Massimo Pacetti, a Liberal MP who has represented a Montreal constituency in Ottawa since 2002, is even willing to help you pay for a domestic holiday. All he needs is to get his proposed legislation through Parliament.

That will be easier said than done. Since Pacetti is an opposition MP, he is introducing his Discover Your Canada Act as a Private Members’ Bill, officially known as Bill C-463.

Such bills rarely become law. Out of 265 Private Members’ Bills introduced since the 2011 federal election, only five have so far become law:

    • Two minor amendments to the Criminal Code
    • One to raise public awareness of epilepsy by declaring Mar. 26 as “Purple Day” (sorry, but it’s not a statutory holiday, so you won’t get the day off).
    • One to designate April 2 as “World Autism Awareness Day” (again, no holiday)
    • And finally, a cute little law to “ensure that all Canadians are encouraged to display the National Flag of Canada,” which became law on June 28.

Pacetti’s bill would, from 2017 on, allow people to claim up to $2,000 in bus, train or air fares as tax deductions, as long as they were used in a trip “not related to a business purpose” and “crossing at least three different provincial boundaries”.

His inspiration for this indirect government subsidy came while walking in Vancouver, thousands of kilometres from his Montreal constituency.

“All of a sudden I looked up and thought to myself this is a beautiful city and if Quebecers ever saw this not too many would want to separate,” Pacetti told the Toronto Star this past week.

The concept of building national unity by offering tax deductions to Quebeckers who holiday in B.C. (which truly is a great place), Manitobans who go camping in New Brunswick and Newfoundlanders who go see the Northern Lights in the Yukon is a noble one — and popular, too, according to a Harris/Decima poll.

But is it good public policy? No.

First, we need to consider the impact that such deductions have on the federal government’s ability to balance the books. Clever use of tax deductions can help a person reduce their tax bill, making these popular with voters.

But they are a choice to forgo revenue that would otherwise be available to balance the books. So, governments have to be careful to ensure that deductions today have a good chance of generating even greater returns later (such as Registered Education Savings Plans) or are at least defensible at some level (such as the Political Contribution Tax Credit, which is distasteful in light of the attack ads and robocall services the parties spend their money on, but perhaps better than individual legislators seeking direct career sponsorship from banks, telecoms, car dealers and land developers).

Pacetti’s tax credit, however, could be easily used in ways he never intended.

Note that Pacetti’s bill says nothing about trip length or purpose. Thus, the cost of flying across three provincial boundaries to attend a U2 concert with a group of friends, deal with a family emergency, or even to leave the country on a plane ticket booked separately could all qualify as tax deductions.

While making it more affordable to fly out to Vancouver to see a concert might be great fun, it is difficult to see this as being worth the federal government foregoing revenues for.

A tax credit would also fail to address why more travel dollars leave the country than flow into it. One reason is the undeniable popularity of escaping to warm southern destinations during the long, cold Canadian winters.

The other is the strong Canadian dollar, which makes it a bargain for Canadians to travel abroad, but more expensive for foreigners to come here. At today’s exchange rates, $100 Cdn. buys you $100 U.S., €78 Eur. or £63 U.K.

Ten years ago, in Nov. 2002, $100 Cdn. bought you only $64 U.S., €63 Eur. or £40 U.K. At that time, it was a relative bargain for travelers from those countries to come to Canada, and expensive for Canadians to go abroad.

Then there is the question of whether tax credits are compatible with the quest for a more open and trustworthy government.

“[L]obbyists and special interests expend resources (time, money, and so forth) in an attempt to gain or preserve tax preferences,” Jason Fichtner and Jacob Feldman of George Mason University wrote in a 2011 working paper.

Indirectly quoting economist Randall Holcombe, they noted that “the easier it is to modify a tax system, the greater the incentive for special interests to pursue rent-seeking behavior. Once tax expenditures were successfully obtained, additional [lobbying takes place] to keep those deductions in place.”

“Tax expenditures are widely criticised as policy instruments which lack transparency and which are difficult to control. They are thought to be vulnerable to lobbying by special interest groups and even corrupt practices,” Clemens Fuest and Nadine Riedel of the Oxford University Centre for Business Taxation wrote in a 2009 report for the U.K. Department for International  Development.

In other words, tax credits are not necessarily wrestled out of governments on the basis of merit. Having the funds to hire a good lobbyist, or friends in the right places, can certainly help.

Even if a tax credit is secured in the absence of these helpful tools, the mere perception that these credits flow to the well-funded and well-connected still lingers.

This blog’s final argument against Pacetti’s bill is based on a domestic travel good, international travel bad assumption that might be at play.

“I think it’s certainly well intentioned and I think we’d certainly like to see Canadians travelling in Canada as opposed to outside the country,” Kevin Desjardins of the Tourism Industry Association of Canada told the Canadian Press this past week.

While this is understandable — nobody expects the Tourism Industry Association of Canada to recommend a trip to Los Angeles — there are also benefits to be gained from Canadians traveling internationally.

Traveling to another country — aside from the carefully scripted worlds of walled-in resorts, cruise ships and fully escorted tours — can be as much an education about Canada as about the host country.

That’s because you can find yourself coming home and seeing your own community through an outsider’s eyes: relieved perhaps at Winnipeg’s relatively laid-back ways, mystified at the “loser cruiser” label attached to public transit here after having been effortlessly whisked around town on the Paris Metro or Berlin’s S-Bahn; shocked by Winnipeg’s poverty; discouraged by the vapidity of our politics; yet grateful that no lifetime resident of Winnipeg has ever lived in fear of a secret police or under military occupation.

Traveling can also lead people to test the validity of their own society’s most cherished beliefs — a discomforting but useful process — and gain a better understanding of what newcomers go through and why so many people come here from some countries, and not so many from others.

Pacetti’s tax credit would discourage Canadians from going through that learning process, and instead stay within the comfortably familiar world of a country that already tends to be very insular and not particularly curious about the outside world.

If the Discover Your Canada Act discouraged Canadians from going forth, seeing the world and perhaps coming back with some new ideas, we would be poorer for it.

As noble as Massimo Pacetti’s intentions are, Bill C-463 is deeply flawed. It would allow people to creatively claim tax deductions for activities that cannot be shown to be worthy of indirect government subsidization; it would encourage further lobbying for tax breaks, which should automatically be of concern to those interested in a more open and trustworthy system of government; and it would discourage Canadians from learning more about the world, and their own country in the process.

On balance, it would be better for this bill to be among the 98 percent of Private Members’ Bills that never make it into law than to be among the two percent that do.

Berlin: A quick guide to a truly world-class city

Most Winnipeggers prefer to head for the sun and sand when they leave town. But if you’re one of those looking to get away from the museum-like hush of deeply provincial Winnipeg for the fun and excitement of a cosmopolitan big city, consider saving up a little bit more than usual for a week in Berlin.

The reunified capital of a reunited Germany has lots to offer the urban tourist. It’s a party town that likes to stay up late, and it has everything the tourist is looking for, from museums, art galleries and concerts for culture lovers to an aquarium and zoo for those traveling with children. And it’s a bargain compared to more expensive gateway cities like London, Paris and Amsterdam.

Video: Scenes taken around town, Aug. 15-22, 2012

Berlin: A quick guide for the would-be visitor

Q: When should I go?

A: The city is lively all year long, but the warmest months are mid-May to mid-August, when average daytime highs are in the 20°C to 25°C (68°F to 77°F) range.  Late March to mid-May and mid-August to early October are also mild, with average daytime highs in the teens. Rain is typically not that heavy, and happens occasionally all year round. As Berlin is at the same latitude as the northern end of Lake Winnipeg, the heat is seldom oppressive.

Cooler weather with average daytime highs of less than 10°C/50°F (though usually above freezing) takes over the city between the second half of October and early March, so these might be the months to avoid unless you are comfortable wearing a coat or sweater around town all day.

Q: How much does it cost to go?

Seat sales throughout the year by Air Canada, Lufthansa and Air France-KLM (which partners with WestJet on flights between Winnipeg and its Toronto and Calgary gateways) typically offer prices of about $1,200 per person. United, Delta and Swiss also offer itineraries via the United States.

Hotels are fairly inexpensive by European standards. Smaller independent hotels can be booked for $60 to $80 Cdn. per night and chain hotels catering to business travelers are available for $100 to $125 Cdn., with some offering lower rates during the summer when business travel declines. Luxury hotels are a little more expensive at $150 to $250 Cdn. per night.

Restaurants are fairly affordable, with many bakeries (German: bäckerei) selling sandwiches for 2 to 5 Euros ($2.50 to $6.50 Cdn.) and cafes selling a meal plus a German beer for 10 to 15 Euros ($13 to $20). Portions are a bit smaller than they are in North America: expect a plate with a sensible amount of food on it, not a heaping platter.

Q: Where do I clear Customs and Immigration?

A: You will need to clear Immigration at the first Schengen state you enter, where you will be given a visa or entry stamp that is good for travel in all other European countries within the Schengen zone. In Berlin, you still need to clear Customs on arrival from outside Germany, even if you’re arriving on a connecting flight from another Schengen country such as the Netherlands. (You will not have to clear Immigration again if you’ve already been admitted to the Schengen zone at another European airport en route.)

Customs and Immigration processes are fairly unobtrusive for Canadian visitors. Immigration officers are primarily concerned with illegal immigrants from poorer countries, and hence take little interest in Canadian tourists. Customs in both Germany and popular connecting points such as the Netherlands works on the Red Channel/Green Channel system — go through the Red Channel if you have anything to declare, or through the Green Channel if you don’t. (Depending on your routing, you probably won’t even be asked to fill out a declaration or arrival card.)

Customs reserve the right to stop travelers entering the country through the Green Channel for spot checks, but these are said to be rare. Signs will tell you in English what kinds of items need to be declared.

Q: Where are the best places to stay?

A: A hotel within walking distance of the Zoological Garden train station in the city’s west or Alexanderplatz or the Brandenburg Gate in central Berlin will put you within walking distance of anything you need.

Q: Which areas should I avoid?

A: The eastern suburbs of Neukölln, Marzahn and Lichtenberg seem to have the shadiest reputation, but are off the beaten track for most visitors and, as with graffiti-marked Kreuzberg, are probably quite safe during the day due to the high population density.

Berlin is generally a safe city, with a murder rate per 100,000 about half of what Winnipeg experiences in a good year, so you need not worry much about your physical safety. As in any large city, remain alert however against opportunistic petty crimes such as pickpocketings and bag-snatchings.

Q: Do I need a car?

A: No, unless you are going out into the countryside. BVG, the local transit authority, can get you practically anywhere in Berlin quickly without having to navigate the city’s streets, which do not necessarily follow a North American-style grid format. Full-network day tickets (sold as the “Berlin ABC” ticket) are available from automatic dispensing machines at any train or subway station or from the BVG kiosk at the airport for 7 Euros ($9 Cdn.), and can be used after validation on any bus, train, tram or subway line. Seven-day cards valid for seven consecutive days (e.g., Friday through Thursday) are available for 34.60 Euros ($45 Cdn.)

Do not get caught on public transport without a validated ticket, or you will be fined 40 Euros ($52). Tickets are validated by inserting the top of the ticket into the small yellow boxes at every purchase point and possibly some bus stops. While bus drivers will check your ticket at the door, trams, trains and subways work on the honour system, with plainclothes inspectors carrying out random spot checks on passengers throughout the day.

Q: Is it easy to get by in Berlin without speaking German?

A: Yes, quite easy. You will not have to worry about having “a knife in my back for speaking English walking down some street or on the U-Bahn one night”, as one visitor-to-be was perversely afraid of. Many younger and middle-aged urban Germans have either a working knowledge of English or complete fluency, and those who know little or no English are very understanding. Berlin is within a day’s drive of other major cities in the Czech Republic, Denmark, Sweden, the Netherlands, Poland and Russia’s Kaliningrad enclave, so Berliners are used to dealing with non-German visitors. Those who start a conversation in German will often switch immediately to English at the first sign of hesitation.

That being said, it pays to be familiar with basic German niceties such as entschuldigen Sie mich (pardon me), bitte (please), danke (thank you) and Ich spreche kein Deutsch (I don’t speak German). (Click on the links to hear the pronunciations).

Q: Is tipping customary in restaurants?

A: Yes, in restaurants with table service. Ten percent is generally considered sufficient, 15 percent a bit better than average. Instead of leaving money out, however, you should ask your server to round the bill up so that it includes whatever amount you want to tip.

Q: How do people dress in Berlin? Will I look out of place in jeans and a T-shirt?

A: Berlin is an individualistic, come-as-you-are kind of city, so you will likely look alright in whatever you wear in Winnipeg as long as it’s clean and in good condition. Unless you wear sweatpants or spandex in public or go for the “gangsta” look, all of which will stand out as being a bit odd.

Q: Finally, what is there to do in Berlin?

A: Berlin is a vibrant city of 3.5 million people (six million across the wider metropolitan area) packed into an area not much larger than the inside of the Perimeter Highway, and often considered one of Europe’s Top 10 destinations, so it’s a city with just about something for everyone. To find things to do that suit your individual tastes, check Frommer’s attraction and nightlife listings or Virtual Tourist’s Berlin travel guide.

But if I can make a recommendation, take a walk just after dark from Alexanderplatz down Unter den Linden, Berlin’s grand boulevard, to the lit-up Brandenburg Gate where East and West Berliners celebrated the Berlin Wall’s demise on Nov. 9, 1989. It’s a truly memorable experience.

The Brandenberg Gate at night

The Brandenberg Gate at night

The Jewish Memorial

The Jewish Memorial

Die Welt's hot air balloon

In addition to the usual tour buses, you can also see Berlin from a hot air balloon (though not the best value at 19 Euros for a 15-minute flight).