Two years ago Air Canada filed for bankruptcy protection and the federal government stepped aside, allowing the airline to stitch together a private sector solution.

Last week, Jetsgo stranded thousands of passengers at airports across the continent and then it too filed for bankruptcy protection. Stock market investors cheered because the failure of Jetsgo was seen as a natural step in the evolution of Canada’s airline industry and proof that Ottawa intends to let the market rule the skies.

At least one investor, FMR Corp, the Fidelity group of funds made money on Jetsgo’s collapse even though it had a $25 million investment in the airline. It seems they also had investments in Air Canada and Westjet that produced share value increases of $61.8 million on news that Jetsgo was gone, thus offsetting their $25 million Jetsgo loss.

A few weeks earlier, Robert Milton, President of Air Canada announced that his airline will withdraw service from New Brunswick, Prince Edward Island and Saskatchewan. He offered JAZZ as a no frills, band-aid replacement and there was barely a whimper heard from this community.

Federal Transport Minister, Jean Lapierre says “it is time to govern the skies on behalf of passengers not those who fly them around.” He promotes a relatively free market and a more open skies agreement with the United States as beneficial to passengers on the basis that free markets and open skies result in lower airfares and more frequent flights.

Robert Milton’s answer to free markets is to designate three Canadian provinces as second class and withdraw service by Air Canada.

Good airline service is important to the economic development of a region. Poor service restricts development by limiting the attractiveness of an area as a location for business.

How do we get airlines to compete on the basis of quality service rather than lowest cost service? How do we wean Transport Canada from its free market zealotry?

The U.K. Air Transport Users Council serves as a watchdog for passenger interests. The U.S. Federal Aviation Authority advocates on behalf of passenger service. In Canada, we sit passively by as our airlines collapse without consequence and the survivor carriers substitute shareholder interest for passenger interest.

Air Canada would have us believe that a small aircraft, regional air service by Jazz that will feed us into airline hubs in Halifax, Montreal and Toronto will somehow be good for us. They ignore the fact that quality of air service matters to us because it affects our cost of doing business whether it’s the cost of face to face contact with customers and suppliers or the cost of moving cargo through major distribution centres like Moncton.

Travel is far more costly in terms of time and money when business travelers are forced to make time-consuming connections at out of the way “hub” airports or when they are unable to return home in a single day. To give you an example, an Air Canada trip from Boston last week took me nearly seven hours through Montreal from hotel to home.

A non-stop jet flight from Boston to Moncton would take about 1 hour and reduce overall travel time by nearly 4 hours. Time is money in my business. It would be a lot less expensive to pay another $200 for service than to waste a day and a half traveling.

Robert Milton’s decision to terminate service in New Brunswick will leave the Province with nothing but small narrow-bodied Jazzcraft. We’ll be without the air-cargo service provided by wide-bodied jets. We’ll continue without non-stop service to anywhere but the three hub cities. Every destination on the continent will require an aircraft change in either of Halifax, Montreal or Toronto and/or double-back flights to destinations like Ottawa and Boston.

I’m not alone on this. The Atlantic Provinces Economic Council argues in its “Agenda for Growth and Prosperity” document that if Atlantic Canada wants to succeed, it must turn its attention to new growth paradigms such as strengthening the capacity of the region’s larger urban centres so as to provide a base for the high quality jobs associated with the knowledge economy and strengthening the foundation for innovation.

The Council points out that one of the success factors in growth economies is the high quality of public services such as transportation. They remind us that current federal policy priorities are focused on major cities. They call for better connectivity to the national and global community through broadband initiatives and the transportation system. Is the federal government listening?

A reduction or elimination of air services in the region will not encourage economic growth. To the contrary, Robert Milton’s decision to terminate Air Canada service will signal to the business world that three of Canada’s provinces are no longer significant enough to warrant service by its national carrier, the implication being they may not be very good places to do business.

Economic development and transportation are closely linked. Today's competitive, technology-driven economy requires products and parts to move quickly and safely between diverse regions of the nation and the world. New Brunswick businesses and consumers are increasingly dependent on air travel to satisfy their shipping needs and to provide convenient access for tourists and business travelers.

I don’t believe we have to accept Robert Milton’s termination decision. The Government of Canada, as regulator, has the authority to compel the carrier to continue service to the three provinces. A ‘free market’ that disconnects us from Canada’s “national” airline is bad economic policy and bad regional development policy.