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37th PARLIAMENT, 2nd SESSION

Standing Committee on Transport


EVIDENCE

CONTENTS

Tuesday, October 7, 2003




¿ 0905
V         The Chair (Mr. Joe Comuzzi (Thunder Bay—Superior North, Lib.))
V         Mr. Roland Dorsay (President and CEO, Canadian Airports Council)
V         The Chair
V         Mr. Roland Dorsay
V         The Chair
V         Mr. Jim Gouk (Kootenay—Boundary—Okanagan, Canadian Alliance)
V         The Chair
V         Mr. Roland Dorsay

¿ 0910

¿ 0915
V         The Chair
V         Mr. Paul Benoit (President and CEO, Ottawa MacDonald-Cartier International Airport Authority)
V         The Chair
V         Mr. Roland Dorsay
V         The Chair
V         Mr. Roland Dorsay
V         The Chair
V         Mr. Roland Dorsay
V         The Chair
V         Mr. Jim Gouk
V         Mr. Roland Dorsay

¿ 0920
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         Mr. Jim Gouk
V         Mr. Roland Dorsay
V         Mr. Jim Gouk
V         Mr. Roland Dorsay
V         Mr. Jim Gouk
V         Mr. Paul Benoit

¿ 0925
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         Mr. Roland Dorsay

¿ 0930
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Roger Gaudet (Berthier—Montcalm, BQ)
V         Mr. Paul Benoit
V         Mr. Roger Gaudet
V         Mr. Paul Benoit
V         Mr. Roger Gaudet
V         Mr. Paul Benoit
V         Mr. Roger Gaudet
V         Mr. Paul Benoit
V         Mr. Roger Gaudet
V         The Chair
V         Mr. Roger Gaudet
V         Mr. Paul Benoit
V         The Chair

¿ 0935
V         Mr. Roger Gallaway (Sarnia—Lambton, Lib.)
V         Mr. Paul Benoit
V         Mr. Roger Gallaway

¿ 0940
V         Mr. Paul Benoit
V         The Chair
V         Mr. Marcel Proulx (Hull—Aylmer, Lib.)
V         Mr. Roland Dorsay
V         Mr. Marcel Proulx

¿ 0945
V         Mr. Roland Dorsay
V         Mr. Marcel Proulx
V         Mr. Roland Dorsay
V         Mr. Marcel Proulx
V         Mr. Roland Dorsay
V         Mr. Marcel Proulx

¿ 0950
V         The Chair
V         Mr. Ovid Jackson (Bruce—Grey—Owen Sound, Lib.)
V         The Chair
V         Mr. Roger Gallaway
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Roland Dorsay
V         The Chair
V         Mr. Paul Benoit

¿ 0955
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair

À 1000
V         Mr. Jim Gouk
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         Mr. Jim Gouk

À 1005
V         Mr. Paul Benoit
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         Mr. Jim Gouk
V         The Chair
V         Mr. Roger Gaudet
V         Mr. Paul Benoit
V         Mr. Roger Gaudet
V         Mr. Paul Benoit
V         Mr. Roger Gaudet
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Roger Gallaway

À 1010
V         Mr. Roland Dorsay
V         Mr. Roger Gallaway
V         Mr. Roland Dorsay
V         The Chair
V         Mr. Paul Benoit

À 1015
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Roger Gallaway
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         Mr. Jim Gouk
V         Mr. Roland Dorsay

À 1020
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         Mr. Roland Dorsay
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         The Chair
V         Mr. Roland Dorsay
V         The Chair

À 1025
V         Mr. Roland Dorsay
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Roland Dorsay
V         The Chair

À 1030
V         Mr. Roland Dorsay
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Paul Benoit
V         The Chair
V         Mr. Jim Gouk
V         Mr. Roland Dorsay
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         Mr. Jim Gouk
V         Mr. Paul Benoit
V         Mr. Jim Gouk
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Jim Gouk

À 1035
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Roger Gaudet
V         The Chair
V         Mr. Roger Gaudet
V         The Chair
V         Mr. Jim Gouk
V         The Chair

À 1040
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Roger Gallaway
V         The Chair
V         Mr. Jim Gouk
V         The Chair
V         Mr. Jim Gouk

À 1045
V         The Chair
V         The Clerk of the Committee
V         The Chair
V         The Clerk
V         The Chair
V         The Clerk
V         The Chair
V         The Clerk
V         The Chair
V         The Clerk
V         The Chair
V         The Clerk
V         The Chair
V         The Clerk
V         The Chair
V         The Clerk
V         The Chair
V         The Clerk
V         The Chair
V         The Clerk
V         The Chair
V         Mr. Roger Gallaway
V         The Chair
V         Mr. Roger Gallaway
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         The Clerk
V         Mr. Jim Gouk
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         The Clerk
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Marcel Proulx

À 1050
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         The Clerk
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Marcel Proulx
V         The Clerk
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Roger Gallaway
V         The Chair
V         The Clerk
V         The Chair

À 1055
V         Mr. Jim Gouk
V         The Chair
V         Mr. Roger Gaudet
V         The Chair
V         Mr. Marcel Proulx
V         The Chair
V         Mr. Jim Gouk
V         Mr. Jim Gouk
V         The Chair










CANADA

Standing Committee on Transport


NUMBER 035 
l
2nd SESSION 
l
37th PARLIAMENT 

EVIDENCE

Tuesday, October 7, 2003

[Recorded by Electronic Apparatus]

¿  +(0905)  

[English]

+

    The Chair (Mr. Joe Comuzzi (Thunder Bay—Superior North, Lib.)): Good morning, ladies and gentlemen.

    Pursuant to the order of reference of Tuesday, March 25, the order of the day is Bill C-26, an act to amend the Canada Transportation Act and the Railway Safety Act, to enact the VIA Rail Canada Act, and to make consequential amendments to other acts.

    Our first witness today is from the Canadian Airports Council, Mr. Roland Dorsay. Welcome. Mr. Dorsay is president and chief executive officer, and from the Ottawa MacDonald-Cartier International Airport Authority, we have Paul Benoit, president and CEO. Welcome, gentlemen, and thank you for coming.

    I'm sure we'll have other members coming in and out who will want to participate. I'm advised there's a vote at 10:30, so we may have to break for that.

    I think, Mr. Dorsay, you've been here before.

+-

    Mr. Roland Dorsay (President and CEO, Canadian Airports Council): No sir, this is my first time as a witness.

+-

    The Chair: Am I to congratulate you on just having been elected president of the Airports Council?

+-

    Mr. Roland Dorsay: I've been at it for 90 days and I'm beginning to feel like a veteran, but thank you, sir.

+-

    The Chair: You look like you're standing up pretty well.

    Yes?

+-

    Mr. Jim Gouk (Kootenay—Boundary—Okanagan, Canadian Alliance): I want to speak before the witness starts.

+-

    The Chair: Well, let's get the witnesses in. After the witnesses are through, we're going to speak on issues, if that's okay with everybody.

    Mr. Dorsay.

+-

    Mr. Roland Dorsay: Thank you very much. I very much appreciate the opportunity to come before the committee to offer our views on Bill C-26. Certainly, both Paul and I look forward to answering any questions you may have.

    I should note before getting into it that I have provided to the clerk 20 copies in English of our written presentation. It is being translated into French and hopefully will be available later this morning for the committee.

    That being said, our view of Bill C-26 is that it is very much a case of well-intentioned policy makers looking for problems that don't exist, finding them anyway, creating solutions that don't work and that result in problems that weren't there before, and calling it a victory in the name of consumer protection and enhanced competition. I fear, unfortunately, that this is the way this bill would work. If there's one message I could leave with the committee, it really is this: please don't re-regulate the aviation industry. In some respects Bill C-26, unfortunately, heads in that direction.

    I wouldn't want to leave you with the impression there are no aspects of the bill we do like; in fact, there are. For example, I would note that the amendment to the national transportation policy that would add a provision with regard to respect for the environment is certainly one we as an airports group are fully supportive of. We think it makes sense to include a provision of this sort. Certainly, for both the airport and airline sides of the industry, it is fair to say that both sides of the House have worked quite effectively to be responsible with respect to the environment.

    If we have one concern with respect to the inclusion of such a provision, however, it's not with the provision itself; it's with the way in which it might be used or possibly misused. Specifically, what we have in mind here is a concern with what we would call “modal fairness”. That is to say, we are somewhat concerned at the prospect that the principle of respect for the environment might be used or misused to justify substantial subsidies for other modes of transportation, arguably on the basis of questionable science. In any event, our view is that subsidies, certainly for high-speed rail, which is our concern here, might be justified on the basis of a principle that is not appropriate.

    There is another aspect of the bill we are very strongly supportive of, and that is clause 6, with respect to the provision of transportation information. We very much support the proposition that the Minister of Transport should be given new powers to collect and to disseminate information. Certainly, the transportation industry today is one that is information-intensive; it's a knowledge industry as much as any other. From an airports perspective, we feel there is a very large gap in the quality and quantity of information that is available to airports about the marketplace to assist airports in making what often need to be very sizable investment decisions and in investing in resources in terms of market development. In terms of attracting new services, it is vital to have access to better information than is currently made available to the public and to airports today. We see this provision in the act as helping to solve that problem.

    Typically, today available information that comes from Statistics Canada, which is the primary source, tends to lag by several years, and it is often the wrong information. Our template for what would be more attractive as a solution, quite frankly, is how statistics are provided in the transportation sector in the United States. We think there's no good reason why the availability of data in Canada should be any less transparent than it is south of the border, so we would, as I said, very much welcome a provision along these lines.

    There are other aspects of the bill we very frankly do not support, as I suggested in my opening remarks. One would specifically be clause 11, with respect to mergers and acquisitions. That clause, as I'm sure you know, would expand the power of the minister to make a public interest determination on mergers and acquisitions with respect not just to air carriers but also to airports and ports and to other modes of transportation. Our view is that these are matters that are best left to the determination of the competition commissioner under the provisions of the Competition Act. We are concerned that a new general and undefined public interest test that is separate from the Competition Act would greatly increase investment risk and investment costs, and we see no good reason for an additional test.

¿  +-(0910)  

    Similarly, we have a concern with respect to air service price advertising, which is dealt with in clause 16. We'd recommend the deletion of clause 16 in its entirety, quite frankly. We see no good reason to single out the air mode or even transportation services in general for such special attention. In any event, we are rather doubtful as to the effectiveness or the feasibility of such controls. While we do sympathize with the impulse to protect consumers from false and misleading advertising, we suggest that the existing legislation of general application is adequate to the task. If it is not, then that is the legislation that we suggest should be looked at in terms of its application to all sectors across the board.

    Similarly, we have some concerns with respect to clause 19, which would allow the agency on its own motion to review air fares and rates in markets that are served by only one carrier and to impose fares and rates and new ranges of fares and rates where it thinks it appropriate in such markets. We're very concerned that a provision of this sort would in effect amount to the re-regulation of this sector of the business and, I think, would be subject to the unfortunate law of unintended consequences. I think it is more likely to result in less service rather than more. High fares in an open and free market are more likely to result in attracting new service. Regulating those fares is in fact likely to dampen that impulse rather than to encourage it.

    Finally, I would note that we have a similar concern with respect to clause 28, which is with respect to mandatory interline agreements. We see this as an example of policy advisors looking for a solution to a problem that doesn't exist. We think there is no clear demand in the marketplace for this kind of regulation. Certainly, the low-cost carriers, for whom I assume this is intended, have developed business plans that do not depend on, do not require, and indeed would be disserved by this kind of requirement. Our judgment is that it would be best not included in legislation as a provision.

    That's all I'd want to say other than, in conclusion, I'd like to come back to my opening remarks, which is to say that the aviation industry, as you know, both on the airline side and on the airport side, is an extremely dynamic one. It's going through and will continue to go through enormous transformations. I think, by and large, it is doing so successfully. I think it is essential for this sector of the transportation industry to have as much freedom as it needs to accomplish that task. To that end, I would suggest it would be best served by less regulation rather than more.

    Thank you very much.

¿  +-(0915)  

+-

    The Chair: Thank you, Mr. Dorsay.

    Mr. Benoit.

+-

    Mr. Paul Benoit (President and CEO, Ottawa MacDonald-Cartier International Airport Authority): Mr. Dorsay has basically summarized it and expressed all of our opinions.

+-

    The Chair: Maybe you can spend a minute or two giving us your background. More particularly, how many airports in Canada do you represent, the large ones, the small ones, and so on?

+-

    Mr. Roland Dorsay: I would be pleased to do that. The Canadian Airports Council consists of 41 airport authorities. Among them they run about a hundred airports, which in total represent about 98% of the total commercial air traffic in Canada.

    Insofar as my background is concerned, it's a rather mixed one. I started in the aviation business, actually, at Transport Canada, and I spent about ten years on the policy side doing international air policy and bilateral air negotiations to a large degree. I left Transport Canada to go into the airline side of the business as senior director of corporate development for Wardair. I went from there, when Wardair was amalgamated, to work for Canadian Airlines with responsibilities for international affairs. Subsequently I left Canadian Airlines to try to start up my own local and regional airline in London, Ontario, but that was put aside compliments of September 11. More recently, after the stint in the consulting business, I joined the Canadian Airports Council.

+-

    The Chair: Have you ever managed an airport?

+-

    Mr. Roland Dorsay: I have not.

+-

    The Chair: But you represent those who do manage them.

+-

    Mr. Roland Dorsay: Yes, sir.

+-

    The Chair: Mr. Gouk.

+-

    Mr. Jim Gouk: Thank you, Mr. Chair.

    My interest is in that part of your comments where you talk about unreasonable competition from another mode of transportation. I think we both know you were talking there about VIA Rail. If VIA Rail were to put in a high-speed transportation corridor, Quebec-Windsor or Toronto-Montreal, it would be highly subsidized, which is the only way it's anticipated to be. What impact would that have on the Toronto, Montreal, and Ottawa airports?

+-

    Mr. Roland Dorsay: That's a good question, and unfortunately the answer is that it would have quite a dramatic impact on them. Clearly, airports depend to a considerable degree on airline takeoffs and landings for their revenues and for the movement of passengers through the facilities for revenues to support the infrastructure they have invested in. It's hard to say what the impact would be until one knows the particulars, but roughly speaking, if you had a high-speed rail system in the eastern triangle, I assume you would see a result somewhat similar to what you see in short-haul high-speed markets in Europe. That is to say, a very substantial portion of that traffic would, as a result of the market distortion produced by the subsidy, transfer to that rail service. The impact would be substantial.

¿  +-(0920)  

+-

    Mr. Jim Gouk: Do you have a comment?

+-

    Mr. Paul Benoit: If I may add something, a very good example is in the Paris-Lyon market, where the TGV was put in place. I can tell you about the Ottawa airport's perspective. On Sunday we're opening a $310 million new airport, which will belong to the people of this country virtually the next day. We have $270 million of debt. We're a private company managing a public trust, and it would be devastating if we were to compete with a mode of transportation that is highly subsidized.

    We are one of eight Canadian airports that together currently pay rent in excess of $250 million a year to the federal government. I don't want to get into that whole issue, but compare that to a mode that is very heavily subsidized, using as an excuse environmental data that is extremely subjective right now for a subsidy on a $3 billion to $4 billion minimum investment. The loss of traffic would put our financial plans in jeopardy, and you could well see defaults down the road.

    And I'm not trying to paint a black picture. If you compare this to the European experience, you're talking about between 30% and 50% in traffic reductions.

+-

    Mr. Jim Gouk: I understand from talks with people I know at Air Canada that their two most lucrative markets are the international market and the Toronto-Montreal-Ottawa triangle. Would it be reasonable to assume that if that highly subsidized high-speed rail were put in, they would lose a large portion of that market and there would be a subsequent impact on the airports?

+-

    Mr. Roland Dorsay: That's exactly the story. That's exactly what they're facing.

+-

    Mr. Jim Gouk: Of course, there's the bigger risk that if they lose that market, then they could jeopardize the stability of the airline and you could lose Air Canada, period.

+-

    Mr. Roland Dorsay: It certainly is a risk and, I think, a real one.

+-

    Mr. Jim Gouk: Under their current system now with the rail that is in there right now, being that it's subsidized at approximately half a million dollars a day--that's the subsidy to VIA Rail aside from other hundred thousand dollar chunks that have been put in from time to time--what impact does that subsidy that is in place right now have on the airports in that corridor?

+-

    Mr. Paul Benoit: Again, it's very difficult to quantify, but when we compare modes of transportation and you look at aviation, a large percentage of the cost for security since September 11 has been borne by the aviation industry through either the infamous air transportation tax or other things. If you look at all the other modes of transportation we face, which are fully subsidized, and if you look at the security when you're going across bridges or crossing the border, all this is part of the national system.

    Now, terrorism is directed at the state; it's not directed at an aircraft and it's not directed at an airport. We become a weapon, a tool that is used to attack the state. Our mode of transportation--airports, aviation, airlines--is asked to pay up to cover the state's cost.

    Any dollar difference between a fare, whether it's a subsidized fare on every passenger...I've heard numbers of $60 to $70 for every VIA passenger who gets on the train, where people across this whole country are paying to subsidize the triangle. Why should somebody in Yellowknife pay to subsidize somebody who is going business class between Montreal and Toronto or Ottawa and Toronto? Make no mistake, VIA is not after the backpacker crowd. It's the VIA 1 service they're after, which competes directly with us.

    We have managed to do two things with our industry since September 11. We have made it much more expensive on the aviation side and we have made it much more inconvenient. All of you gentlemen have had the distinct displeasure of going through Ottawa airport and the security lines. In the old terminal it's changing. If I'm doing an hour flight, it's taking me 20 minutes to go through security, but I can just walk up to the door somewhere else.

    VIA in its totality today is so subsidized that it could not exist in a free market, but at the end of the day is it the role of the government to subsidize VIA Rail? If Bombardier or whoever else feels that it is such a good idea, then let them do it.

    If Air Canada goes broke tomorrow, so be it. There will be a Jetsgo and there will be a WestJet. Somebody else will come in and we're seeing that in the industry. Our industry is bouncing back, but the last thing we need is to go back to the good old days of us being regulated in Tower C at Transport Canada. This is what these things are doing, this and another bill that will be coming to you shortly.

¿  +-(0925)  

+-

    Mr. Jim Gouk: Say there was a recovery, although there was a lapse period in between. With the airport rents you pay and given the percentage that comes from Air Canada, if you had a reduction in your airport rents collectively of $100 million and if you transferred that saving back to the respective airlines, what portion of that would be directed back to Air Canada?

+-

    Mr. Paul Benoit: I'll use an example. Earlier this summer the Minister of Transport announced that there was a rent deferral of $45 million. In our case it amounted to about $2 million or $3 million. The problem with a rent deferral, any accountant will tell you, is that you have to carry that on your books as debt. I cannot give that back to the airlines in the deferred mode because I have no guarantee of being able to collect it. Two years from now, when I have to start paying my money back to the federal government, do I increase everybody's rent just to have made somebody look good who came up with a temporary solution? There's an issue with a deferral.

    I will speak for Ottawa airport only. We wrote to the Minister of Transport a year ago. We have made a commitment that for any rent reduction--not a deferral, a reduction--we will pass on dollar for dollar that portion the carriers pay us. Let me explain. Carriers today--and I'll use order of magnitude numbers if I may--pay us approximately 60% of our revenue in the form of landing fees, so we would give 60% of the rent reduction back to carriers to make their industry healthy. If we had a rent freeze or reduction, not a deferral, for a couple of years, it would do more to help this industry than any deferral or any hare-brained idea that might come down the pipe.

    We are committed and I know, while I will not speak for other airports, that many other airports have taken the same position in letters that have gone forward. I think Roland can refer to a letter that went to the minister about a month and a half ago.

    We're not looking for a handout. We're not looking for a free lunch. We are looking for fairness between modes within the industry.

    In our case we pay $12 million a year in rent. Ottawa airport at transfer had a net book value of $67 million. We've already paid more in rent than the place was worth. We're building a $310 million facility that'll be transferred to the people, essentially, on October 13. The taxpayers of this country have had a very good return on their investment. We can help the airlines and the airlines in turn will help us. The difference in terms of that money...we would use...not to increase our parking fees and not to increase other fees within the airport. We're not for profit but we're not for loss.

+-

    The Chair: Will you tell us if you have an airport improvement fee at Ottawa airport?

+-

    Mr. Paul Benoit: We have an airport improvement fee. Our airport improvement fee started out at $10. We had always planned to increase that fee to $15 on January 1, 2004, but with the impact September 11 had on our passenger activity, we in fact increased it one year early, on January 1, 2003, to allow us to be solvent going forward. We have no plans--I'm not saying read my lips, I'm saying we have no plans--to change that airport improvement fee over the life of the loan we're paying back. Basically, our passenger traffic takes care of the amounts as we go forward at a $15 airport improvement fee, sir.

+-

    The Chair: Where is that collected?

+-

    Mr. Paul Benoit: That is collected on the ticket, and 100% of the fee is committed. My mandate is, I'm ordered by my board, that 100% of that fee will be used for the project. I cannot use that fee to pay rent and I cannot use that fee for operational matters. The project in our case is 100% funded by that.

+-

    Mr. Roland Dorsay: Maybe I can just supplement that a little bit and talk about some of the other airports dealing with the same issue. As an association we are committed to the proposition that if there were true rent relief as distinct from a temporary deferral, we would envisage that overall something in the order of about 50% of that rent relief would go back to the airlines across the system. That's what we're looking at. Again, it's driven by the proposition that airlines don't cover 100% of the rent, but to the extent they do, they would see that coming back to them.

    More broadly and more generically, certainly, our view would be that what is needed is for the government to develop a transportation infrastructure strategy, not just a policy but a strategy, a way to look at infrastructure in ways that will help the industry to be more competitive and more sustainable over time.

¿  +-(0930)  

+-

    The Chair: Thank you, Mr. Dorsay.

    Mr. Gouk, you've gone three minutes over but I have taken a minute of your time; you can come back for another round.

+-

    Mr. Jim Gouk: I'll be here.

+-

    The Chair: I thought you would be.

    Mr. Gaudet.

[Translation]

+-

    Mr. Roger Gaudet (Berthier—Montcalm, BQ): Thank you, Mr. Chairman.

    I would like to know what the overall budget of the Ottawa airport is.

+-

    Mr. Paul Benoit: The Ottawa airport budget is about $58 million including the airport infrastructure. That figure is for the revenues; the expenses are about $55 million. As for the difference which is a rough estimate, we use it as a fund to cover infrastructure upgrades. The funds are reinvested in airport assets in accordance with the legislation and with my council’s mandate.

    Since we have 1.7 million passengers that each pay $15 it translates into an amount of $17 to $18 million that goes to the airport infrastructure fund. The work is under way.

+-

    Mr. Roger Gaudet: Is it included in the $58 million?

+-

    Mr. Paul Benoit: Yes everything is included. It is the total amount.

+-

    Mr. Roger Gaudet: I wonder where your money goes.

+-

    Mr. Paul Benoit: It’s very easy. I will give you--

+-

    Mr. Roger Gaudet: You give it all to the government!

+-

    Mr. Paul Benoit: No we try to keep part of it. First, let’s take the rent. In our case the rent is $12 million.

    Let’s take an amount. When the Solicitor General decided to withdraw the RCMP officers from airports given that we are a private entity, we were told to pick up the tab. We spend between $2 and $6 million depending what is included in the amount, which used to be paid by the government. What we receive from CATSA only covers a small portion of that amount. Our employees’ salaries constitute the biggest cost apart from the rent.

    After the transfer of the airport from the government we had to extend its benefits to our employees, which included indexed pensions and medical coverage with similar conditions. This represents 30% of the cost approximately. I don’t have an amount but let’s just say that I have more than 140 employees at the airport. I don’t have the exact dollar amounts but it’s an important element.

    We have assets such as fire fighting trucks and roads that we build. That costs another $3 to $4 million per year. We maintain the roads in airports.

    I can send you my budget. I don’t mind, we are fully accountable.

    We are not left with much money when all these costs are added together and after deducting $17 million plus for infrastructure improvements to the airport. Since we have taken over the management of the airport, the operating costs have been reduced. The charges to our carriers are less than the rate of inflation since 1997. It’s one example but it reflects the reality in most airports.

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    Mr. Roger Gaudet: I will come back to this later Mr. Chairman.

[English]

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    The Chair: Mr. Gaudet, you were offered a copy of the budget. Did you want a copy?

[Translation]

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    Mr. Roger Gaudet: Yes please.

+-

    Mr. Paul Benoit: You will get a copy.

[English]

+-

    The Chair: Mr. Gallaway, then Mr. Proulx.

¿  +-(0935)  

+-

    Mr. Roger Gallaway (Sarnia—Lambton, Lib.): I just have a couple of questions. I wanted to ask Mr. Benoit something with respect to rents because this is something we've heard a lot about. If you're a commercial tenant and your landlord comes along and, because your lease is expiring, wants to talk about rent, there are a number of considerations, including the marketplace and your ability to pay. What kind of negotiation actually takes place between Ottawa airport and Transport Canada or, Mr. Dorsay, between your members and Transport Canada with respect to setting rents? Is there real negotiation or is it an imposed number based upon guesswork at Transport Canada.

+-

    Mr. Paul Benoit: The rents follow a very complicated formula that was done during the airport transfer negotiations. In our case it was during the period of probably 1994-1996. That formula carries on ad nauseam and it doesn't take into consideration the September 11 downturn. We actually paid about 20% more rent after September 11 than we were paying before. We have an industry in crisis and we're saying please, help us. But there is no negotiation; it's a case of, this is the formula. At the end of the day during the airport transfers, it was basically a situation of take it or leave it.

    When you look at the airport rents of today, there is no rhyme or reason in terms of whether it is net book value or net present value. How do you arrive at it? The argument is always advanced that the taxpayers of the country--and we support this--deserve a return on their investment. Absolutely, but I think, as you look at most airports across the country, there's a substantial return.

    Indeed, you've heard before that most people pay twice for the airports. You pay the first time as a taxpayer, and unfortunately the person who's going through my airport is a taxpayer. He has to pay again, yet the money isn't coming back into this industry.

    There's very little negotiation. There has been a rent study that has been going on for almost four years. During that time we've lost half a dozen carriers, and you have a commitment from airports that the number Roland was referring to...and that number of $250 million will increase in the next few years to over $500 million.

    Now, you're taking this out of the hide of an industry. You're killing it. We don't want the government to turn around and say, we're going to take 50% of that and give it back to this industry--fairly--but we want to subsidize a money-losing train in a corridor. Rents have no relationship to anything that's out there.

    You mentioned a landlord-tenant relationship. I would love to have a landlord-tenant relationship. We have been faced since transfer with numerous acts of Parliament, legislation that has imposed additional costs on us. For example, I mentioned the police. At the time that was done it was about a $70 million hit to airports. That was not negotiated; that was legislated.

    A year and a half ago Parliament passed the Immigration and Refugee Protection Act. There was a rider in the act that said airports had to provide immigration officers with their desks, their computers, and their telephones. We've had a tremendous fight at the new airport we've built in Ottawa. We have had to provide the federal government and mandated agencies with more than $30 million in free built space, which we then must maintain for the length of the lease. There are revenue opportunities that are lost, and what people do not understand is that there is no free space.

    I would invite this committee to come and see what is going to be the most beautiful airport in this country for a change; a national monument is what we're building--at a reasonable cost. Come and see this. You will see that in certain areas I have three times as many offices as I even have officers; we have customs and immigration officers of Canada and the States. That $30 million had to be charged back to the airlines and to the people. I should put a sign in my parking lot saying we have increased your parking rate by $2 to pay for free space for the federal government.

    That's the situation that's out there, and all those things are legislated at us. This is why we are appearing today on Bill C-26 and will on Bill C-27, should it ever arrive; it's to say please, don't re-regulate us.

    Transport Canada got into this with the idea that they were going to regulate safety and security, and that's really their domain. Ours is how we market these things and make them efficient, and we are more efficient.

+-

    Mr. Roger Gallaway: How does this whole business, then, of rents work? You're opening a new building and you're going to have some retailers in that building. Far be it for me to say it, but your major tenant in terms of airlines is in crisis. How do you then entice a retailer, a guy who sells newspapers, coffee, or whatever inside that building, to get involved in a long-term lease if he knows all of these uncertainties are out there?

¿  +-(0940)  

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    Mr. Paul Benoit: This is where we get back into, don't re-regulate the industry. Retailers, anybody moving into your airport...bankers, indeed, when we went out and borrowed the money.... I think the more fundamental question would be, since you're an industry in crisis and a year ago you went out and borrowed $270 million, how did you get the money? We ended up with A-plus credit ratings from Moody's, Dun and Bradstreet, and DBRS. They all looked at the fundamentals of the business: people are going to travel in this country.

    I was at l'aéroport de Montréal previously. At Mirabel we had Nationair, for those of you who remember, and we were one of the airports that put Nationair into its final demise. The next morning every passenger who had been flying on Nationair was flying on Air Transat. If there is a market, it will be served, and this gets into the whole play of how much we should help anybody.

    We turn around to our retailers, and our retailers will pay us either a guaranteed minimum for a year or a percentage of their gross sales. We deduct that essentially from our other expenses as we're going down for carriers, etc. We will meet with them. You end up with two or three big players. You end up with people like Cara Operations, who do it on a national basis.

    It's very difficult to have individuals. You try to have them bring in local people to work here at your facilities, but at the end of the day it's big multinationals that will normally come in. They know the market and they know, as an example and we've seen it, that Air Canada at one point had, I think, probably close to a 90% market share at our place; they're in the sixties now.

    Two or three weeks ago WestJet announced 21 new flights out of Ottawa, so this market is coming back and it's coming back without re-regulation, which is so important. We don't want it and we don't need it, and I think you've heard that from Air Canada as well.

+-

    The Chair: Thank you, Mr. Benoit.

    Mr. Proulx.

+-

    Mr. Marcel Proulx (Hull—Aylmer, Lib.): Thank you, Mr. Chair.

    Thank you, Mr. Dorsay and Mr. Benoit, for attending this morning, and Mr. Benoit, congratulations on the official opening of the airport. The rumours say it's thanks to you this is under budget and everything is working fine. Every time you mention you are on orders from your board, permit me to smile a little bit. Thank you.

    Mr. Dorsay, I just want a few explanations. Did I hear you say that you were against clause 19?

+-

    Mr. Roland Dorsay: Yes, sir, with respect to allowing the agency on its own motion to review air fares and rates. That's because, as I say, I think the market would be better served by market forces rather than by regulators determining what is an appropriate fare.

    I think it is entirely appropriate for the agency to be empowered to review fares when there are complaints in the marketplace, because that is suggestive of a difficulty that at least deserves consideration. But I think if you give the agency a new power to do something, it will do something. It is in the nature of a regulator to regulate.

    While there will always be occasions when one might wish more service to be there or one might wish a fare to be lower, I think experience has demonstrated over time that when the aviation industry has been regulated, the regulation has not worked well. It has typically resulted in something other than what the unfettered marketplace would have resulted in, ultimately at some cost to somebody, typically the consumer.

    So our preference would certainly be to not add this new provision to the act. Deregulation has worked well. Deregulation of fares in particular has worked well in general, which is not to say that there haven't been problems from time to time. There undoubtedly have been, and the competition commissioner has, when those problems have arisen, had the opportunity to address them and to deal with them. We think the system as it is works reasonably well.

+-

    Mr. Marcel Proulx: I understand your point, but I don't think it's clause 19. Clause 19 is an exemption under section 64 for licensees that operate a domestic service that is seasonal in nature for eight months or less in a 12-month period. I hear your point but I don't think it's clause 19.

¿  +-(0945)  

+-

    Mr. Roland Dorsay: If I've misstated the clause, my apologies, but that's the basic--

+-

    Mr. Marcel Proulx: Let's come back to clause 16. This is the one in regard to air service advertising. Why would you object to this?

+-

    Mr. Roland Dorsay: I think one needs to take a look at the transformation that's taken place in the aviation industry with respect to fares in particular. Perhaps what's most worthy of note is what has happened with the arrival of low-cost carriers. The real revolution that has impacted the so-called legacy of network carriers was the decision of the new, entrant low-cost carriers to introduce one-way fares, in effect to eliminate the Saturday night stay. And that's because traditionally, up until the arrival of the low-cost carriers, the airline industry structured almost its entire tariff regime around the proposition of tariff differentiation. What the economists will tell you is that if you segment the market properly, it will result in more business and in lower average fares for the consumer than if you have a single fare, which is why you end up with literally thousands of fares in the airline business. This is as confusing as not, but it actually does make sense when you get down to it.

    What you do with this advertising, basically, is to intrude into that process in the marketplace in a way that is perhaps seemingly subtle but is in fact quite consequential. Here is what you say to the network carrier who has to respond to the low-cost carrier. The low-cost carrier says, I only advertise one-way fares. The network carrier says, I'm in the business of selling conditional fares and return travel. Suppose the guy who's selling the one-way fare advertises a price of, say, $90 between Ottawa and Toronto and the network carrier is told, well, either you have to match that and sell $90 as a one-way fare or, alternatively, if you want to protect your market, then you have to advertise it as $180 return. Then typically what will happen is that the consumer will look at $90 and $180--they're different products--but end up gravitating towards the $90 sale.

    So I'm not sure you in fact do anything to protect the consumer by imposing a requirement that you only advertise a return fare if you're in the return fare business. Quite frankly, I think the consumer today has learned that if you're looking at a fare in the marketplace, as often as not you will see in the small print or somewhere there's a return fare requirement for them to purchase that ticket. I don't think it's terribly complicated, and I'm not sure there's any benefit to anybody by virtue of imposing a requirement to advertise in a way different from what the carriers perceive they need to do in order to respond to the marketplace.

+-

    Mr. Marcel Proulx: I'm very surprised. You're in the business; you know all of these price competition wars and so on, but I'm very surprised that you would be against some sort of protection for the travelling public in the sense that the rationale behind clause 16 is to protect the public. The reason we want to protect the public is that we have had complaints and we're still getting complaints from the travelling public, who feel they're not getting the proper information in the advertising.

    But that's okay; it's your choice to ignore it.

+-

    Mr. Roland Dorsay: If I may elaborate, certainly our view is that of course there needs to be protection for the consumer. But again, we think that there is existing legislation that accommodates this both through the Competition Act and through consumer protection legislation. I'm just not sure there needs to be airline-specific legislation with respect to advertising.

+-

    Mr. Marcel Proulx: Mr. Dorsay, you mentioned to us a while ago that part of your background is in policy-making at Transport Canada. Surely you're not trying to tell me that a policy would be developed if another policy covered it already. The rationale for having this is to make sure that it is very sound and very clear and that the travelling public is protected. But that's fine.

    Thank you, Mr. Chair.

¿  +-(0950)  

+-

    The Chair: Thank you, Mr. Proulx.

    Mr. Jackson, do you have anything?

+-

    Mr. Ovid Jackson (Bruce—Grey—Owen Sound, Lib.): I just have one comment. We used to have bureaucrats who ran the airports and now we have these people. One of the things I've noticed with any government agency, whether it be at Natural Resources or wherever, is that they get into closets; then, when things happen, they talk to bureaucrats and they talk to lobbyists.

    Now, I haven't had an invitation to take a first-hand look at that airport, and I think both of you gentlemen appear to be a little bit haughty in some of your comments. When you come into places like this, for your PR in the future, make sure you include us and let us know what's going on.

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    The Chair: Thank you, Mr. Jackson.

    This is the conclusion of the first round. We'll get into the second round, but I just have some questions of clarification, if I'm allowed by the committee members.

+-

    Mr. Roger Gallaway: You can do whatever you want, Mr. Chair--which he will do anyway.

    Some hon. members: Oh, oh!

+-

    The Chair: Mr. Benoit, tell me who backstops the loans airports make in order to expand

+-

    Mr. Paul Benoit: Basically, as with any private company, we will go to the market. For the bond issue, in our case we did two tranches, a $120 million tranche and a $150 million tranche. The bonds are sold by our lead bank, which is RBC Dominion Securities. They sell them on the open market, and the people who would buy them would be mutual funds and pension funds, such as OMERS, as with any corporate bond.

+-

    The Chair: What security is there?

+-

    Mr. Paul Benoit: Well, we can't use the facility as security because the land on which the facility lies belongs to Her Majesty. What we end up having to do is secure our revenue stream, in essence the airport improvement fee and our operations fees, should we get into difficulty. Technically, if an airport were to get into difficulty paying its bondholders or paying its obligations, our lenders could come in and demand that we increase our airport improvement fee to cover the cost, so it's our revenue streams that guarantee the loan.

+-

    The Chair: So if any one of your airports should get into that difficulty, then the taxpayer of Canada is not responsible for whatever you've built.

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    Mr. Paul Benoit: Ultimately the draconian measure is of course default under our ground lease with Her Majesty, but no, today we have bondholders. Like any business, we have people out there who have money on us.

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    The Chair: They didn't require the guarantee of the government?

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    Mr. Paul Benoit: Absolutely not. If the government would help us the other way, it might be interesting. There's no commitment; there's no underlying guarantee or anything whatsoever on the part of the government.

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    The Chair: That goes across the board for all airports, Mr. Dorsay?

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    Mr. Roland Dorsay: Yes, it does.

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    The Chair: You're the airport manager. What control do you have over the security?

+-

    Mr. Paul Benoit: Security is an interesting world. We have Transport Canada, which is in fact the regulator that is enacting the will of the legislator. We have CATSA now, which is in fact the implementer.

    There are various parts of this airport security system. Airports are responsible for the armed policing of their facilities. We are responsible for security patrols, perimeter patrols. We are responsible for the access controls within the terminals. We issue our airport passes after verification through the national police systems.

    For the security checkpoints per se, we're much more limited in our role. In essence, today we supply the space. CATSA contracts and pays for the employees who are there to meet Transport Canada's regulations, which are legislated by Parliament.

¿  +-(0955)  

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    The Chair: What you've just said is that you're responsible for most of the security within the airport complex with the exception of airport screening. For that you supply the space.

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    Mr. Paul Benoit: I think that's a fair thing, and it's something we are currently discussing with people like CATSA. At the end of the day there's a command and control advantage to having everything under one unit as opposed to having several different groups running different operations within an airport. Ultimately we have Transport Canada's inspectors there making sure things happen the way they should happen, but I think you've summarized it fairly well.

+-

    The Chair: And that's basically the same throughout all the 41 airports.

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    Mr. Paul Benoit: Yes, sir.

+-

    The Chair: And you're aware as an airport manager that with the improvement fee, all we're trying to do is enhance the airline industry in this country, trying to get people back in the airports and flying.

    You're also aware that you're doing everything within your power to stop that--really. Let me just give you a prime example that happened at your airport last Friday; I was going to bring the CATSA people here. It happened between 2:15 and 3:30. I have never seen so many rebellious airline passengers in my life. After you get to the airport, you go through a huge line to get a boarding pass. If you go to the machine and try to press in your travel number, the machine spits something out that says, you're too late and you have to go to the counter.

    You go through the counter and that takes 10 or 15 minutes. Now you get upstairs. It just so happened--I'm sure you're aware of this--that the lineups to go through security were not only in all of those cattle things you have there, they extended along the back and went over to where Air Canada had its access point and beyond that, almost into the American.... That's how long the lineup was between 2:15 and 3:30, and it could have gone beyond 4 o'clock. People who were standing in line waiting to get through security missed their airplanes. To me that doesn't sound like a good operation--I know you have some answers--and this isn't the first instance.

    Rather than get upset, I called over the head supervisor of security to ask him, what's not happening today? I was advised--I have a witness--well, it just so happened today that we took seven of our people off the security line and sent them out for training. I said, well, did you realize there was this lineup? That's not our function, he said; we had to get seven people out for training. So there were seven security people who should have been there who were not.

    I then asked the question, is there no cooperation between the airlines and the security people so you know when there's going to be increased pressure for service on the facilities we have? They indicated that a couple of airlines don't accommodate them but they get a slip from Air Canada once a week, at the beginning of the week, telling them what the potential passenger load is. I said, is that slip updated? We don't see if the slip is updated.

    We were told that if we were running into difficulty, we should see an Air Canada person at the counter. They wander around in those animal cages you have. But when we approached an Air Canada person, they advised us that they were not in that department, they were in operations, whatever the hell that means.

    Then we asked--there was extra stuff on her arms--do you have security officials there? I said, there are more than several people who are going to miss their airplanes if we don't get this line moving. At that time they opened up the other line, at about 2:40, but there was so much confusion as to who should go to that other line and so on. I said, you should facilitate things for people who are going to miss their flight. They said, our instructions are never to assist anybody to jump the line; the only people we're advised to assist are the elderly, the infirm, and people who have...what's that super-pass you get with Air Canada?

À  +-(1000)  

+-

    Mr. Jim Gouk: Super Elite.

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    The Chair: And if you're a Super Elite customer. Now, come on.

    I'm just giving you that. So we caught a later flight.

    We're not doing anything with security and the problems in the airline industry to enhance air travel and make it easier for the person using airlines in this country. They're paying $15 here, $20 here, and $60 there. It's a pain.

    I'd better be careful.

+-

    Mr. Paul Benoit: I know what it is.

+-

    The Chair: I can tell you this: there were several people there who will refuse to go back to the airport. They'd sooner take the time and drive to Toronto.

+-

    Mr. Paul Benoit: If I may, I'll respond briefly. First of all, I share your frustration 100%. You don't pull people off for training when you have an operation going. I have 25 years on the airline side and I also worked for Transport Canada, a kind of reverse of Roland's role.

    The Canadian Airports Council has been in discussions with CATSA because we recognize this is a problem. There are no customer service standards. We need security standards but we need customer service standards too. We need to know that, as an example, 95% of our passengers will be processed within three or four minutes of getting through a security checkpoint. That's not out there.

    Now, CATSA has done an admirable job and has come a long way, taking over something that was good and making it better. Canadian Airports Council has repeatedly asked that the security--and I mentioned command and control before--be put under one unified unit at the airport. If they find something at security, our police respond. Currently you as a frustrated traveller go running to the airline and they say, that's not my problem. You go running to CATSA...and the cattle cards all have CATSA written on them, if I may say so. In our role within that part of security today, we have to give them the floor space, and apart from that we have nothing whatsoever to say.

    What we're trying to say is, if you have a peak period at 3 o'clock...and what you were running into that day was a 4:00 or 4:30 flight to Vancouver with a heavy Asian departure. We would know that. Under a unified system I could pull people who were doing maybe traffic duty or maybe doing pass issuances in those offices and move them around in a peak period time to cover the customer demand. This would be as opposed to the system that says, well no, you are only doing the traffic duty, you're only doing gate perimeter, or you're only doing the CATSA security point.

    So we in the airport industry share your frustration 100%. We have a solution we think needs to be looked at as opposed to creating another government department--if I may say so--that runs on its own. We got so frustrated at one point that we had signs at the airport over the security checkpoint that said, the security operation is run by such-and-such; in the event of any issue, please phone this number. This is because everybody at the airport will turn around and say, it's the airport; it's the Ottawa airport, it's the Winnipeg airport, or it's the Montreal airport. Yet we have nothing to say about it.

    We want to be able to ensure that what you just mentioned doesn't happen, and the way to do it is to turn it into a unified system, where one person is responsible in that airport, one person is accountable, not where everybody is running all over the place blaming everybody else. You can't tolerate this. You don't pull somebody out of the line to go on training and let the customer who's paying the freight suffer. I agree with you, but there are solutions, sir.

+-

    The Chair: We'll come back to that, maybe after the meeting.

    Mr. Gouk.

+-

    Mr. Jim Gouk: I have two very short ones, Joe. First of all, given that the airport opens operations next week, would it be possible for this committee to avail itself of you on Thursday to have a tour of the airport before it opens so we can have a better opportunity to see the terminal?

+-

    Mr. Paul Benoit: Absolutely. I will do it Wednesday, Thursday, Friday, or Saturday. I will do it at your convenience. I apologize that this committee hasn't been invited, but I think Mr. Proulx can vouch for the fact that the national capital caucuses and members in here have been constantly consulted as we've gone forward on this. We've met with you down here and so on, so we've done it for our region. We are remiss in not having had this committee, but individually, collectively...I will give my card to the clerk and I will take you through myself, and you'll be blown away.

+-

    Mr. Jim Gouk: That's great.

    I do have to comment that I was more than passingly curious about Mr. Proulx's objection to the one-way fare, given that he doesn't object to hotels advertising $125 a room based on double occupancy or cruise ships advertising $595 a cabin based on double occupancy. He has no problem with that, yet he has this problem with one-way fares.

    The other question I have is, do all airport employees at Ottawa airport--and others--have to go through CATSA security every time they go into the air side and if they come out for any reason? Do they all have to go through the full type of screening a passenger goes through when they get on an aircraft?

À  +-(1005)  

+-

    Mr. Paul Benoit: The security at the airport is controlled in two areas. I mentioned that the airport controls the perimeter. CATSA does the passengers and we do the perimeter, so employees would fall under the airport screening program, which I'd be glad to talk to you individually about.

+-

    Mr. Jim Gouk: Could some of them conceivably go back and forth by showing their picture identification issued by the airport? Is that the extent of the screening?

+-

    Mr. Paul Benoit: There's more to it than that, sir.

+-

    Mr. Jim Gouk: But do they have to go through a metal detector?

+-

    Mr. Paul Benoit: No, sir, but there is more to it than just showing the--

+-

    Mr. Jim Gouk: I understand that, but that leaves something I want to discuss with the chair later.

+-

    The Chair: I think that was a very open answer. If we had asked that to CATSA, they'd have said, we can't tell you that because it's a national security issue.

    Mr. Gaudet.

[Translation]

+-

    Mr. Roger Gaudet: Earlier you talked about advertising. What is the difference between advertising of one-way tickets and return tickets? As far as we are concerned, we only care about having lots traffic in the airport.

+-

    Mr. Paul Benoit: For us it is no longer a question of competition. They focus on air transportation and tell us that we have to be more catholic than the Pope. Yet we are facing competition from other industries and I don’t see them facing such ethical requirements. Let’s take for example the train and the bus traveling between Ottawa and Toronto. I might be mistaken but I don’t think they are subject to the rules and regulations that they are considering imposing on us.

    So I come back to my earlier question: why chose to target a particular mode of transportation? It is the same issue with security. Why are we saying to the stakeholders of one industry that they will pay 100% of the costs while we are saying to others not to worry about it, the taxpayers will pay? I think it is a question of fairness.

+-

    Mr. Roger Gaudet: Perhaps what is fair would become more apparent if we considered as an example the planes arriving in Ottawa from other countries and the trains from within Canada. What is fair is not the same.

+-

    Mr. Paul Benoit: I think it is the same because they are planes that arrive from outside the country but they are also trains arriving from abroad; Amtrack enters our country. If I am able to promote outside Canada, I still try when possible to respect the Canadian regulations. If we are not applying the same regulation it brings us back to the question of knowing if fundamentally, we are not creating another layer of bureaucracy given there already exist tools from our government partners, the various departments and the Competition Bureau.

    It’s interesting to see that you are not inclined to use these tools for all modes of transportation. I ask you the question. Why are we not applying the rules to other modes of transportation? If it is so important then why not apply across the board?

+-

    Mr. Roger Gaudet: I will answer your question later. I am not yet familiar enough with the issues.

    Thank you.

[English]

+-

    The Chair: Thank you, Mr. Gaudet.

    Now you have an opportunity to respond to Mr. Gouk, Mr. Proulx.

+-

    Mr. Marcel Proulx: I wanted to tell Mr. Gouk that just because we were talking about the aviation system, it didn't mean I wasn't going to be talking about other modes under Bill C-26, so just be patient, Mr. Gouk.

+-

    The Chair: Mr. Gallaway.

+-

    Mr. Roger Gallaway: I just have a couple of questions. I wanted to ask about a statement you made, Mr. Dorsay, early in your comments. It was about whatever part of Bill C-26 where they talk about an environmental statement, and you had concerns this might be used to subsidize other modes of transportation. Subsidies can be small and they can be many little hits along the way. I just wondered if you had something in mind. Do you have an example you can think of, something you're aware of that's occurred recently?

À  +-(1010)  

+-

    Mr. Roland Dorsay: If I may elaborate a little bit to be clear, there's a fundamental distinction between subsidy and investment. We have no objection to investment, and we certainly think that it makes sense for the government to be thinking about an appropriate investment strategy with respect to transportation infrastructure in all modes. Where we think it comes a cropper somewhat is when it converts into subsidies.

    I don't mean to suggest that there isn't a role for subsidies in some cases. Certainly, I think there are cases, when you look at remote communities that have very special needs, where clearly there's a strong public policy case to be made for subsidy. But when you look at the large markets, certainly the high-density corridor between Quebec City and Windsor, where the market is certainly large enough to sustain competition on the basis of an unsubsidized framework, the market should be allowed to determine what the outcomes are without that kind of distortion.

    To answer your specific question, am I aware of smaller subsidies that have an impact that distorts the marketplace, offhand I don't recall one at this point in time.

+-

    Mr. Roger Gallaway: Of course, when you use the word “investment” as opposed to “subsidy”, I would suggest to you that cabinet ministers in particular, whenever they make announcements, are always making investments; they're never subsidizing.

    Some hon. members: Oh, oh!

    Mr. Roger Gallaway: This has become part of the lexicon of this place, where the word “investment” is always used as opposed to an “expenditure” or a “subsidy”. We've assumed new vocabulary here, where we talk about “values” as opposed to “principles”. I don't know what values are. There are many terms here that have amorphous meaning.

    In any event, the other part I wanted to ask you about was your comments with respect to clause 16. I know that Mr. Proulx is very interested in protecting consumers, but I would simply point out to you that the largest body of complaints from consumers around federally regulated industries has nothing to do with the airline industry; it has everything to do with, number one, banks, and two, communications, that is, telephone companies and cable companies, and there is no federal law protecting consumers on that. So I find it very interesting that we're now going to, in the name of protecting the public, move on a silo-type basis to protect the travelling public and to force the industry to reveal how much the federal government is charging in taxes.

    I just make that observation.

    Thank you.

+-

    Mr. Roland Dorsay: If I may, I'll add to that. Your point is certainly well taken by us. I would also add that with respect to the airline industry, it's of note that in real dollar terms, airfares today are probably as low as they have ever been. If anything, the industry suffers from the airfares being too low. So again, the notion the consumer needs special protection with respect to airfares strikes us and me, certainly, as passingly strange at this time.

+-

    The Chair: Mr. Dorsay, have you flown recently on Air Canada without advance notice? Have you bought one of those tickets recently, and do you want to rephrase that statement? Please.

+-

    Mr. Paul Benoit: Maybe I'll jump in on that one. I flew on Jetsgo recently without advance notice and I paid $64 to Toronto. What we're saying is, the market will respond to what you want to do. When you look at travelling on a carrier without advance notice, look at WestJet, for example. Look at Air Canada's former product Tango, which they're now putting into their online things. There's a gamut of products out there. Look at CanJet.

    Right now this industry is restabilizing itself. You can find some phenomenal fares out there very easily, and it's not a matter of getting on the Internet and spending an hour. You can turn around and pick up the phone and pay $800 for a simple trip that somebody else can give you for $200. I can go out and I can buy four wheels, a steering wheel, and an engine and pay $60,000, or I can spend $30,000. The consumer is smart enough to see right now, with the prices that are out there--

À  +-(1015)  

+-

    The Chair: I have a question with respect to Air Canada. Have you bought a ticket recently on less than 24 hours' notice to go someplace?

+-

    Mr. Paul Benoit: Yes, sir.

+-

    The Chair: And did you find a good fare?

+-

    Mr. Paul Benoit: Yes, sir.

+-

    The Chair: And they didn't give you any break?

+-

    Mr. Paul Benoit: Yes, sir, I had a break, because you can do that on Air Canada's Tango product, and you'll have it overnight.

+-

    The Chair: I'm talking about Air Canada.

+-

    Mr. Roger Gallaway: Mr. Benoit, I've flown on Jetsgo for nine bucks from Toronto to Ottawa, but it cost me twice as much a day as the airfare to park my car at Pearson.

+-

    Mr. Paul Benoit: That's why I manage Ottawa.

    Some hon. members: Oh, oh!

+-

    The Chair: I tried to call Tango but they're not even listed in the book. You can't get hold of them and I don't know how to run a computer. What the hell do I know about a computer?

    Some hon. members: Oh, oh!

    The Chair: I still use a telephone. I thought that was an average means of communication, but let me be very frank with you. I tell you, when you have to make an arrangement in less than 24 hours, those are very high fares you get charged.

+-

    Mr. Paul Benoit: You're absolutely correct, but the industry is...I'll give you an example. Two years ago there was a carrier that was only doing Ottawa-Hamilton service; it was very limited. Today that same carrier does non-stop Edmonton, non-stop Calgary, non-stop Winnipeg, non-stop St. John's, and non-stop Gander, Regina, and Saskatoon.

    The industry has gone through a crisis. It is reinventing itself and it's going to take a couple of years, but as the industry rebalances, those who want to have their frequent flyer points and their whatever will pay for them, and those who want to pay $90 to go to Toronto will pay that.

    This industry needs time to restabilize. What it doesn't absolutely need is re-regulation by well-intentioned people who should stay with the government's mandate of safety and security. At the end of the day those fares are there and they're becoming more and more prevalent, but it takes a while to start bringing up the new fleets that are coming in. Jetsgo is an example. It has gone from two aircraft to, I think, eight or nine right now. WestJet's fleet is increasing, CanJet's is increasing, and Air Canada is turning around and reinventing itself. There's a new world coming.

+-

    The Chair: The question was only, did you buy a ticket recently on Air Canada without using all the other facilities?

+-

    Mr. Paul Benoit: The answer is yes.

+-

    The Chair: Mr. Gouk.

+-

    Mr. Jim Gouk: I'm sure Mr. Proulx wouldn't envision doing such a thing, but if the government were to build a new airport somewhere at the west end of Ottawa and heavily subsidize it to operate, could we reasonably assume that it would steal most of the traffic from Ottawa airport and that you would have great financial trouble?

+-

    Mr. Paul Benoit: That's so hypothetical. Right now we have an agreement with the government that they will not build an airport within 75 kilometres, I believe it is, of the existing airport for international traffic. First of all, it sounds to me like you've just done Mirabel, and it didn't work. It's a field of dreams and we're not in the field of dreams industry. I think both of us would die, but it's very hypothetical.

+-

    Mr. Jim Gouk: Well, the obvious comparison is the fact that they do operate another mode of transportation, one operated by the government and heavily subsidized, and that takes money away. Obviously, even without that agreement they wouldn't do something like build that second airport and take all your traffic away, yet they're doing it through VIA Rail.

    Does the airline-airport industry have any fear or unwillingness to compete against the rail sector, operated by the private sector but unsubsidized by the government, with whatever market costs they incur? Is the industry ready to deal with that?

+-

    Mr. Roland Dorsay: I think the answer to that is very clear and the answer is yes. Deregulation for the airline industry means the airlines are prepared to compete with each other, and they are prepared to compete--and do compete--with other modes of transportation. Take WestJet, for example. It's almost a model for WestJet that they believe they compete with the coach and the couch, and they also of course compete with the train.

À  +-(1020)  

+-

    Mr. Jim Gouk: Mind you, they would have a hard time if the government, say, took over the operation of Jetsgo subsidized their airfares, and let them compete against the other airlines. Obviously, that would create a market distortion.

+-

    Mr. Paul Benoit: Mr. Gouk, it's the same thing as when we talk about interlining. You must interline. Why? One of the most successful carriers in the world is a very strong unionized carrier called Southwest. They don't have that model. The industry is trying--or there are certain people who are trying--to take elements of what is in the past, re-regulate it, and impose it on the future.

    Right now if carriers are to be successful, they have to find ways of reducing costs. WestJet doesn't interline and has no intentions of it, and they're successful. Jetsgo doesn't interline. So at the end of the day, why do we need to have somebody sitting somewhere in Ottawa saying, thou shalt interline? It's not protecting the consumer, it's destroying the industry.

+-

    Mr. Roland Dorsay: I would add, if I might, another example. It's the example of Ryanair, which I think is actually the world's most profitable airline at the moment. Its business model is one in which it will not even intraline with itself. If you are a customer wanting to connect two Ryanair routes together at a connecting point, they will not sell you the ticket, even though it's to their very own customer, simply because their model tells them it adds costs they don't wish to incur.

    We simply see no good reason why the government should get involved in making those kinds of business decisions for the airline industry.

+-

    Mr. Jim Gouk: I'll just go back to your formula, where you pay rent under the carried-forward formula. When I was coming in, I spent a lot of time studying that because I had a severe problem with it. I consulted with an aviation specialist from PricewaterhouseCoopers in Toronto by the name of Johan van't Hof, who you may know of. He's certainly a very knowledgeable person in the industry, and he spent an entire afternoon showing me why it couldn't work, yet the airports went ahead with it anyway.

    I talked to a few airport authorities, who said, well, it'll be okay; the government won't harm us; they'll make it work. Then those same authorities came back a couple of years later saying, help, it doesn't work.

    Now, given that it's a huge problem--and a lot of you have inherited that agreement; you didn't negotiate that agreement, you've inherited it--at what point can you go to the government and say okay, that agreement has expired; we need a new agreement that is built on an entirely different formula? Is there any such provision, or are you locked into that thing for the indefinite future?

+-

    Mr. Paul Benoit: We're locked into that for 60 years. Short of default, I would imagine there is not any remedy that's there, but we have complete freedom today to raise our rates.

    We started in 1997, as an example, paying around $3 million a year. Today I'm paying $12 million. My rent has gone up $4 million since September 11. It's an industry that's in crisis, and what am I being fed? I'm being fed, we're studying it. Well, finish soon, because we're going to run out of airlines.

+-

    The Chair: Do you want to just comment, Mr. Dorsay, on the deferral of rents granted this summer? Toronto airport was running into serious trouble. Tell us what that amounted to, please. I don't know what the number was; I think it was around $45 million or $65 million on the rental deferrals. Toronto participated and so did Ottawa and Victoria.

+-

    Mr. Roland Dorsay: I believe the total amount available, based on the formula that was adopted, was about $80 million in total, of which some $47 million went to Toronto. Roughly what it amounted to was a two-year deferral of 10% of the rents that were payable. It was based in some measure on the volume of decrease in traffic since September 11 and repayable over a period of time starting two years later. That was the essence of the problem.

+-

    The Chair: What other airports participated and took advantage of the deferral? If $47 million went to Toronto, how much went to Ottawa, Vancouver, and so on?

À  +-(1025)  

+-

    Mr. Roland Dorsay: I can provide you with the numbers for each airport, but I don't have them at hand.

+-

    The Chair: I'd like a little more detail on this 10% factor. If the rent was $100, that means they only had to pay $90 or what?

+-

    Mr. Paul Benoit: I'll use a concrete example of the rent deferral in terms of our case. We're paying roughly $12 million a year. If we assume 10% for the next two years, that would be a $2.4 million reduction. I still have to pay $10.6 million per year, so I pay $10.6 million instead of $12 million.

    Two years from now I have to start repaying that money to the government and will pay over the next several years. The problem is, because it's a deferral, it must be paid back. You must carry it on your books as debt. We in our case have basically turned around, have deferred the money, have taken the 10%--which is about $100,000 a month--and are putting it in the bank. I'm not spending it and it serves absolutely no purpose. I can't give it to an airline because in a year and a half from now I'm going to turn around to the airlines and say, by the way, I now have to increase your rent by 10% to cover what the government loaned me because I have to start paying them back.

    It's a nonsensical proposal, and the idea that a government cannot come up with $85 million.... Even if they turned around and said listen, we are going to give you $85 million rent relief, again, providing it's passed on to the carriers...that portion, you'd get it from us tomorrow. We are trying to run prudent businesses. My accountants and my auditors are saying, Paul, deferral won't fly.

+-

    The Chair: But you're going to provide us with that information.

+-

    Mr. Paul Benoit: With the numbers, exactly, Mr. Chairman.

+-

    The Chair: I think it's fair to say that with Bill C-26, which we're trying to get through, and Bill C-27, which isn't out of the House yet, the committee has decided we shouldn't do little bits and pieces in the airline industry. We agree with you that it's not only the airline industry that's in crisis, the airports are in crisis. If we're going to do a review and try to do what is right for this industry, we should look at it all together and not do it piecemeal, and I think that may happen in the very near future. I don't expect that there'll be anything that will change in the next three, four, or six weeks, but you're absolutely right: it has to be looked at.

    If I can summarize, because this is very important evidence you folks have brought to us today, what you've said is that you don't want any more rules. You don't need any more rules.

+-

    Mr. Roland Dorsay: We feel that we have more than enough.

+-

    The Chair: Second, you've said to us that you cannot compete against VIA Rail when VIA Rail is so hugely subsidized. There is some rumour out there about subsidies and further improvements to VIA Rail, and it's just counterproductive to have an airline industry and a rail industry competing with each other, one highly subsidized and one trying to operate on its own. Is that correct?

À  +-(1030)  

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    Mr. Roland Dorsay: Very much so.

+-

    The Chair: I can't agree with you, Mr. Benoit. I agree with you and I think the committee would agree with you that security in our airports has to come under the control of one source. But I can't agree with you that we should be sitting here allowing people to go through these abuses we're experiencing, the delays causing people to not want to go into your airports and use the aircraft that are available. I just can't see us waiting to get this thing fixed. I think it's a situation that is so serious it should be addressed immediately.

+-

    Mr. Paul Benoit: I'm in full agreement, sir. I remind you, though, that the security checkpoint is under the control of the staff and regulations of CATSA. I fully agree that this can't wait. Every day we wait, we lose more passengers to other modes, so it's not a matter of us disagreeing. I fully agree.

+-

    The Chair: I wonder if the committee would be interested in hearing your recommendations either today or on another day, because I completely agree that you cannot continue to operate under the present mode.

+-

    Mr. Paul Benoit: At another time. I'm not prepared right now in terms of numbers.

+-

    The Chair: I'm going to ask you back, so will you get prepared? Would you mind doing that?

+-

    Mr. Paul Benoit: Absolutely not, sir.

+-

    The Chair: And we'll just deal exclusively with that.

    Those are my questions.

    Mr. Gouk.

+-

    Mr. Jim Gouk: I just have a couple, quickly. One of them follows up on what Joe was saying, but prior to that, what is the total amount, if you could tell me again--you did mention the figure--the airport authorities pay to the government in rents per year?

+-

    Mr. Roland Dorsay: It is currently $250 million a year, and it is scheduled to increase quite substantially over the next several years.

+-

    Mr. Jim Gouk: Isn't that interesting? That's almost exactly what the government gives to VIA. How curious.

    There's one thing, Mr. Benoit, you could maybe think of. It's certainly something I've raised with regard to CATSA and it's why I asked about the airport employees and the screening they get. CATSA was here and they couldn't answer this--or at least they didn't answer, I think. They didn't answer a lot of our questions, frankly.

    The Americans, post-9/11 and at the height of their security efforts, allow us into the United States pre-cleared for security with a NEXUS card. Would it be at least a partial solution to the problem if CATSA came up with some pre-clearance for high-frequency travellers to take them out of the mix to reduce the volumes? Subject to a spot check, these people who were pre-cleared through the RCMP and with whatever else you have to do with NEXUS could, with proper identification, then pass through a different line and bypass the bulk of the security and the delays. This would allow you to use the resources to move the rest of the people through a lot quicker and, hopefully, reduce our costs at the same time.

+-

    Mr. Paul Benoit: It's a question I'm not competent to answer. It's not within my field.

+-

    Mr. Jim Gouk: It might be something you might want to think about with regard to--

+-

    Mr. Paul Benoit: I'd have to learn a lot to be able to come back and give you an answer in the next couple of weeks.

+-

    Mr. Jim Gouk: Well, I want to plant the seed, nonetheless.

+-

    The Chair: Thank you, Mr. Gouk, and I want to thank you gentlemen, Mr. Dorsay and Mr. Benoit, for attending. I think the information you were able to bring to us and the information we're going to be facing in calling upon you to enlighten us and give us some direction on this will be invaluable.

    You're welcome to stay. I would just, on behalf of the committee, thank you for coming this morning. We're going to talk about a couple of other issues--

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    Mr. Jim Gouk: Including the chores.

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    The Chair: Including the chores.

    Okay, is there any other business?

    Mr. Gouk.

+-

    Mr. Jim Gouk: I have lots. First and foremost, I want to be on record as objecting to the fact that we're even proceeding with Bill C-26 in light of a tremendous number of different facts that have been raised in the past and in light of the fact that, say what the government will, it is almost assured that we will prorogue in four weeks and this thing will not go through. So we're wasting our time, frankly, because it comes off the table with prorogation.

+-

    The Chair: Mr. Proulx.

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    Mr. Marcel Proulx: On a point of order, Mr. Chair, we had these discussions at the last meeting and Mr. Gouk wasn't there or wasn't represented at the last meeting. Let's not start our discussions all over again.

    Thank you.

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    The Chair: Mr. Gouk.

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    Mr. Jim Gouk: Mr. Chair, we're not starting discussions. I am simply going on record. I wouldn't want to have Mr. Proulx misunderstand my intentions.

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    The Chair: Do you ever get the feeling you've lost control here?

    Let Mr. Gouk finish, Mr. Proulx, and then I'm going to give you the opportunity to respond.

+-

    Mr. Jim Gouk: That's all I have on that for now. I just wanted to raise that because my objection to going on with Bill C-26 is not just on those grounds alone but is due to the fact there are much more pressing things this committee should be dealing with.

    We had VIA Rail in here and VIA Rail didn't properly answer our budget questions. The money was put back in nonetheless, and now we find they have a $110 million cost overrun. I think they need to come back and tell us not only why they needed the money, something we didn't get a proper answer for the last time, they need to tell us why they're $110 million over budget, where they expect that money is going to come from, and why we should feel any assurance that even if they get that $110 million, there's not going to be something else down the road. They seem totally financially incompetent to run their company.

    The second problem--

À  +-(1035)  

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    The Chair: Where does that information you have come from? We're not privy to that.

+-

    Mr. Jim Gouk: The $110 million? It's is a matter of public record, Joe.

+-

    The Chair: Mr. Proulx, could you provide--

+-

    Mr. Jim Gouk: Could I just give a list, Joe? Then we can deal with it and it might be easier.

    We heard last spring that there was a problem for airline flight attendants who'd had their job classification changed from aircrew to non-aircrew. Because of the nature of the way they fly and the way they're paid, they now don't officially get sufficient hours to get EI. It's something that shouldn't have happened but it did. It was something where even EI said, this is a big problem; we just realized we've been doing this wrong in light of this; we don't know what to do about the way the regulations read, and we have to start enforcing this.

    We were promised by, I believe, HRDC people that we would have an answer back on that. We have not had that answer. The flight attendants are now subject to this regulation. They are subject to layoff because of what's happening in the industry, and they are blocked from getting EI. We need to get some answers from the department on that. It is overdue.

    The third thing is CATSA. Again, we have a crisis in the airline industry. This is one of the huge roadblocks...NAV Canada, which I'll come to in a minute. We have the airlines and we have the aviation council saying it's a huge problem, the increase in NAV Canada fares, which are less than $2 per passenger, yet we're getting $13 per passenger at CATSA and we're not addressing that issue. I think there are ways, first of all, CATSA has to be held accountable for the money they're spending. They're not. Second, they have to show how they're going to provide the efficiency that is not there. And third, we have to explore ways ourselves so we can then demand answers from CATSA as to how they can make their operation more streamlined and more cost-effective than it is right now.

    The fourth issue is NAV Canada. The airline industry is raising the issue, as we all know, that it is in crisis, and here they're being hit with yet another increase in costs. There are ways this committee can investigate that could reduce costs to NAV Canada, which they then would be mandated to pass on to the airlines, perhaps in the form of not increasing their fees, which they are now doing. There are ways this can be dealt with and this committee needs to study it. Each of these things is infinitely more important than proceeding on Bill C-26, in my opinion.

    The final thing is the tour. We have two witnesses tentatively for Thursday and they are both air carriers, so it means they're committed to coming here for an hour of their time. They're obviously travelling on their own airlines. That meeting would best be postponed. It is in the interest of the committee to tour the airport before it opens because we are going to get a whole lot different tour by being able to go through the building and come and go at will, unrestricted by traffic, security, or anything else, than we're going to get after this terminal building goes into operation. I strongly urge this committee to redo their schedule for Thursday morning and arrange to go on a tour of the new Ottawa terminal Thursday morning.

+-

    The Chair: Thank you, Mr. Gouk.

    Mr. Gaudet.

[Translation]

+-

    Mr. Roger Gaudet: Mr. Chairman, I was absent during the last meeting, but my colleague Mario left a list of witnesses he wanted me to give you so the committee could meet them.

[English]

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    The Chair: Let's do the list of names for witnesses, Mr. Gaudet.

[Translation]

+-

    Mr. Roger Gaudet: This is it.

[English]

+-

    The Chair: Mr. Gouk.

+-

    Mr. Jim Gouk: On a point of order, Mr. Chair, just so there's no misunderstanding, I also have my witness list, but I wish to deal with whether or not we are proceeding with Bill C-26 first. If we are, then I wish to come back and deal with witnesses, travel, cost, and all those things.

+-

    The Chair: Mr. Proulx.

À  +-(1040)  

+-

    Mr. Marcel Proulx: Mr. Chair, I want to congratulate Mr. Gouk for derailing the committee's work. I have noted that any time Mr. Gouk is not here at committee, there is not much sense in discussing anything because we're going to have to start all over again the next time he's here. We discussed future business at the last business meeting. As a matter of fact, on this morning's order of the day we have committee business and we're supposed to be talking on Bill C-26. We're supposed to be considering witnesses' expenses and a list of witnesses. But again, I congratulate him for derailing the work of the committee and for being able to sufficiently get your attention so you let him go on.

    Thank you, Mr. Chair.

+-

    The Chair: Mr. Proulx, let's get this straight. This is a committee that is responsible to the House of Commons, and every member of the committee is as valuable as any other member. Mr. Gouk expressed his concern last week that he was not here at the meeting, but his chairman, Mr. Moore, was here. Mr. Gaudet was not here but his chairman was here. For us to sit here and refuse to listen to either Mr. Gaudet or Mr. Gouk this morning would not be fair. We've listened to him and now we're going to make our decisions, but to sit here and say that we're going to deny him the opportunity to be heard is absolutely undemocratic, and I'm surprised that you would even venture down that road, Mr. Proulx, to challenge the right of a member of the House of Commons to come to the committee and speak freely and openly in trying to express his party's thoughts and his own personal thoughts.

    Mr. Gallaway.

+-

    Mr. Roger Gallaway: I think that at the last business meeting where we discussed the agenda there were two general themes. One was that we would chip away at Bill C-26, if I can put it in those terms, and the second was that we would also deal with the estimates, knowing that the supplementary estimates (A) had to be dealt with by October 31--or whatever the date is, but sometime this month--at the very latest. I don't know if what Mr. Gouk has raised this morning falls exclusively within the purview of the supplementary estimates (A), but it is a parallel or identical thing to what we've already agreed to do. In the context of studying the estimates, all of those very important concerns Mr. Gouk has raised certainly could be dealt with.

    It is the primary obligation of a House of Commons standing committee to vet the estimates. We don't set the supplementary estimates deadline of the end of the month. That is done because departments come back for many reasons for additional money in the course of a fiscal year. That is our primary obligation, so in that regard I'm fairly confident we could address all of those very important concerns Mr. Gouk has raised in the context of the estimates, that being our first obligation.

    Second, I hear the story that the House won't sit again past November 6 or 7, and there certainly is a reasonable expectation that this will be so. That being said, once again, we don't decide the schedule of the business of the department in terms of tabling legislation. We have to then work in terms of our priorities, and our priorities can in fact change. The committee can change its priorities from day to day and from week to week. A committee, as we've often been told, is the master of its own collective destiny.

    So having regard to that, we can certainly address the very important concerns raised by Mr. Gouk in terms of the estimates, and second, we can also deal with Bill C-26, knowing or suspecting that in fact the House may prorogue on or about November 6 or 7 or sometime after that date. But that's not of our doing, that's the decision of the executive to prorogue the House any time it wants, and we can't deal with all those contingencies.

+-

    The Chair: Thank you.

    Mr. Gouk.

+-

    Mr. Jim Gouk: I just want to assuage the ruffled feathers of Mr. Proulx.

+-

    The Chair: We're dealing with an issue now.

+-

    Mr. Jim Gouk: But just give me pause, because there was a bit of an attack. There was a specific accusation made by the parliamentary secretary and I'd just like to briefly respond to it.

À  +-(1045)  

+-

    The Chair: The microphone was on, I understand that.

    Now listen, there's been enough debate on it. At the last meeting we had it was understood we would discuss estimates--we'd had no idea the estimates were coming up--and that we would discuss the witness list for Bill C-26. I think I am correct in that. Since we had no money to either invite witnesses here or to travel, you instructed the chairman to make an approach to the liaison committee in order to secure funding for this committee to continue to operate. Let me say that I'm meeting with the liaison committee this afternoon.

    Am I correct, clerk? When am I meeting with the liaison committee?

+-

    The Clerk of the Committee: The committee has to approve it first.

+-

    The Chair: This is dealing with one issue, an order on the monetary issue. Go ahead; what's the process? We have a meeting with the liaison committee, correct?

+-

    The Clerk: No. The liaison committee--

+-

    The Chair: Well, then you haven't looked at my schedule.

+-

    The Clerk: The liaison committee will meet but not to talk about our budget. You are a member of the liaison committee. Maybe the committee is meeting, but not to talk about our budget, because our budget has to be approved by our committee and then be submitted to the liaison committee.

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    The Chair: When will that be done?

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    The Clerk: This committee has to approve the budget first.

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    The Chair: When will this committee have a budget to approve?

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    The Clerk: I have the budget all ready today but you can't approve it. We don't have a quorum.

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    The Chair: When will we have the quorum to pass the budget?

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    The Clerk: At some future meeting--

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    The Chair: How about Thursday?

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    The Clerk: If enough members show up, that's not a problem.

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    The Chair: So what am I to do at the liaison committee this afternoon?

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    The Clerk: Maybe it's to organize the committee. The committee has to be organized.

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    The Chair: The second issue that was to be discussed was estimates. We're still operating without money until we get approval, correct?

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    The Clerk: That's right.

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    The Chair: Do we have to have a motion to present the budget?

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    The Clerk: Yes.

+-

    The Chair: What's the...?

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    Mr. Roger Gallaway: It's 48 hours.

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    The Chair: Will you give notice that the budget will be presented?

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    Mr. Roger Gallaway: Yes, I'll give notice.

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    The Chair: Thank you, Mr. Gallaway.

    We talked about estimates; that's what the subject was. We wanted this meeting and we asked the deputy minister to attend, but he was unable to attend. We then gave him the option, can you attend on Thursday? It was tentative. We can't deal with the budget and the estimates without the deputy minister, correct?

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    Mr. Marcel Proulx: Or the minister.

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    The Chair: Or the minister. Thursday the deputy minister advised us first that that there was a tentative agreement, and now what's the position with the deputy minister?

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    The Clerk: The deputy minister will not be available before October 21, which is the Tuesday after the break.

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    Mr. Jim Gouk: How convenient.

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    The Chair: He was scheduled for this morning, you know that.

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    Mr. Marcel Proulx: Mr. Chair, we had decided we were going to invite him, but I'm sure the deputy minister doesn't sit in his office waiting for an invitation from the committee. If we called him 24 hours ahead...I don't know where he is. I don't know what he's doing.

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    The Chair: Could you explain what the process is?

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    The Clerk: I was told the deputy minister was supposed to travel to Washington to meet with the Homeland Security people and would be busy all week, so he cannot make it before the week after the break.

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    The Chair: So we can't talk about the estimates until then.

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    Mr. Marcel Proulx: Why don't we invite the minister?

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    The Chair: Well, I thought it was pretty well determined and agreed upon that after we'd heard all the evidence, then we'd ask the minister to come in. I thought that was the procedure. Is that correct?

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    Mr. Marcel Proulx: We have to find a way to get the deputy minister or somebody else from the department to give us figures if we want to look at the estimates and want some explanations.

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    The Chair: Yes, but you would also agree that estimates--or appropriations, as I would rather call them--are one of the most important functions of this committee.

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    Mr. Marcel Proulx: We had agreed on that last meeting, Mr. Chair.

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    The Chair: We just got back last week, don't forget.

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    Mr. Marcel Proulx: Yes, but we had a meeting and discussed this and agreed that it was going to be done. What more can we do? Let's do it.

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    The Chair: It's your department, Mr. Parliamentary Secretary.

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    Mr. Marcel Proulx: Mr. Chair, if we give 24 hours' notice to a deputy minister--

À  +-(1050)  

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    The Chair: We didn't give 24 hours' notice, Mr. Proulx.

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    Mr. Marcel Proulx: How many hours did we give him?

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    The Chair: How much notice did we give him?

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    The Clerk: A week.

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    The Chair: Ten days. Stop, don't talk about 24 hours' notice.

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    Mr. Marcel Proulx: It was to be the next meeting, and at the time of the next meeting--today--he's in Washington. What can I say?

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    The Chair: We agreed to do the estimates. It was a committee agreement, everybody agreed, and estimates are paramount in the process. We asked for the right person to come in and discuss the estimates. That person, who works for Transport Canada, is not available, and we have to adjourn the meeting--well, not adjourn the meeting but re-establish the witness list--to accommodate the deputy minister.

    And it's obvious now that the deputy minister cannot be available till after we come back from the break, which is the 21st, and the supplementary estimates, as the Auditor General tells me, have to be submitted by the 24th or something like that. That's the situation, that's a fact. We will have the deputy minister in here the first meeting after the break to discuss the estimates. Is that fair? Agreed? Any discussion on that point?

    Now we have the witness--

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    Mr. Marcel Proulx: Excuse me, has he confirmed that he's available and that he'll be here?

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    The Clerk: Yes, on the Tuesday.

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    The Chair: It's Tuesday, October 21, so don't try, Mr. Proulx. This is an editorial comment from the chair. Don't try to say the committee is trying to hamper the work of getting Bill C-26--

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    Mr. Marcel Proulx: No, I didn't say that.

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    The Chair: Well, the insinuation is so loud and clear that it's expanding in the room.

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    Mr. Marcel Proulx: Not at all. I congratulated Mr. Gouk.

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    The Chair: Just to show that we're trying to concentrate on Bill C-26, we invited for this morning's meeting both CN and CP to attend as witnesses. They are very important to the discussions on Bill C-26.

    As you know, when this committee convened last week when the House resumed, we were looking for witness lists. We thought it would be wise to have the two railways in as fast as we could. The railways indicated to us that they weren't prepared yet to come before the committee. We have invited them to pick a later date.

    To discuss Bill C-26, you need both CP and CN, but they refused. It really wasn't the intention of the committee to start with airlines--not that this was not good evidence. We wanted to start with the railways, and we're going to do what we can to get as many railways as we can in here in the next few days.

    Now let's have the witness lists.

    That's only by way of information. That's what we're trying to do. It's not that we're sitting around. It was you guys who came around. You know, what goes around comes around. Your department didn't want to provide the financing for us in the spring when we made...how many applications? Two?

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    Mr. Marcel Proulx: On a point of order, Mr. Chair, it wasn't turned down by the department. Come on.

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    The Chair: It was turned down by our group, by the House leader.

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    Mr. Marcel Proulx: The House leader and the Department of Transport are two different things.

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    The Chair: Thank you.

    If you don't think the House leader and the Minister of Transport don't discuss things, then I'm going to sell you something for Christmas.

    Some hon. members: Oh, oh!

    The Chair: Well, why would you turn it down?

+-

    Mr. Roger Gallaway: Just on another point of order, maybe you could explain why we don't have a budget. We can't even pay for coffee in this committee.

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    The Chair: Explain.

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    The Clerk: We have a budget to function but we do not have a budget to invite witnesses in.

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    The Chair: We've just been advised that we only have this room for an hour and a half. There's another meeting here at 11 o'clock.

    What about the witnesses?

À  -(1055)  

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    Mr. Jim Gouk: They can't come in now anyway because we're just going to have to leave.

    For witnesses, Joe, I have two lists, both of which have been submitted before and which I'll be resubmitting . One is a very expanded one and was submitted in the expectation that this committee would travel. I think, frankly, it's a travesty if this committee does not travel, certainly to western Canada, given the impact of what's arising out of Bill C-26. I have submitted a highly shortened list in light of the fact that we're going apparently to have to have the witnesses come here. For the record, I want it known that I went from 157 names to 40 in the interests of cooperation.

    And while we're talking about the interests of cooperation, I would like the voice of the minister on the committee to know that I was distressed that I could not be here last week, first, because I wanted to be here, and second, because there was a family emergency that took me away. I would just as soon not have those types of things coming up.

    It was my understanding that what came out of that meeting was that we were doing estimates and that we were deciding the future business of Bill C-26, namely the witness list and so on. That's what was discussed, and it got derailed not because of me today but because of what the chair has brought up, that we couldn't get a witness we needed to come in, namely the deputy minister. What had been agreed to was changed as a result of the lack of cooperation by the department.

    I submit both lists because I still wish to have this committee travel on Bill C-26 so they can see first-hand the incredible impact this bill will lead to in western Canada in derailing the private sector rail operation of that region of this country. If the government is at all concerned about western alienation, by God, they had better address this before they move on.

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    The Chair: Thank you.

    Mr. Gaudet, do you have a witness list?

[Translation]

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    Mr. Roger Gaudet: I already gave it.

[English]

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    The Chair: Do we have a witness list from you, Mr. Proulx?

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    Mr. Marcel Proulx: The clerk already has it.

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    The Chair: Could I ask for the concurrence of the committee that Mr. Gouk, Mr. Proulx, Mr. Gallaway, Mr. Gaudet, and I meet sometime later on this afternoon or tomorrow to talk about the witness list? Is that okay?

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    Mr. Jim Gouk: Tomorrow would work.

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    Mr. Jim Gouk: What about the tour? Are we going to address that?

-

    The Chair: Leave the tour with me to see if we can fit it in. We'll get a tour. It may not be Thursday morning, but we'll get a tour.

    The meeting is adjourned.