Airlines soar; profits plunge
The nation's airlines in 1979 carried a record 317 million passengers, had $ 27.2 billion in operating revenues, and made less than a penny on each dollar of revenue -- down from 6 cents the year before, according to the Air Transport Association.
Operating profits of $1.4 billion in 1978 plummeted in 1979 to about $200 million, the sharpest dip in airline profits in any year.
The scheduled carriers flew 262 billion revenue-passenger-miles in 1979, accounting for 84.6 percent of intercity public passenger miles. In the first five months of 1980 revenue- passenger-miles are 0.3 percent below the 1979 pace.
But Alberta Premier Peter Lougheed, who started the fund, doesn't really care that he and his fellow Albertans are still called "the blue-eyed Arabs of Canada" by eastern Canadians.
Rather, he is worried about the day when the oil tap dries up forever, and when Alberta's now-dynamic economy will be self-sustaining without oil, for which it must lay aside billions of dollars in investment capital.
At the same time, Premier Lougheed has encouraged and approved loans from his fund for other Canadian provinces, like the $100 million to energy-shy Nova Scotia, jutting far out as it does into the mainly frigid North Atlantic.
Though that province is paying the commercial interest rate on its loan from the fund, Alberta's offer saved Nova Scotia from both a high domestic underwriting charge and the possibility of a substantial currency-exchange loss if that amount had been raised in US dollars in the New York money markets.
Some Albertans, including many business and oil tycoons who are just as free enterprise-oriented as their competitive and determined premier, worry that he may use the fund to buy too many provincially owned or controlled companies.
The Heritage Fund's $200 million in debentures are held through the issue of both the provincial housing corporation and convertible debentures once owned by Gulf Canada and Canada-Cities Service before the Province of Alberta absorbed their share of the Syncrude heavy oil sands recovery project.
The Heritage Fund owns 50 percent of the Alberta Energy Company, through which it has also bought into companies with ethane-gathering systems, primary steel production, and oil pipelines.
The growing surpluses from the fund's investments are not used to cut taxes. They don't need to be. In Alberta, services normally provided through tax dollars are paid for from the other 70 percent of the provincial oil royalties, thereby eliminating completely the need at the present time for sales, gasoline, or estate taxation.