Turn off the Subsidy Faucet, Premier (Or "On Taking a Page out of 1970s Airline Policy")

The paucity of blogging did not abate, as I indicated it would below (a fortnight ago). So it seems fitting that what riles me out of my slumber are reports of the public spat between PEI Premier Pat Binns and Air Canada. [Domina and ALW will remember my January 2003 tirade aimed at a New Democrat in a Toronto hotel suite because of said NDPer's ridiculous assertion that individuals living in remote communities have a "right" to efficient and convenient airline service]

Long story short: PEI earlier this summer decided to provide $500,000 in pork to WestJet to begin flying a direct route from Toronto to Charlottetown for the duration of the summer, without extending the same subsidy package to Air Canada, which flies to the island year-round. So Air Canada began threatening to remove its year-round service, arguing that the increased competition in the summer would prevent it from using its summer service to subsidise the diminished demand it has for the route in the winter.

The Premier's audacity extends further: he actually has the gall to accuse Air Canada "of mistreating his province by using small planes that cramp the style of tourists..." With talk like that, you'd think he was Mayor of an underserviced city of 2,000,000 people, rather than Premier of a tiny, rural, remote island of 130,000.

Binns' brilliant economic intervention in what is already an overregulated industry has actually *reduced* the very service he wanted to see increased, which was the ostensible purpose of the subsidy. Can one even begin to rationalise the PEI government's policy (nor his salt-in-the-eyes remarks aimed at Air Canada) on either an intellectual or economic basis?