But former Mountie Joe MacDonald insisted Monday that the spat didn't mean the airline was left unprotected from terrorist threats.
"It didn't affect the coverage" he told the inquiry. "They continued with the coverage (and said) basically we'll worry about the money later. But the arguments were going on all the time."
The security coverage given to Air India - categorized as "level 4," the second-highest possible - called for RCMP officers to be deployed at check-in counters, arrival and departure lounges, and for a cruiser to be stationed on the tarmac near the aircraft.
Level 4 was also supposed to mean an RCMP sniffer dog would be on call to check suspect luggage pulled aside during the pre-boarding process.
As a rule, said MacDonald, that was no problem: "The dogs were at the airport, they were stationed at the airport . . . They didn't have duties off the airport."
But it's known from documents tabled at the inquiry that no dogs were used to screen the luggage loaded aboard Air India Flight 182 before it departed Pearson Airport in Toronto on June 22, 1985.
It's not clear exactly why that was the case. The inquiry is expected to delve into the matter when other police and Transport Canada officials testify later this week.
No RCMP dog was on hand either when the plane stopped later that night at Montreal's Mirabel Airport. A Quebec provincial police dog handler was called in as a backup - but the plane took off before he arrived at the airport.
The failure to properly employ the canine teams marked the end of a long series of security oversights. An X-ray machine at Pearson also broke down during luggage screening, and a hand-held electronic wand proved to be ineffective in detecting explosives.
Flight 182 was blown from the sky the morning of June 23 off the coast of Ireland, the victim of a terrorist bomb planted in the baggage stored in its hold. The blast was blamed on Sikh extremists using Canada as a base in their campaign for a homeland in northern India.
The airline and the Indian government had delivered a series of warnings to Canadian authorities preceding the bombing, but some Transport Canada officials believed Air India was overstating the threat.
The main problem on the Canadian side was the overtime bill for laying on extra police protection, said MacDonald. The issue was finally resolved when Transport Canada agreed to cover the cost.
Co-ordination among the RCMP, Transport Canada and Air India has been a major issue at the inquiry. It continued to bubble Monday with the disclosure that some key intelligence about threats never made its way up the ladder to MacDonald, then the sergeant in charge of the airport policing branch at Mountie headquarters in Ottawa.
None of the threats actually came to pass, and RCMP officers in local airport detachments were aware of them and laid on appropriate security. But MacDonald was never notified at headquarters - a failure that he said was probably due to the sheer volume and frequency of the threats.
MacDonald himself was responsible for one communications breakdown, when he failed to pass information he did receive from Air India to the Canadian Security Intelligence Service. The airline had told the Mounties it feared either a bombing or a suicide attack sometime in June 1985.
"I saw no need to send that one (to CSIS)," said MacDonald. He offered no detailed explanation for the action: "It's just a decision you make at the time."
