Thank you, Madam Chair. I'm delighted to be here. I've been looking forward to this for a long time.
Madam Chair and honourable members, I am pleased to meet with the committee today to talk about Bill , the Transportation Modernization Act.
I would like to thank the committee for studying the bill before the House is scheduled to resume. That is very much appreciated. I know that you've had three very busy days.
A strong transportation system is fundamental to Canada's overall economic performance and competitiveness. This bill, once passed, would make amendments to the Canada Transportation Act and other related legislation that would position our country to capitalize on global opportunities and make improvements to better meet the needs and service expectations of Canadians.
The measures included in Bill reflect what Canadians told us they expect during the extensive consultations we undertook last year. We held more than 200 meetings and round tables across the country with transportation and trade stakeholders, indigenous groups, provinces and territories, and individual Canadians to hear their views on the future of transportation in Canada. Our work is aimed at creating and facilitating the conditions to achieve long-term success, and this is precisely what this bill proposes to do.
Bill is an important first step, and I emphasize “first step”, towards delivering on early and concrete measures in support of transportation 2030, which is the strategic plan for the future of transportation in Canada. This bill focuses on our immediate priorities in the air, rail, and marine sectors. It aims to implement a series of measures to promote an integrated transportation system that is safe, secure, green, and innovative, and that will contribute to our economic growth and a cleaner environment, not to mention the well-being of Canadians when they travel.
The concerns of Canadians have been highlighted in recent months with the much-publicized cases of unacceptable treatment of air travellers both in this country and elsewhere. Bill proposes to mandate the Canadian Transportation Agency to develop, in consultation with Transport Canada, new regulations to enhance Canada's air passenger rights. These new rules would ensure that air passenger rights are clear, consistent, and fair for both travellers and air carriers.
Some examples of issues the new regulations would address include denied boarding in cases of overbooking, delays, or cancellations; lost or damaged baggage; tarmac delays beyond a certain period of time; seating children next to a parent or guardian at no extra cost; and ensuring that carriers develop clear standards for transporting musical instruments. Clear information will be provided to travellers in plain language about carriers' obligations and how to seek compensation and file complaints.
Under this proposed legislation, Canadians and anyone travelling to, from, and within Canada would benefit from a uniform, predictable, and reasonable approach. My objective is to ensure that passengers would have a clear understanding of their rights as air travellers while ensuring that this new approach would not negatively impact access to air services or the cost of travel.
I've been clear that regulations would include provisions whose intent would be that any denied boarding due to overbooking is done voluntarily and that under no circumstances someone be involuntarily removed from an aircraft after they have boarded. As Canadians, we expect that air carriers serving our country treat their passengers with the respect they deserve and that they live up to their commitments.
This bill also proposes that regulations be made to require data from all air service providers to be able to monitor the air traveller experience, including compliance with the proposed air passenger rights.
The legislation also proposes to liberalize international ownership restrictions from 25% to 49% of voting interests for Canadian air carriers, with accompanying safeguards, while retaining the 25% limit for specialty air services.
These safeguards limit a single international investor to hold no more than 25% of the voting interests of a Canadian air carrier, and no combination of foreign air carriers could own more than 25% of a Canadian carrier.
The direct impact of higher levels of international investment would be that Canadian air carriers or companies wishing to create new air services would have access to a wider pool of risk capital. Consequently, that pool of capital, from both international and domestic sources, would allow the Canadian air sector to become more competitive, and would lead to more choices and to lower prices for Canadians.
Another improvement in the bill is that it proposes a new, streamlined and predictable process for the authorization of joint ventures between air carriers, taking into account competition and wider public interest considerations.
In Canada, air carrier joint ventures are currently examined from the perspective of possible harm to competition by the Competition Bureau, under the Competition Act. Unlike in many other countries, notably the United States, Canada's current approach does not allow for the consideration of the wider public interest benefits with respect to specific routes. Furthermore, the bureau's review is not subject to specific timelines.
This raises concerns that the current approach to assessing joint ventures may make Canadian carriers less attractive to global counterparts as joint venture partners and may be limiting the ability of Canadian carriers to engage in this industry trend.
The bill proposes measures that would allow the Minister of Transport to consider and approve air carrier joint ventures, where it is in the public interest, taking into account competition considerations. The minister would work in close consultation with the Commissioner of Competition to ensure that he or she be properly informed regarding any concerns with regard to competition. Air carriers that would choose to have their proposed joint ventures assessed through the new process would be given clear timelines for an expected decision.
Globally, airports are making unprecedented investments in passenger screening to facilitate travel and gain global economic advantages. Canada's largest airports have also expressed an interest in investing in this area, and smaller airports have shown interest in obtaining access to screening services to promote local economic development.
The bill would create a more flexible framework for the Canadian Air Transport Security Authority to provide screening services on a cost-recovery basis, supporting efforts to maintain an aviation system that is both secure and cost-effective.
Bill also proposes significant enhancements to increase the safety of the rail sector in order to build a safer, more secure rail transportation system that Canadians trust. As you all know, rail safety, as I've said many times, is my number one priority.
The proposed modifications to the Railway Safety Act would mandate the installation of voice and video recorders to strengthen rail safety by providing objective data about crew actions leading up to and during a rail accident or incident. Beyond that, the requirement would also increase opportunities to analyze identified safety concerns to prevent accidents from occurring.
This would not only require companies to install the recorders, but it would also limit how the recorded data could be used, within strict criteria. For instance, the Transportation Safety Board would have access to the recorded data for post-accident investigations. Transport Canada and railway companies would also have access to the data for proactive safety management and for following up on incidents and accidents not investigated by the Transportation Safety Board, but under specific conditions. The specific limits on the use of the data are designed to maximize the safety value of this technology while limiting its potential to infringe on employees' privacy rights.
Canada's freight rail system is critical to our economy. Bill would strengthen that system by enhancing its transparency, balance, and long-term efficiency. Let me highlight key examples.
Under this bill, shippers could seek reciprocal financial penalties for breaches of their service agreements by the railways. They would have fair access to more timely processes for settling service and rate disputes. More shippers would be eligible for the streamlined final arbitration process in particular. Further, new measures would ensure that the agency offers shippers informal dispute resolution options as well as guidance.
The bill would also introduce a new measure, long-haul interswitching, to give captive shippers across regions and sectors access to an alternative railway. Rates would be set based on comparable traffic, with the agency having discretion in determining comparability. The bill would modernize key grain measures, such as the maximum reserve revenue entitlement, to promote railway investments—and that's a key feature—and ensure that interswitching rates are updated regularly and compensate railways adequately.
Further, Bill would enhance sector transparency by requiring large railways to report some performance, service, and rate data about their Canadian operations. Transport Canada would have the authority to publicly report rate trends.
With these and other measures of this bill, we are taking important steps to ensure that Canadians have the freight rail system they need now and in the years ahead.
These aren't the only ways that we propose to improve trade to global markets. Bill would also amend the Coasting Trade Act and the Canada Marine Act to enhance marine transportation and to allow access for marine-related infrastructure funding. Specifically, amendments to the Coasting Trade Act would allow all vessel owners to reposition their owned or leased empty containers between locations in Canada using vessels of any registry. This would support greater logistical flexibility for industry. In addition, modifications to the Canada Marine Act would permit Canada port authorities to access the Canada infrastructure bank for loans and loan guarantees to support investments in key enabling infrastructure.
In conclusion, I believe that this proposed legislation advances important actions that will help to bring Canada's transportation system into the 21st century. Ultimately, we do need a system to meet the demands of today's economy so that we can keep Canada's travellers and cargo moving efficiently and safely. Passage of this bill as soon as possible this fall would represent a critical milestone in achieving tangible improvements to our national transportation system that will benefit Canadians for decades to come.
Thank you for your attention. I now look forward to answering your questions.
Thank you, Mr. Badawey, for your question.
As I mentioned and as I think I emphasized in my opening remarks, Bill is a first step because, as you know, transportation 2030, which I outlined about a year ago, is much broader than simply the measures that are contained in Bill C-49. The Bill C-49 measures are an important first step to address a number of particularly important matters. The charter of rights for passengers is long awaited and has not been done in the past.
With regard to the modernization of freight rail, I can't emphasize how important that is. We need to improve safety on our railway systems because there are still too many derailments occurring.
As you know, there are five themes in transportation 2030. One of them is the air passenger experience. It also talks about green transportation and about innovative transportation. It talks about safety in all the forms of transportation, many of which are not addressed in Bill C-49. There is still much more work to do, and that is part of our ongoing work with respect to achieving the aims of transportation 2030, so there will be more projects that will be coming forth.
A simple example is that we have heard from air passengers that it takes too long to go through security at airports. That is still very much something that is on my mind, and it is part of the traveller experience.
We've heard that we need to make transportation greener in this country, and this is a commitment of our country.
There will be more on those as we go along as part of our mandate.
Good morning, Mr. Minister.
First, I hope you and your staff have been able to absorb what we've heard from the various witnesses, because invariably they're saying this is a major step. We're accomplishing things here that some people have been waiting a long, long time to see. Each one has said there are some things they'd like to improve, so I think a sweet spot has somehow been touched here.
In the fullness of time, you will hear a little bit more about the long-haul interswitching and the nearest transfer point versus the most competitive one. We'll hear about the exclusion of soy from the maximum revenue entitlement, the ownership of records for the LVVR systems, and the timeliness of data and how long it's going to take to get everybody up to speed to be able to provide that data and bring in the transparency. You'll hear all of that later on.
With respect to the air passenger bill of rights, I've spent time on airplanes going back and forth to my riding in Fleetwood—Port Kells in B.C., and if I'm sitting on the tarmac or I'm sitting on top of a rocket, I don't care if it takes a little longer, because I want it to be safe. Obviously, there's a balance there that we have to consider, but notwithstanding the fact that a lot of the focus has been on the airlines, they've also been delayed because ground crews aren't available at an airport. That's not a safety issue; it's an operational glitch.
I'm just wondering about something. If we look at the all-of-experience scenario for passengers and whether or not the focus solely on the airlines is fair and balanced, given that some of the other players can also contribute operationally—not necessarily safety or weather or act of God but just simply not working very well—to the delays and problems that air passengers face, is there a sense that we can include that in the mix?
Thank you, Madam Chair.
Thank you, Minister, for appearing in front of committee.
Minister, I think we would all agree that the privatization of Air Canada in the 1980s and the subsequent privatization of Canadian National Railway in the 1990s, along with the deregulation of parts of the transport system in allowing commercial forces to play a greater role in that system, have been successful. It's better for consumers and customers and better for companies.
What I don't understand is why the government didn't move in Bill in that direction for the movement of grain. We've had an ongoing crisis in the grain handling industry. This is not new. We had one in 2013-14 under the previous Conservative government. There was one in 2001 under a previous Liberal government. The crisis is only going to get worse. In fact, projections are that the amount of grains and oilseeds produced in Canada is going to continue to increase as a result of advances in crop science and techniques.
Both the June 2001 report, which was commissioned by a Liberal government, and the February 2016 report, commissioned by a Conservative government, recommended that we move toward a commercial grain handling system, and that we lift, over a period of time, the maximum revenue entitlements.
Maybe you could tell this committee why the government didn't move on those recommendations in this bill, particularly in light of the fact that two reports have now recommended that the government move on it, that we've had a number of crises in the grain handling industry over the last two decades, and that it's only going to get worse going forward as production continues to increase.
Thank you, Madam Chair.
Mr. Garneau, you visited Rouyn-Noranda recently and made an announcement about the airport. The airport expansion should sort things out, but right now Air Canada is the only carrier with flights to Montreal, meaning that there is no competition and the fares are very high. It could easily cost me $1,200 to fly from Ottawa to Rouyn-Noranda return, even though the distance between the two cities is less than 500 km as the crow flies. This shows that the lack of competition has a huge impact on prices.
In Bill , however, you are giving yourself the power to approve joint ventures between air carriers even if the Commissioner of Competition is of the opinion that the agreement will weaken competition and increase costs for passengers.
Once again, Air Canada's profits seem to take precedence over consumers' rights. After introducing a bill that cost 2,600 workers in Quebec their jobs, you are at it again with a bill that removes powers from the Commissioner of Competition.
Moreover, the register of the Office of the Commissioner of Lobbying of Canada shows that Air Canada has been in contact with your government numerous times to discuss the legislative framework for international air carrier joint ventures.
In short, it looks like Air Canada is pressuring your government to weaken the powers of the Commissioner of Competition and passenger rights. Air Canada's lobbyists must be proud to have your support.
I would like to know how diminishing the powers of the Commissioner of Competition will serve air passengers.
Minister, as I said, I want to talk a bit about short-line rail, and I'm glad that my colleague, Mr. Badawey, brought it up as well. What I want to do was quote something from David Emerson's testimony on Monday, which I think is important, since he chaired the commission that took a look at everything. He said, in response to a question from Mr. Brassard, that “it's a very serious problem”, meaning short-line rail funding, “and if we don't deal with it, it's either going to force everybody onto the roads in trucks or we're going to have to fix the problem, probably when it's very late in the day and it's maybe ineffective.
Mr. Murad Al-Katib, who also sat on the committee, weighed in on it as well. What he said, with respect to short-line rail, is that it's “a very essential element of interconnectivity. The rail lines, with consolidation, will go to the main lines, and the densification of short-lines is essential for rural economic development in this country.”
The question was whether there will be something forthcoming on short-line rail. I note that you said at the beginning that C-49 is a first step. I'm wondering if you can give us some comfort about whether we're going to see a package of reforms from you that focus on the undercapitalization of short-line rail or on a national rail plan in the coming years.
It's back to me again, Minister. It's more like a conversation than it is anything else, I think. The officials around you are probably thinking that this feels like the briefings they used to give me all the time in terms of questions.
Briefly, I want to say that I understand—I know that I'm talking to somebody who understands this—that there is a delicate balancing act when it comes to the portfolio. In the air sector you have to balance airlines, airports, and consumers. You have the bill of rights with that one. In marine you have cargo carriers, ports, shippers. All those guys are important.
In rail you have a different balancing act. It's a very difficult one, I will tell you. You know it's difficult. On one side it's farmers, forestry, mining, containers, and all that. On the other side it's rail companies, and then throw in a little dash of unions. It's a very difficult area. Any time you move off the status quo, which Bill does, you're going to have people who are winners and people who are losers. Our attempt here is to try to figure out what the best balance is.
I'd like to go back to something you said to I think Mr. Sikand or Mr. Fraser. It had to do with whether or not we need in Bill the ability, again, for the CTA to do self-implementation. This time I'll give the example of forestry, which is very different.
FPAC came to this committee and asked to have the ability for the agency to intervene so that they will be able to study something. I think it comes from a real place, because as my colleague Mr. Chong pointed out, we have seen this movie before in terms of having emergencies in the transportation of grain and transportation of commodities. Sometimes the politics that invariably are in a minister's office can cloud the quickness by which you can make a direction for a study to happen. It happens in all parties. It's not a partisan issue here. This happens in all parties.
I'm trying to understand, Minister, why you don't think it's a good idea for the CTA to have that experience, to be those people who are the knowledge people in the business, seeing a certain situation happening again where they can actually take action and get in there quicker in order to resolve these disputes because they have the ability to look at it themselves.
That's an area where I'm really concerned about the balance. I don't see the purpose in having the minister hold the only power to start off an investigation by means of a notice of direction. I have used that and you have used that in the past, but we're not always going to be.... I'm not going to be the transport minister, and one day you won't be the transport minister. We have to make the system work for everybody forever.
You have to bear in mind that sometimes ministers just won't take action, so why not have the CTA have that power?
Madam Chair, my name is Melissa Fisher. I'm the associate deputy commissioner in the mergers directorate at the Competition Bureau. I'm joined today by my colleague, Anthony Durocher, the deputy commissioner of the monopolistic practices directorate at the bureau.
Also present is Mark Schaan, director general of the marketplace framework policy branch at Innovation, Science and Economic Development Canada. He is in charge of competition policy, while the Bureau carries out the independent enforcement function.
I understand that the committee has questions about changes in the bureau's role in relation to the review of arrangements between air carriers, as set out in Bill .
I'll begin by providing some context about the bureau and its mandate. I will then speak to the bureau's experience in reviewing agreements and arrangements between air service providers. Finally, I will address the provisions of Bill that would impact the bureau's role in examining these types of agreements or arrangements.
The Bureau is an independent law enforcement agency that ensures that Canadian consumers and businesses prosper in a competitive and innovative marketplace that delivers lower prices and more product choice. Headed by the Commissioner of Competition, the Bureau is responsible for the administration and enforcement of the Competition Act and three of Canada's labelling statutes.
The act provides the commissioner with the authority to investigate anti-competitive behaviour. The act contains both civil and criminal provisions and covers conduct such as false and misleading representations, abuse of a dominant market position, mergers, and price-fixing. Civil matters are resolved before the Competition Tribunal, a specialized adjudicative body that comprises Federal Court judges and laypersons with expertise in business, commerce, or economics, whereas criminal matters are resolved before the courts. The act also provides the commissioner with the ability to make representations before regulatory boards, commissions, or other tribunals to promote competition in various sectors. The basic operating assumption of the bureau is that competition is good for both businesses and consumers.
Today I am here to talk about the bureau's role in reviewing arrangements between air carriers and how that role would change if Bill were passed.
The bureau has a significant amount of experience reviewing arrangements, including mergers and joint ventures, in the air transport sector. From the development of the first broad airline alliances in the late 1990s to the acquisition of Canadian Airlines by Air Canada in 2000 and the entry, and sometimes exit, of a number of carriers since then, the bureau has examined a variety of arrangements between air carriers that could harm businesses and consumers who rely on air services through increased prices and reduced choice.
Notably, in 2011, the bureau challenged before the tribunal a proposed joint venture between Air Canada and United Continental that involved co-operation on certain key aspects of competition, including pricing, capacity setting, frequent flyer programs, and revenue and cost sharing. After conducting an in-depth review, the bureau determined that the proposed joint venture would have resulted in the airlines' jointly monopolizing 10 key Canada-U.S. transporter routes and substantially reducing competition on nine additional routes. In turn, this would have likely led to increased prices and reduced consumer choice. Ultimately, the bureau reached a negotiated resolution with the parties. The consent agreement entered into prohibits Air Canada and United Continental from implementing their joint venture agreement on 14 transborder routes.
The Air Canada-United Continental matter is an example of how the bureau might review an air services arrangement under the Competition Act. The bureau typically examines this type of arrangement in the context of either the merger or the competitor collaboration provisions in the act, depending on how the arrangement is structured. These arrangements can have positive effects, such as increasing efficiency and competitiveness, in turn allowing Canadians to benefit from lower prices and better product choice. However, they can also raise competition concerns. If the commissioner determines that an arrangement is likely to result in a substantial lessening or prevention of competition, which is the statutory threshold, he may, subject to an exception for notifiable transactions under the act, challenge it before the Competition Tribunal, or alternatively, seek a consensual resolution with the parties in the form of a consent agreement.
With respect to the factors considered in reviewing mergers or agreements among competitors, the bureau undertakes an exhaustive, fact-intensive and evidence-based review, including quantitative analysis. In analyzing an airline joint venture, the bureau will focus on routes where there is overlap or potential overlap in the service by the parties.
In particular, the bureau typically considers whether the joint venture partners provide competing air passenger services on specific origin-destination city pairs, such as Toronto to Chicago or Winnipeg to North Bay. The bureau also assesses whether consumers view, for example, non-stop or one-stop service, or business and leisure travel as substitutes for one another. The bureau also considers whether there are competitors serving the parties' overlapping routes, any barriers to entry, and whether existing or potential competitors may constrain the ability of the parties to the arrangement to raise prices.
A joint venture that reduces the number of competitors or potential competitors on an already concentrated route will raise concerns. For any particular overlapping route, the bureau will want to ensure that consumers have access to competitive prices and services, and that a proposed arrangement would not result in any route being captive to one or more airlines with enhanced market power.
To assess the competitive impacts of a proposed joint venture, the bureau can require significant amounts of data and other market information from the parties to the joint venture and other market participants. This information is necessary for an informed and credible review based on sound economic principles. The bureau may seek such information on a voluntary basis from the parties to the arrangement, from third parties with knowledge of the industry, or from consumers. At times, it may also seek the issuance of a court order requiring that certain information be produced.
Bill establishes a new process for the review and authorization of arrangements involving two or more transportation undertakings providing air services. This process will cover all types of arrangements among air carriers, other than arrangements that would be considered notifiable transactions under the Competition Act. Notifiable transactions are transactions that meet specific financial thresholds regarding the size of the parties and the size of the transaction, and that cannot be completed until the commissioner has had an opportunity to review. Notifiable transactions have been subject to a potential public interest review by the minister of transport since 2000.
Bill proposes a new process for arrangements involving air services that will enable air carriers to voluntarily seek authorization of a proposed arrangement from the minister of transport. The commissioner will receive a copy of any notice of an arrangement that is provided to the minister, along with any information required by the guidelines.
If the minister determines that the proposed arrangement raises significant considerations with respect to the public interest, then the commissioner is required, within 120 days of receiving the initial notice, to report to the minister and the parties on any concerns regarding the potential prevention or lessening of competition that could occur as a result of the proposed arrangement. A summary of the commissioner's report may be made public. I would note in this respect the bureau's ongoing commitment to transparency within the limits of our confidentiality obligations, and that this commitment would continue under this process as well.
The bureau will carry out its usual competitive analysis, but to the extent that the arrangement raises competition concerns, it will not have the option of settling those concerns with the parties directly through the negotiation of remedies or by applying for a remedial order from the tribunal. The final decision in these matters will rest with the minister of transport, and the minister will consult with the commissioner on any remedial measures relating to competition.
In cases where the parties do not seek an authorization from the minister, or where the minister does not trigger a public interest review, the bureau will assess the arrangements under the Competition Act in the usual manner and without any change from its current process. The bureau will make its staff available to consult with the minister of transport to develop guidelines as required by the bill, and is committed to working with transport, including taking steps to ensure that the guidelines require parties to produce the information that the bureau needs to undertake an informed competition analysis.
While the bureau and the minister will work together to share information, the bureau's review of arrangements will remain separate and independent from the public interest review conducted by the minister.
Chair, committee members, first let me offer condolences on behalf of the Canadian Chamber of Commerce regarding the passing of your parliamentary and caucus colleague, Arnold Chan.
The Chair: Thank you.
Mr. Ryan Greer: I think we all appreciate the challenge of continuing your work on a difficult day like today, so thank you for having us here.
Thank you for inviting the chamber to take part in your study on Bill . The package of legislative amendments before you affects chamber members of all sizes across our network of 200,000 members.
I'd like to start by commending Mr. Emerson and the review panel for their work on the Canada Transportation Act review report. The report is a comprehensive landmark piece of work. It made important recommendations toward helping to modernize Canada's trade and transportation networks. Bill C-49 touches on some key issues raised by the review.
The lens by which the chamber considers the individual components of Bill C-49 and offers comments is how we see the proposed changes affecting Canadian competitiveness overall. I'll start briefly on the rail side before jumping over to a few remarks on air travel as well.
Canada's historical trend of privatization in rail is a tremendous success story that has resulted in significant private sector investment leading to some of the lowest freight rates and highest levels of service in the world.
To that end, the chamber offers caution about the urge to expand regulation into Canada's supply chains. In a global economy where connectivity has become a key determinant of economic performance, the objective of any transportation system reform should be on continuous improvement to the efficiency of our supply chains. This was a major theme of Mr. Emerson's review.
The network nature of these supply chains, including our rail system, is such that providing a regulated advantage to one customer, one sector, or one part of the network will inevitably take something away from other parts of the network. This is one of the reasons that the last two Canada Transportation Act review panels, in 2001 and again in 2016, recommended against increased interswitching limits and maintaining a system based principally on commercial relationships and market forces.
Specifically, the chamber has concerns about the proposed new long-haul interswitching provisions. I think we should be wary of unintended consequences, including disincentives to investment and reduced productivity. In particular, the economics around remote branch lines serving resource industries is already difficult. LHI could threaten to reduce the income that railways make on these lines, which makes their future even a little more perilous.
Another consequence of long-haul interswitching is allowing U.S. railways to take advantage of Canadian lines without reciprocity. As currently drafted, Bill C-49 includes some geographical exemptions for U.S. access and, at a minimum, those exemptions should be maintained. Without the exemptions, Canada would stand to lose a large amount of rail and port business to the U.S., particularly through Vancouver and Montreal.
Broadly, supply chain competitiveness is better served by having a commercial marketplace that has sufficient provisions in place to protect customers in the event of a dispute. Bill C-49 does include some reasonable amendments to existing dispute resolution mechanisms.
On the issue of level of service decisions from the CTA, the chamber would suggest that the CTA should take into account the impact of decisions on all aspects of a supply chain and not just a single customer in making their decisions.
Moving on, we are supportive of provisions in the bill that will change the framework of the maximum revenue entitlement to remove some of the disincentives that have discouraged the acquisition of new hopper cars. We are also supportive of the measures for supply chain data transparency and some of the additional steps that the government has already taken in this regard.
We also support Bill C-49's provisions on locomotive video and voice recorders, including the proactive use of this data by railway companies. The minister has repeatedly said that his number one priority is safety, and this will help accomplish that.
Last, on rail, the chamber is supportive of increasing the individual share ownership limit for CN from 15% to 25%. This is an issue for fairness compared to other carriers and other modes and is important for accessing the necessary capital for long-term investment for the railway.
Moving on quickly to the air transportation sections of the bill, the chamber is supportive of a new framework for consumer rights. The current complaint-based system is a bit of a mess. It leads to inconsistent application of rules between carriers. A simplification and standardization of those rules is overdue, both for those travelling on the airlines and the airlines themselves. Like all business, our carriers can operate more effectively and efficiently when they have greater certainty of the environment in which they're operating.
As regulations under the framework are developed, we'd recommend that they clearly reflect the fact that airlines are one part of the air transportation system. For instance, security screening delays remain one of the top complaints from air travellers.
The bill also requires more information and data regarding air carrier service. I would offer that increased data requirements should not be limited to our carriers, but specifically include government entities within the network that affect system performance, including CBSA and CATSA.
We are also supportive of the joint venture provisions in the bill and setting up the new approval process for the minister of transport. Moving the authority or creating this new process will allow joint venture decisions to be made with a broader public and economic interest in mind.
We do recommend that some of the joint venture provisions in the bill be amended. Specifically, the allowance of a ministerial review of a joint venture after two years following its approval should be lengthened. The two-year clock begins following the ministerial approval of the joint venture, not from when the joint venture actually commences its operation. Once it's actually off the ground, so to speak, we believe that the two-year time frame will probably not provide sufficient enough time to test the joint venture in the market.
The chamber is also supportive of the CATSA cost-recovery section of this bill, with the major caveat that this is very much a band-aid solution, while the government continues to correct or tries to correct the CATSA funding model. We must look to end the chronic underfunding of CATSA to ensure that air travellers can receive the efficient screening services that they are already paying for on their tickets.
We are also in favour of the foreign ownership provisions for airlines in this bill. The minister has stated that the objective of this change is to help promote more competition and bring down airfares. I would just add that if Canada wants to get serious about lowering airfares, it is time to review the government-imposed costs on ticket prices. This of course includes airport rents, security charges, Nav Canada fees and other taxes, all of which impact the competitiveness of Canadian air travel.
I'll wrap up by commending the minister, his team, and the department for the work they've put into transportation 2030 and Bill , and this committee for all the work that you are doing this week. As the minister said this morning, Bill C-49 is only the first step in a long-term transportation plan and the Canadian Chamber of Commerce looks forward to continuing to work with the government on improving Canada's trade and transportation competitiveness.
I'll start, and my bureau colleagues may want to intervene.
One of the reasons we introduced the joint venture provisions in Bill as they are now is that currently joint ventures in this country actually don't have any set timelines necessarily, because they are subject to the commercial collaboration provisions of the Competition Act, which the commissioner of competition can initiate at any time and invoke a review of at any time. That does not allow for any certainty or predictability for proponents unless it's a notifiable merger.
We've taken the merger provisions that currently live under the CTA, which allow for a public interest consideration, and we have actually made those timelines more explicit and shorter. If I take the merger timelines, for instance, it's important to think about the time that leads up to a merger notice being given, but essentially you can take that same time frame and, say, 42 days to inform parties, and, where there is public interest, another 150, and then there's a TBD on all of the steps that follow thereafter.
With respect to the joint venture provisions, one point I want to clarify is that the 120 days for the commissioner of competition are parallel to the 150 days for the minister of transport. Really, in this particular set of time frames we are trying to balance providing predictability and certainty with the need for a robust competition consideration by the commissioner of competition and a robust public interest consideration by the minister of transport. We actually think this particular measure right now allows for an international competitiveness that Canada currently can enjoy like its other comparators.
To your point on the two-year minimum immunity period, I would stress that it's a two-year minimum period, so unless it is otherwise stipulated in the terms and conditions, joint ventures will not have an expiry date and will continue to operate in perpetuity while being monitored annually. That being said, we believe the two-year minimum is sufficient. It's worth noting that in other jurisdictions, such as the United States, antitrust immunity can be reconsidered at any point by the transportation authorities, and so there is actually no certainty to pardon. Therefore, in the joint venture provisions in Bill , we've tried to provide for a balanced and thoughtful consideration of competition and public interest considerations and as much predictability and certainty to parties as possible while ensuring that at all times there's due process.
Thank you to the panellists for coming out this morning and afternoon. It's a pleasure to have you.
This process, as I said earlier, has been very fruitful in terms of a lot of the information that's come out. There's no question it's going to be a work in progress. We had an environment that we lived in yesterday, and now we're going to have a new environment that we're going to live in tomorrow. I see this bill, in adding to the overall bigger strategy, as becoming more of an enabler, more a plan of action, being very pragmatic. With that, once it reaches royal assent, it will be able to execute a lot of the recommendations that are contained therein.
My question first of all is for Mr. Greer. Speaking of yesterday's environment, a competitive air transportation environment, as you well recognize, is a key economic driver, creating economic growth not only within relevant regions vis-à-vis those that have airports, but also the ones that they cater to that might be some distance away.
In your view, and this is again a work in progress, does this bill bring a proper direction forward in comparison to the way it was, and streamline the process, make it more user friendly, therefore customer friendly? Do you find that, again, we're moving in a more positive direction in comparison to what we had?
Madam Chairwoman and honourable members, I appreciate the opportunity to appear before this committee as it considers Bill .
My name is Doug Lavin, and I am the vice-president for member and external relations for North America for the International Air Transport Association, or IATA.
IATA is a Canadian corporation created by a special act of the Canadian Parliament, representing the interests of 275 airlines in more than 117 countries around the world, including Air Canada, Air Transat, Cargojet, and WestJet. As such, IATA has a significant interest in the proceedings of this committee on Bill .
I have submitted my written comments on Bill for your consideration in advance of today's hearing, but I'd like to take my time this afternoon to highlight several points included in that submission.
First, it is important to note that a key recommendation of the 2016 Canada Transportation Act review was to reduce the high level of government taxes and fees on Canadian air transportation because of their significant negative impact on both airlines and passengers. Specifically, the CTA review recommended a phasing out of airport rent, a reform of the user-pay policy to prevent the government from collecting taxes in excess of its investment in services and infrastructure, and a reduction in the air traveller security charge.
In announcing the government's transportation policy, promised a reduction of what he characterized as a “litany of fees and charges” on air travel. In fact, this morning he mentioned that he had travelled the country in preparation for Bill , and the number one issue he heard about was the high cost of air travel.
IATA was therefore disappointed that Bill fails to address any of these cost issues—no call for a reduction in rent, taxes, or fees.
To be fair, has promised to address these cost issues in phase two of the government's vision for the future of Canadian transportation. We look forward to supporting Minister Garneau and his team in this second phase.
I believe my airline and trade association colleagues who have testified before you yesterday and this afternoon are better equipped than I am to address the issues of airline ownership, joint ventures, and CATSA cost recovery set forth in Bill . I'd like to focus my remarks on Bill C-49's call for the Canadian Transportation Agency and Transport Canada to develop enhanced air passenger protection regulations.
IATA is currently working with approximately 70 governments that have either implemented or are considering implementing air passenger rights regulations. As you would expect, some governments have done a better job than others in this regard. We have seen two primary approaches to these passenger rights regimes.
The first approach is that government steps in and dictates how airlines should treat their passengers. This model is best seen in the approach taken by the United States and the European Union, where regulations impose stiff fines if airlines do not meet government-imposed requirements as to how passengers should be treated in the case of delay, cancellation, or lost baggage.
For the most part, these fines are punitive in nature, as they go beyond the cost of the delay or cancellation to the air passenger. We see a number of challenges to this approach.
First, it is difficult to define in regulatory terms exactly how to treat passengers in any given circumstance. Each irregular operation presents a different set of facts that are difficult to anticipate, much less to regulate. In Europe, for example, the courts stepped in to interpret the intent of the European passenger rights regulations, which more often than not resulted in contradictory interpretations and confusion on the part of airlines and passengers alike.
Second, the most well-intentioned government regulators can sometimes do more harm than good when attempting to protect passenger interests. For example, in the United States the rule against lengthy tarmac delays has resulted in increased flight cancellations, which often prove to be more inconvenient to passengers than the tarmac delay itself.
In 1987, Canada deregulated the commercial airline industry based on the belief that the free market, rather than government regulation, would produce better results for airline passengers. There is little evidence to suggest that this assumption was incorrect then or now. We know that rare tarmac delays or lost luggage occasionally cause inconvenience for air passengers. However, the answer is not always government second-guessing airlines when the competitive market, and more recently social media, already provides them with all the incentives they need to treat their customers as well as possible.
While Europe and the U.S. passenger rights approach have been copied by some governments, other countries have taken a second approach that I believe this committee and Canadian regulators should consider.
Under this approach, governments do not impose strict passenger rights rules with accompanied fines or penalties. Instead, they put measures in place to ensure that air passengers are fully aware of their rights before they purchase their ticket, leaving it up to passengers to decide what level of service they're willing to pay for.
Australia is a good example of this approach. In addition to adopting a broad consumer rights law covering all industries, the government has worked with the airlines to develop customer charters that outline each passenger's service commitments and complete handling procedures. China and Singapore have also chosen this focus on transparency rather than imposing punitive measures, and have seen positive results in terms of on-time performance, lower cancellations, and lower airfares
It is interesting to note that last year, the Canadian Transportation Agency took a step in that direction when it requested and received voluntary commitments by Canadian carriers to publish their tariffs and contracts of carriage in clear language on their respective websites.
Bill seeks to combine both approaches to this passenger rights issue. On the one hand, it requires airlines to make terms and conditions of carriage readily available to passengers in clear and concise language. IATA supports this transparency. Bill C-49 goes on to direct CTA and Transport Canada to develop regulations with minimum standards and compensation for passengers during irregular operations. IATA has significant concerns regarding this approach, particularly if the fines are prescriptive in nature.
If Bill remains as is and CTA and Transport Canada follow the U.S. and EU approach, we urge these regulators to follow several principles to promote clear and fair regulation. These include guarding against unintended consequences and including provisions to fix them when they arise, as well as ensuring that the benefits outweigh the costs of regulation. Compensation should be equivalent to the cost of lost time and property to passengers and not be punitive. We need to ensure that any customer service requirements apply to all parts of the air transportation ecosystem rather than just airlines, and that fines are only imposed on actions within the airline's control. Finally, passenger rights rules should not be extraterritorial in nature.
Thank you for your consideration. I look forward to answering your questions.
Thank you, Madam Chair.
To the committee, thank you for having the Northern Air Transport Association here. My name is Glenn Priestley and I am proud to be the executive director of NATA.
Our membership is representative of all aspects of northern and remote air operations. Our operators are committed to the highest possible standards and co-operating with all government agencies to achieve this standard with rules and recommended practices that make sense and support the Canadian aviation industry.
I would like to take the opportunity to thank the committee and staff for including NATA, including northern and remote operations across Canada on these important discussions on the legislation contained in Bill . Too often, aviation policy is formed with a focus on southern Canadian air services. There has been a genuine effort by this government and various committees like TRAN to understand the unique issues associated with northern and remote aviation and we thank you for that.
Bill is a large bill that has three sections that concern the Canadian aviation industry. For this briefing we'll be focusing on the passenger bill of rights legislation from the perspective of the northern travel experience. We'll be looking to ATAC as our senior association. We'll be looking at all of the aspects, but I'd like to focus on the passenger bill of rights, if I may.
The management of passenger safety and the overall cost of the travelling experience is a complex and daily issue for northern operators. Long-term commitment to isolated communities with initial and ongoing investment in newer aircraft and facilities creates a special bond between the air carrier and customer. The relationship is more like a partnership, and a unique aspect of all northern operators is significant commercial partnerships with many first nation and Inuit governments. These relationships provide a recognition of the needs of communities and individuals.
Examples of this recognition would be the reserved seating section to community elders located in most northern airport waiting areas. Northern operators have had to find solutions to operational problems that simply do not exist in the south. Examples include long-range flight planning with limited information and support, creating the need for contingency planning to ensure the safety of the travelling public.
This committee had a substantial focus in its June 7, 2017, report on aviation safety in Canada regarding the lack of northern aviation infrastructure needed to improve the travel experience and improve overall system safety and service reliability. The northern focus concluded with the following recommendation, “That Transport Canada develop a plan and timeline to address the specific operating conditions and infrastructure needs of airlines serving Northern Canada and small airports.”
Referring to the Canada Transportation Act amendment to include passenger rights legislation, the Northern Air Transport Association is very concerned with the generalities and the wording, and the increase in regulatory authority that these amendments and others will provide to the Canadian Transportation Agency.
To be clear, NATA agrees that fare-paying passengers have rights. However, there are concerns that because of problems that have been manifested in southern Canada and internationally, northern air carriers are going to be burdened with one-size-fits-all. NATA members are currently very engaged on flawed regulations that were developed this way regarding flight and duty time rules for flight crew.
Here is our summary.
NATA agrees that the travel experience should be as transparent as possible with expectations clearly stated.
NATA does not agree with any minimum standard of compensation in the regulations, as there are simply too many variables.
NATA does agree with the procedures that provide passengers with essential notice for any unscheduled occurrence that causes delay.
NATA agrees every air carrier continue to maintain some form of operation control manual for these and other procedures associated with carriers of passengers and their carry-on-board items as well as checked baggage.
NATA is concerned with the blanket amendment that empowers the minister to give the CTA extra-regulatory authority without consultation.
In summary, the Northern Air Transport Association has an excellent service record with its passenger management, challenging flight environments, and difficult locations. Northern operators pride themselves on a tradition of providing hot meals, for instance, on many flights included in the price of the ticket. Northern operators are invested in the community in a different way than southern operators, which is easy to explain.
NATA agrees passengers have rights. Our operator members have been respecting all their customers for a long time with recognition for special needs and unique cultures. NATA is proud to be an original member of the CTA's accessibility committee, an important forum that provides guidance to our members on how to make a good system better in the movement of all passengers.
Any passenger bill of right needs to recognize existing industry efforts regarding passenger safety. We encourage a new air carrier-centred conflict resolution model to be developed to replace the current CTA model that inhibits consumers' participation.
Good afternoon. Thank you very much for the opportunity to appear.
We are pleased to be able to have a discussion with the members of the committee.
My name is Allistair Elliott. I'm the international representative for Canada for the American Federation of Musicians for the United States and Canada. As a professional musician over the last 40 years, I've travelled most of the world performing music. My performing career has been paralleled with my work for the Canadian Federation of Musicians, initially as an executive board member, then as president of the Calgary Musicians' Association, Local 547, of the AFM, since 1999, and now as an international representative for Canada.
I'm joined today by oboist, teacher, and my friend, Francine Schutzman, who played in the National Arts Centre Orchestra for 38 years. She's the past-president of the Organization of Canadian Symphony Musicians, and currently the president of the Musicians Association of Ottawa-Gatineau, Local 180, of the AFM.
We are here today to enthusiastically applaud the and Transport Canada for the inclusion of musical instruments as part of passenger rights in Bill , an act to amend the Canada Transportation Act.
The Canadian Federation of Musicians is the Canadian national office of the American Federation of Musicians of the United States and Canada. We are comprised of 200 local offices across North America, collectively representing a membership of approximately 80,000 professional musicians, 17,000 of whom live and work in Canada. We've been representing the interests of musicians for 121 years.
As the distinctly Canadian division of AFM and under the federal Status of the Artist Act recognition, the CFM negotiates fair agreements and working conditions covering all musical services within Canada. Our goal is to pursue harmonization with the United States' FAA Modernization and Reform Act of 2012, regarding the carriage of musical instruments on commercial air carriers. We have included our original submission to the Canada Transportation Act review in January 2015.
I just want to thank the —I know she was in this morning and she's not in this afternoon, but her colleagues can pass it on—for encouraging us to enter that submission a few years ago.
Following extensive advocacy to all the key stakeholders, we were very pleased to be included in the discussions on passenger rights and are looking forward to working together to develop regulations once royal assent has been received.
We would also like to thank Air Canada for leading the way as an airline and working closely with the CFM to provide better service to musicians. This summer, at the 4th International Orchestra Conference in Montreal, Air Canada was presented with the Federation of International Musicians Airline of Choice award for 2017.
We thank Air Canada and offer our congratulations.
Musicians travel for business with oddly shaped briefcases. Players of smaller instruments generally have no issues with stowing their instruments on board. The problems arise with larger instruments. Cellos are the ones that have the most problems. Many instruments are made of wood, fragile, and affected greatly by temperature, which in itself, can damage an instrument beyond repair. Instruments belonging to professional musicians are often old and very expensive. Cellists flying with their instruments typically purchase a second seat for that instrument, but are nevertheless sometimes told they may not take the instrument on board. That equals lost job opportunities, lost work, and lost income. Some of you may be familiar with a song called United Breaks Guitars. This song was generated by an incident in which a guitarist, Dave Carroll, was forced to check his instrument, which arrived at its destination in pieces.
We applaud the steps that have already been taken to ease the problems of musicians travelling with instruments and we thank CATSA for working with us directly on some initiatives. There's still much work to be done. What we need is a well-advertised, industry-wide policy, so that musicians may plan accordingly for business travel with the tools of their trade and the confidence they will make the job interview or performance on time and without incident.
I'd like to conclude with comments made recently by one of our more high-profile member musicians, Dr. Buffy Sainte-Marie, on the floor of the Senate of Canada, when she was given special recognition for her contribution to Canadian music. During her remarks, she asked that the government help connect the dots so that musicians could travel with their instruments. She cited an example where she was charged overage fees of $1,376 for an underweight guitar and a suitcase.
Musicians have long had difficulties transporting the tools of their trade, which are often very expensive and irreplaceable. On behalf of all musicians across Canada, we thank you for this inclusion, we applaud your efforts, and we look forward to working closely with you to develop regulations that will be effective for everyone.
My name is John McKenna. I'm the president of the Air Transport Association of Canada.
ATAC has represented Canada's commercial air transport industry since 1934. We have approximately 190 members engaged in commercial aviation, operating in every region of Canada.
We welcome this opportunity to present our comments on Bill as it addresses important issues of commercial aviation in Canada. Passenger rights, foreign ownership, joint ventures, CATSA, and the CTA have been subjects of debate for some time.
My comments, however, will address only the major themes of the bill as the applicability of the proposed measures will be determined only by the company regulations to ensue. These regulations, which will be developed by the Canadian Transportation Agency, are probably one year away.
As for foreign ownership of Canadian airlines, the minister claimed, in his November 3, 2016, speech before the Chamber of Commerce of Metropolitan Montreal, that increased foreign ownership “will lead to more options for Canadians, and allow the creation of new, ultra-low cost airlines in Canada”.
The presence of more airlines usually offers greater choice to travellers, but we have yet to hear convincing arguments supporting the claim that foreign investments will pave the way to ultra-low-cost carriers.
Contrary to what the government claims, increasing foreign ownership of airlines will not lead to the creation of ultra-low-cost airlines in Canada.
Lower operating costs to airlines, not the source of capital, are the key to lower costs to the travelling public. Only when the government decides to support, rather than bleed, the air transport industry will ultra-low-cost carriers stand a chance in Canada.
Increased foreign ownership of airlines can also lead to an increase in the export of profits generated in Canada to foreign interests rather than reinvestment in our industry.
This being said, we don't oppose the government's intention to allow foreign ownership of up to 49%. However, we ask that this proposed change be accompanied by reciprocity with our foreign partners. In other words, if we allow foreign investors to own a 49% stake in our airlines, we would expect to have the same privilege in their country.
I would be curious to know if our government has entered into discussions with our major trading partners on reciprocity in terms of increased foreign ownership of airlines.
Passenger rights is a popular theme in Canada, and the government wants to ensure that passengers are protected by law. Some of the measures the minister is keen to address include compensation standards for passengers for delays and denied boarding due to factors within the carrier's control, and lost or damaged baggage. The minister also wants clear standards allowing for children to be seated with parents at no extra charge, and for the transportation of musical instruments.
We appreciate that the government wants to help the travelling public navigate through simpler rules and have easier access to support in unfortunate circumstances where those standards are not being met.
Please bear in mind that over 140 million people travelled by air in Canada in 2016. The number of complaints filed each year at the CTA was well under 500. The reason I raise this is to give a perspective regarding the size of the problem. Of course some complaints remain at the airline level, but even then the vast majority of travellers have a good passenger experience.
We believe three major principles have to be incorporated in the passenger rights legislation.
A key principle of the bill is that the go-no go decision must remain with the pilot. The threat of severe, even unreasonable, financial repercussions should not be allowed to influence the pilot's decision.
Second, the compensation paid out to aggrieved passengers should be in line with the economic realities of travel in Canada. Unreasonable monetary compensation out of proportion to the magnitude of the carriers' revenue on any given flight could only result in a deterioration of our enviable air transport system, perhaps even including reduced service on some routes.
For example, air passenger rights in Europe are generous to the point that a passenger could receive compensation for a delayed flight which by far exceeds the price paid for the ticket.
Such practices can only lead to increased costs to airlines and to all passengers.
Shared responsibility is another major principle. You can’t hold an airline accountable for events beyond its control. The minister has stated, “Some of the measures we are looking at include compensation standards for passengers denied boarding due to factors within the carrier’s control”. We need a clear definition of what falls under a carrier’s control.
While it may be a carrier's decision to cancel or delay a flight, the reason for doing so may be well beyond the carrier's control. Weather, ground delays as a result of de-icing pad congestion, snow clearance, congestion of the airport of destination, and air traffic control all affect an airline's decision. Also, some delays are safety related.
The safety of passengers is the utmost preoccupation of pilots and airlines. Safety-related delays should not result in penalties for the airlines. How such delays are managed by the airlines is what the law should address.
An additional principle is that a one-size-fits-all policy is so widespread at Transport Canada that Transport Canada's policy just can't apply here. You can't impose southern compensation standards as applied to Canada's largest airports to northern and remote airports.
Ease of compliance with the law, administration of complaints, and user-friendliness for passengers all depend on the complexity of the regulations which will accompany the proposed changes in the law.
We only ask that the government work collaboratively with stakeholders in the drafting of new regulations attached to the bill. Only then will the minister's objective of improving the passenger experience be met.
Thank you, Madam Chair and dear committee members.
My name is Bernard Bussières and I am the vice president of legal affairs at Transat. With me is George Petsikas, senior director, government and industry affairs.
Transat is honoured to be invited to appear before you today as part of your consideration of Bill .
Since we were founded in 1987, we have always worked diligently and proactively with government decision- makers, legislators, and regulatory officials in order to develop informed policy that supports growth in travel and tourism, which is an important industry in Canada. It is in this spirit that we appear before you today.
You should be in possession of our detailed corporate brief that we filed with the clerk earlier this month. We would like to use our few minutes this afternoon to offer some supplemental thoughts and reiterate some of our key points outlined therein, which we trust will add value to your deliberations.
To begin, we regard Bill as a first step in resolving certain challenges facing the airline industry, which is vitally important to Canada. Although the bill attempts to include some of the Emerson report recommendations, it does not address certain key aspects such as tax policy for the sector, cost competitiveness, the funding of air travel infrastructures, revision of the user-pay model, and airport governance.
We would ask the federal government to follow up on these aspects as soon as possible in order to thoroughly and comprehensively improve the policies that affect our industry and travellers alike.
With respect to the proposed airline consumer rights framework outlined in Bill , Transat was one of the first industry stakeholders to publicly welcome this initiative after the tabling of the bill in Parliament. As we publicly stated at the time, we are fully prepared to work with government regulators and our industry colleagues to achieve a fair and balanced compensatory and duty-of-care framework that ultimately enhances the consumer experience.
We refer to our further caveats outlined in our brief, and reiterate support for the input that will be provided by our NACC colleague today.
Today we would like to focus on our main concerns about Bill , specifically the provisions pertaining to air carrier joint ventures. At first glance, these provisions seem harmless, but they are not. I readily admit that they are obscure and complex. In our brief, we tried to explain in detail why they are in fact a long-term threat to healthy competition in our industry and to achieving a fair and reasonable balance between the public interest and the interest of airline customers.
We therefore invite the committee members to consider the following as they examine the amendments we are proposing to these provisions.
Transat is not attempting to be obstructionist with its approach in this case. There are indeed many reasons why airline joint ventures may result in more services, destinations, and other additional benefits for Canadian travellers, communities, and for the economy as a whole.
This, of course, is good, but we do not believe it should be achieved at any cost or risk to the consumer interest. Put simply, stated efforts by the government to rebalance the public versus consumer interest consideration in this case have resulted in the pendulum being shifted to the other extreme and to the ultimate detriment of fair competition.
The ubiquitous public interest standard, which is a common feature of legislation seeking to provide residual powers for ministerial authority to address a broad range of undefined matters and circumstances, is simply not sufficient as drafted here to justify the pre-empting of critical competition law oversight to these potentially anti-competitive agreements between competitors.
The conservation and coordination of critical functions such as route development, capacity deployment, fare-setting, etc., among JV partners should be considered as a de facto merger of these respective commercial entities. Existing law is sufficient to establish whether these types of agreements between competitors are in the public interest.
Indeed, we believe it is incumbent on those stakeholders who are advocating for joint-venture specific provisions to justify why they are in fact needed and why their commercial or corporate objectives are impossible to achieve without same.
It must always be remembered that past commissioners of competition have already expressed serious concerns regarding potential anti-competitive behaviour by airline joint ventures, especially in environments where they control high concentrations of market share. This is not just Transat waving the caution flag here.
Furthermore, and as indicated above, we recognize that there has often been a legislative and policy balance to be struck between the concepts of the public and/or national interest versus the narrower consumer interest that competition law primarily oversees. This balance has already been achieved in the transport sector through the merger provisions incorporated through the Canada Transportation Act, which were crafted at that time jointly by the commissioner of competition and the then Minister of Transport.
Therefore, instead of reinventing the wheel, we propose for greater clarity and consistency that these merger provisions be largely adopted for the review and approval of joint ventures. The process that we propose would be more transparent as the report of the commissioner of competition, and the decision to immunize a joint venture, would be made public.
It would provide a public rationale for the choices made by the Governor in Council, with input from all relevant departments, instead of granting the Minister of Transport sole responsibility for immunizing joint ventures in a decision that requires no publication.
This would result in a decision enforceable by both the commissioner of competition and the minister of Transport, who have different knowledge and responsibility with respect to the joint venture.
It would include a periodic review process to ensure that the consequences of the joint venture continue to justify immunity.
In closing, the need for a fair, transparent and public process regarding the immunization of airline joint ventures from competition is particularly important in the Canadian context, where the industry is dominated by one major carrier. We believe our proposal, which mirrors the current process for mergers in the transportation sector, meets these objectives.
Thank you for your kind attention and we look forward to answering your questions.
Thank you, and good afternoon, Madam Chair.
My name is Neil Parry. I am vice-president of service delivery at the Canadian Air Transport Security Authority, also known as CATSA. Thank you for the opportunity to speak with you today.
As many of you know, CATSA is an agent crown corporation, funded by parliamentary appropriations and accountable to Parliament through the Minister of Transport. CATSA is responsible for taking actions, either directly or through a screening contractor, for the effective and efficient screening of persons who access aircraft or restricted areas through screening points. Also, the property in their possession is controlled, as well as the belongings or baggage that they give to an air carrier for transportation.
CATSA, as the civil aviation security screening authority for Canada, is regulated by Transport Canada and is the designated national civil aviation security authority. CATSA is subject to domestic legislation, regulations, and procedures in the way that it conducts its business and screening. In this context, CATSA's mandate outlines four core responsibilities within the realm of aviation security: pre-board screening of passengers, screening of hold baggage or checked baggage, the screening of non-passengers, and the restricted area identity card program.
Given the nature of today's meeting examining Bill , the transportation modernization act, my remarks will focus on the amendment associated with the Canadian Air Transport Security Authorization Act. Specifically, this relates to the cost recovery of security screening operations in airports across Canada.
Bill contains two changes to the CATSA act. These changes would formalize policy authority for cost recovery initiatives for designated airports that strive for expedited passenger screening and cost recovery for non-designated airports. These services would normally be beyond CATSA's mandate and would require authorization from the Minister of Transport.
Under the direction of Transport Canada, CATSA has undertaken two trials on cost recovery to date. In 2014, the Greater Toronto Airport Authority sought the approval of the to purchase additional screening capacity directly from CATSA for pre-board screening operations. CATSA and the GTAA subsequently entered into an agreement, following authorization from the minister, that allowed us to effectively sell them additional screening hours. A similar trial agreement was entered into in June of this year, between CATSA and the Vancouver Airport Authority, for the same thing.
In 2015, Transport Canada amended regulations to allow non-designated airports to enter into cost recovery agreements with CATSA for the purpose of attracting new commercial routes and potentially enhancing economic development. These airports must meet the same requirements as a class 3 airport within Canada. To date, CATSA has entered into consultations and discussions with 12 non-designated airports and while the discussions have been productive, no agreements have been signed.
With those introductory remarks, I thank the committee. I would be happy to answer any questions related to the subject.
My name is Jeff Walker and I am the chief strategy officer at the Canadian Automobile Association, or CAA as most people know us.
Thank you very much for having us here today. We're looking forward to speaking today on Bill , specifically as it relates to air passenger rights.
I'm going to begin my remarks by providing a little bit of background on our role in air passenger rights issues. As many of you probably know, CAA has been around for over 100 years. We were founded in 1913 and our major mandate at the beginning was road and driver safety, as an advocate for the consumer and the consumer interests around roads and driving. Today we have 6.2 million members from coast to coast and we offer a wide range of services that go far beyond that.
In fact, CAA is Canada's largest leisure travel provider and we have a large network of 137 stores across the country and online that provide services to members. We remain a not-for-profit, member-driven organization that is at its heart an advocate for the Canadian traveller.
Our agents at CAA work with air passengers every day and we understand this business very well. This allows us to take a strong and informed position in favour of air passenger rights while at the same time recognizing that the consumer interest is best served by healthy, competing airlines.
The passenger protection regime we have in Canada has been untouched for many years, leading to a widening discrepancy between how U.S. and European air travellers are treated on one side, and how Canadians are treated on the other. It's time we do better when it comes to protecting Canadian air travellers.
We do a lot of polling, a lot of member research. The work we've done in talking to members and non-members alike has found that over 90%—in fact, 91%—of Canadians agree that it's time Canada had its own national airline consumer code. We welcome and support Bill as it contains many of the improvements that we have been calling for over the last several years, and we believe it's going to be better for the travelling public. At the same time, the bill will only take us partway to where we need to be. The bill leaves the all-important details on treatment and compensation—for example, when and how much—to a future regulatory process, and we urge this committee to pay close attention to that process. A good-sounding bill will end up not meeting expectations if the end result is a coffee coupon and compensation for being bumped somewhere someday. We all have to work to make sure that doesn't happen.
Bill addresses some important areas such as covering all airlines, both domestic and foreign, as well as all passengers, non-Canadian or Canadian, to avoid situations where there is an unlevel playing field. It sets out minimum standards of treatment and compensation for key categories such as delays, cancellations, overbooking, and lost bags. It addresses the seating of families with children at no extra fee. It provides the CTA's ability to collect and monitor airline performance data as it relates to passenger handling, and it gives the agency the ability to extend decisions to other passengers on the same flight who are affected by the same incident.
However, the bill relies on a complaint from a passenger in order to trigger any action. We agree with Scott Streiner, who is the CEO of the CTA, and David Emerson, both of whom said in testimony earlier this week that the regime would be more effective if the agency could initiate its own investigations when it deems necessary and make industry-wide rulings on minimum treatment rather than restricting its findings to passengers on one specific flight.
It's worth noting that the CTA was able to initiate hearings in the Air Transat situation a few weeks ago only because it concerned an international flight. It just happened to fall into that space; otherwise, unfortunately it could not even have been dealt with in that context. The CTA wouldn't have had the authority, even under Bill , to decide to hold a hearing into a similar situation if the flight occurred within Canada, nor will the CTA be able to examine any broader systemic issues that the CTA might note unless they come from a specific complainant. It might have to ask the minister for permission to investigate them.
Another matter worth noting is that in some circumstances, regulations are likely to set out clear rules, for instance, that for a delay of x hours within an airline's control, passengers might receive y in compensation. The current system would require a complaint from a passenger in order to initiate that payment. Airlines have this information though, and they know when they're offside, so why does this system have to wait for a complaint? Why not compensate proactively in these cases?
This is an important consideration in light of recent findings from the EU consumer association, which reports that only one in four EU flyers is getting the compensation they're due for lengthy delays because airlines are not required to proactively offer it. This would allow CTA to focus on more complex complaints.
The International Air Transport Association says 60 countries have some form of passenger rights legislation already in place. For too long Canada has relied on the airline's own policy, and a needlessly complex complaint process through the CTA. While the vast majority of air travel goes off without a hitch, a clear set of standards would benefit everyone from passengers to the industry, which will be able to compete on a level playing field.
However, as noted earlier, whether this new regime is effective will be dependent on the regulatory process. As a consumer watchdog, here are some of what CAA is looking for in this process.
First is clear, simple, and understandable terms and conditions that the average traveller can understand. Second is levels of compensation and minimum treatment that ensure travellers are well treated and that for the airlines, in the words of Parliamentary Secretary McCrimmon, “it's not worth your while…to treat people this way”. Third is proactive disclosure by airlines of a consumer's right to compensation and minimum treatment. Fourth is regular reviews to ensure that regulations and compensation levels remain appropriate, and finally, airline performance reporting with respect to the handling of passengers and luggage should be made public regularly. Sunshine is after all the best disinfectant.
We will be participating in the regulation-making process to be sure that consumer interests continue to be heard loud and clear. In order for Canadians to judge the new system a success, we need to make this right.
We urge this committee to stay engaged even beyond these hearings to make sure the eventual system is one that works well for all Canadian air passengers.
Thank you. I'd be pleased to take any questions.
Good afternoon, Madam Chair, members of the committee.
My name is Massimo Bergamini, and I am President and CEO of the National Airlines Council of Canada.
I want to thank you for the opportunity to appear today to provide my organization's perspective on Bill .
But before I begin, allow me to say a few words about our organization and industry.
The National Airlines Council of Canada was created in 2008 by Canada's four largest airlines—Air Canada, Air Transat, Westjet and Jazz Aviation—to advocate for policies, regulations and legislation that foster a safe and competitive air transportation system.
Collectively, our members carry over 92% of Canada's domestic air traffic, and 65% of its international air traffic. They employ over 50,000 Canadians directly, and contribute to an additional 400,000-plus jobs in related sectors such as aerospace and tourism. According to the Conference Board of Canada, in 2012 our industry contributed almost $35 billion to Canada's GDP. Those are significant statistics that speak to the role that a strong, competitive aviation industry plays in ensuring Canada's economic prosperity.
More to the point of our discussion, commercial aviation has become the only practical way for millions of Canadians to travel to be with family, for work, or simply to explore our vast country, and travel they do. According to Statistics Canada, the total number of passengers emplaned and deplaned in Canada increased by some 30% between 2008 and 2016. There's no doubt that the era of elite jet-setters is long past.
Our members alone were involved in over 71 million passenger movements last year. As people now book flights as readily as they drive cars, air travel is becoming the domain of the middle class, not the 1%. For Canadians, flying is now part of daily life. It's the lifeblood of an open, diverse, and geographically dispersed society.
In our country the freedom to travel is considered a given. Air transport has become an essential link between people and communities. To quote the Emerson report:
Not only does air travel provide access and labour mobility to urban, rural, and remote locations in Canada, but airports and air carriers act as economic engines for communities and for the country as a whole....
This is why a competitive commercial air industry is so important. That is why this bill is so important, and that is why getting it right is also so important.
Unfortunately, we think the government's approach falls somewhat short of that mark.
The Emerson report recognized the complex interconnections that make up the travel experience and that contribute to our industry's global competitiveness. It proposed a three-pronged approach to addressing the major components of a competitive airline industry: cost, access, and the user experience. Bill addresses only one, the user experience.
For the government to lead with Bill , absent economic measures to address the public cost structure issue, from our perspective, risks creating further economic imbalances that may eventually hurt those the bill is meant to protect.
To be clear, while we find that some aspects of the bill require clarification—you will find our recommendations in the technical annex to my remarks—we do not take issue with the bill or in any way oppose its adoption.
We are, however, concerned that the government's approach amounts to putting the cart before the horse.
Putting in place an economic penalty system as the framework for dealing with service issues, without addressing public cost structure at the same time, runs the risk of negatively affecting the industry and, ultimately, passengers.
As Mr. Lavin of IATA pointed out earlier, the international experience on this matter is instructive and should be noted.
As I said at the time of the bill’s tabling last May:
Our organization and members share and support Minister Garneau's commitment to ensuring that all air passengers have the best air travel experience possible and look forward to working with him and with the Canadian Transportation Agency to this end.
However, we also recognize that the air travel experience doesn't start with check-in and end with baggage pickup, and it doesn’t happen in an economic or systems vacuum.
There are a lot of moving parts in getting a passenger to destination. It involves the coordinated efforts of hundreds of dedicated people working in airlines, airports, air traffic control, air security, and border services. Every trip takes place within a complex web of systems, regulations, and costs. Each piece contributes to the outcome, and each must be considered when trying to improve service to passengers. There is no doubt that, sometimes in this complex system, capacity is stretched by unforeseen circumstances, mistakes are made, flights are delayed, luggage is lost, and connections are missed.
In 2016, there were some 2,800 passenger complaints made to the Canadian Transportation Agency, or about eight per day. Of these, 560 were either withdrawn or were outside of the agency’s mandate. Of the remaining complaints, 97% were resolved through facilitation. That is to say, the airline was informed of the complaint and reached a mutually satisfactory agreement with the guest without further agency involvement. Less than 1% went to adjudication.
Far be it from me to minimize the significance of these complaints, or the inconvenience that passengers experienced, but it is important to place those numbers in the context of a system that moves over 350,000 passengers per day, every day.
Clarifying and codifying the rights of passengers, as Bill does, is a positive measure, and it will lead to more certainty in the marketplace. Of that, there is no doubt. We are disappointed, however, that this measure was not introduced in conjunction with concrete steps to address the uncompetitive public cost structure faced by our industry or the systems bottlenecks caused by underfunding of air security and border screening.
The Emerson report recognized how mounting fees and charges, as well as delays in security screening, affect travellers and the efficiency of the industry. It recommended phasing out airport rents, reforming the user-pay policy for air transport, and putting in place regulated performance standards for security screening. Unfortunately, absent any provisions in the government’s five-year fiscal framework for additional spending in this area, Bill alone will do nothing to address the cost pressures on our airline industry or the systems bottlenecks outside of its control.
September is when the leaves start changing in Ottawa and when Parliament resumes sitting. It is also when budget deliberations get under way in earnest within government. It is our hope that when your committee has completed its study of this bill and is ready to return it to the House, you include a recommendation that the government begin taking immediate steps to implement the competitiveness provisions of the Emerson report in next year’s federal fiscal framework. Implementing the Emerson report recommendations on the air industry’s public cost structure as well as on eliminating passenger screening bottlenecks in parallel with the provisions of Bill would be a true game-changer for airlines, airports, travellers, and ultimately the country.
We'll start since we've made it pretty clear that it's something that concerns us.
As we indicated in our opening statement, we are trying to be realists here. We know how the world is evolving. These joint ventures are out there, not only in Canada but in the United States and Europe, and they offer a lot of potential advantages for travellers in terms of enhanced connectivity, more destinations, etc. However, when we look at it in the Canadian context, we have to look at our specific circumstances here.
We are a small market in Canada. We have one airline in particular that is interested in these sorts of joint ventures and in these provisions that would effectively indemnify that joint venture, protect it from the scrutiny, if you will, or active enforcement of competition law by transferring that power to the minister. We know who that airline is. They're a member of a joint venture right now, which, according to our numbers, out of 30 transatlantic markets in 2016, controlled over 35% market share. That's those three major members: Air Canada, Lufthansa, and United. This is in and out of Canada.
In several of those markets, that figure exceeded 40%, and in two of them over 80%, and one 90%, Switzerland. These are extraordinary market shares, and as such, when you take that reality, and all of a sudden you propose to curtail the ability of the commissioner of competition to look at the ultimate consumer interests here, how this is being deployed, and whether or not it may not be in the long-term interests of the Canadian consumer, that's why we're ringing the bell here and we're saying hold on. Yes, the minister has a role to play. Yes, there are public interest considerations that must be looked at: job creation, connectivity, and trade and commerce. This is all good, and I think our colleagues from WestJet talked about connectivity yesterday.
However, it's not at any cost. What has happened here is that the pendulum, as we said in our opening remarks, has swung too much towards the ability of the minister, in terms of a politicized process, to make this decision without necessarily having a meaningful input on the part of the competition commissioner, and a transparent input at that.
Thank you, Mr. Sikand, for that question.
First and foremost, we'll state the obvious. This was an extremely unfortunate incident. We obviously regretted what happened there. We are a proud airline with 30 years of service to Canada and Canadians. We have won numerous international awards for our service. This is not the way we wanted things to turn out. We have apologized to our passengers. We are working actively and transparently with the CTA public inquiry into this matter. As you know, they held public hearings a few weeks ago, and we told our version of events there. I don't want to repeat that right now because, obviously, it's all on the record, and I don't think it adds anything more to the discussion here.
What I can say is this. If we are to look at anything in terms of a silver lining from this awful situation that took place, it's that it's a cautionary tale. You heard, I believe, our colleagues at Air Canada and WestJet yesterday talk about a holistic, system-wide approach to ensuring that these sorts of things are avoided in the future.
One thing that you have to understand it this. Just putting out an obligation, a penalty, or a fine and saying that, if you don't disembark your passengers after certain hours, you're going to pay this amount of money, would not have helped those passengers that evening, I can assure you that, because we don't need a financial incentive or threat to do what we're doing. Our crews want to get those people where they're going as quickly and as safely as possible.
What happened here was a system that broke down in terms of communications in terms of central coordination. When an airplane is at 35,000 feet going 600 miles an hour, the captain and his crew are basically in control of the situation, with air traffic control, of course. Once that airplane full of people lands on a piece of pavement at an airport, it's a whole different ecosphere. Now we're talking about all sorts of intermediaries and service providers running all over the place. Usually that works well in normal circumstances. I call it the symphony when the plane pulls up to the gate and the trucks come in, the fuellers and the baggage handlers. But when things go wrong, like they did in Toronto, and the whole thing is in complete meltdown, then we need a plan. We need somebody to conduct that symphony right now. We respectfully suggest that it should be the airport.
I understand how exceptional it was, but we didn't get complaints from those other aircraft, not that I'm aware of.
Again, if you become aware that you have people in your custody, in your plane.... It's kind of a rhetorical question at this point, and I understand that. But you could save yourself a world of pain and a world of grief from a government that is asked to do something about the problem that's created when people don't think, when they don't use their head, and they don't ask the simple question, “What are we going to do for our passengers?”
Johnson and Johnson set the bar pretty well in the Tylenol tampering. They said they didn't care what the problem was; they would just fix it. Lloyd's of London did exactly the same thing following the San Francisco earthquake. It just dealt with it and paid the claims.
That's the value statement that needs to be nailed to the wall in every airline, every business, in fact. Number one is the customer, and we failed, and that's why government is doing what it's doing right now.
Mr. Bergamini, I'm going to talk about the balance between user-pay and everybody pays. It was interesting that one of our earlier witnesses mentioned that we're first in the world when it comes to our airports. They're great facilities, great everything, but we're 61st when it comes to the cost. He didn't really seem to get the connection between the two: the fact that we do pay a lot is the reason we have really good facilities.
What is the appropriate balance between user-pay, through all of the fees, etc., that we talk about, and everybody pays, which turns into a government subsidy? What's the proper balance here?
Thank you, Madam Chair.
My first question will go to Mr. Bussières, but first, I would like to provide all members of the committee with some information.
I did some quick research on my iPad. The minister and others mentioned this morning that nothing had been done in the last 10 years. We must not forget that, during that period, the Liberals were in power for two years, but that's another story. The Conservatives were in power for the other eight years and I am going to provide some justification for six of those years.
It must be understood that the aviation industry has evolved a great deal. Let me give you this statistic: from 2010 to 2016, that's six years, the number of flights has increased by 31 million. So the industry had to react and adjust. That is probably what explains why the government has decided to develop a bill in order to improve the situation.
So that is now clear. It's important to put things in perspective so that some people's questions can be properly answered.
As I mentioned, my first question goes to Mr. Bussières, from Air Transat. Let me take a different tack. We are not in a courtroom here; our role is not to accuse this airline of badly managing the crisis that arise from the events that took place in Ottawa. At least, I do not intend to do so. I intend to be constructive.
You happened to experience that situation, but it could have happened to other companies. Actually, no airline is immune to problems like that. You have to react to unique situations, and that is quite legitimate. That said, I hope that your reflex is to put mechanisms in place so that you do not have to experience other similar problems. I am sure that you are not happy to have to manage a situation like that.
Could you tell us what, in your opinion, could be included in the passenger bill or rights to deal with that kind of situation and to minimize the impact on Canadians?
Let me go back to the situation which, thank heavens, is extremely rare. If it were not, we would be talking about it a lot more.
As my colleague Mr. Petsikas mentioned, this is a complex ecosystem. The captains on board their aircraft have to make a decision and, to do so, they need information. The better the information, the better the decision. If the captain can be told precisely how long it will take to refuel the aircraft, it does not matter whether it is 30 minutes, two hours or three hours, everyone's decisions will be better.
At the outset, I have to say that we deeply regret what happened in Ottawa. That is first and foremost. However, I am asking you to consider the background to the situation: no company deplaned its passengers. Everyone was being told that they would be refuelled with the next 30 or 45 minutes. In a situation like that, the captains have a certain mindset: they have to make a decision and to use their judgment that is reasonable in the circumstances. Of course, if the captains are quickly informed of the exact amount of time necessary, the decisions will be better.
As for the passenger bill of rights, situations like that have to be put in context. As my colleagues have mentioned, and I will repeat, the ecosystem is complex; it has links to NAV CANADA, to the airport, and to all the people inside that system. Watching it work is extraordinary. It is fascinating. From 2010 to 2016, the number of flights has increase by 31 million. Considerable organization is needed to get it all rolling. So, touch wood, we have an absolutely extraordinary system. Imagine the risks that all the companies in the sector take in order to make a profit of $8, as was just described.
Thank you, Madam Chair.
I just want to make a comment. We've been in this process for quite some time now, especially over this past week. As was mentioned earlier, this is not something that will be over tomorrow or next week or next month. This is an evolution of collaboration and, of course, partnership with all 338 members of the House, as well as the industry itself.
An assumptions report has been completed. It leads up to 2022. Within the report it recognizes the socio-economic, supply, and strategic factors. With that, it influences the forecasts of demand for air transportation—for example, gross domestic product, personal disposable income, adult population, economic outlet, airline yield, fleet route structure, average aircraft size, passenger load factors, labour costs and productivity, fuel costs, fuel efficiency, airline costs other than fuel and labour, passenger traffic allocation assumptions, and new technology. That's the basis of a strategic plan. That's the basis of next steps.
May I suggest the following? This committee is not going anywhere, at least for the next two years with the people around this table. Beyond that, there will probably be new people. The bottom line is that we have an opportunity here. Bill is the foundation that will be injected into the overall strategic plan as it relates to transportation. Let's all go back to our respective organizations and come up with tangible, pragmatic objectives attached to strategy. Let's attach actions to that, actions that are doable, actions that we can execute in the short and long term, based on the socio-economic, supply, and strategic factors I just outlined.
This is not done, gentlemen. Mr. Rock outlined 10 years ago that this was a challenge. I'm surprised it wasn't dealt with within that 10-year span. Unfortunately, it wasn't, but again, I don't want to talk about the past. I want to talk about the future. We have an opportunity here. Let's seize it and move forward with new recommendations, based on what you give us, in terms of the input we're looking for.
Again, Bill is here, but we have many days after that when we can help to strike that balance for people when it comes to performance, when it comes to passenger rights, when it comes to value, and when it comes to return, because we want you to do good just as much as you want to do good.
Thank you for the question.
I feel that our carriers' daily experience shows us that the reality of delays....
Please excuse me, but I'm going to answer in the language of Shakespeare so that I can explain myself better.
As to delays at the front end—and this is the point that we were making—the travel experience doesn't start with check-in. There are all of those steps, and when you have a delay.... We appreciate what our colleagues at CATSA have done in very difficult conditions from a financial perspective and a planning perspective, but our organization, along with the airport council, have been pushing for regulated performance standards that eliminate those bottlenecks that have an impact not only on the passengers affected at that airport, but if there are delays, these delays cascade across the system domestically and internationally.
It really is important and in this sense I echo what has been said by my colleagues at Air Transat.
We have to address that question in terms of a complex ecosystem. The problem of funding the system absolutely requires attention. It is not enough to deal with the issue through regulations.
I am sure that you all remember the Walkerton tragedy. I have worked at municipal level. A good number of provincial governments across Canada have passed regulations in order to deal with situations like the one that occurred in Walkerton.
Provincial environment ministers were heros. They signed these tough new regulations, but they passed the bill on to municipalities that didn't have the resources or the capacity to implement those regulations in the first place. You have to look at these things from a holistic perspective. This is a regulatory exercise, in general we agree with it, but we absolutely have to look at the economic foundations of this industry if this is going to work.
Not really. If I may, I would just add on to what Mr. Badawey was saying before.
In fact, I agree with you. For years—again, before Massimo's time, before he joined us—as head of the NACC I begged government for a strategic top-down integrated plan to help our strategic industry help this country succeed. That means a holistic, as Massimo said, approach. The minister said today it's a first step. Bill is not the basis for that holistic approach, and that's our problem, because there are a lot of issues that are on the table, especially infrastructure financing.
I'd just like to address the point made before when we talked about whether we are asking for a subsidy by the taxpayer to the industry to help us pay for those airports. I would argue that over the last 20 years there has been subsidization absolutely by the user towards the taxpayer. We are talking about airports that were transferred in the early nineties that had a nominal book value of about $1.5 billion. Today, we are talking about well over $7 billion paid in airport rents up until now into the federal treasury. It's not a bad return. Secondly, airports have had $18 billion in capital investments put into the ground, and that's been jobs, construction workers, downstream economic benefits, and billions and billions in terms of economic activity that's enabled by this infrastructure. It's all been paid for by the consumer, not the taxpayer, and this is an almost unique model in the industrialized world.
All we're saying is that it's time to have a look at that again, because we don't think it's helping us achieve what we can achieve or we could achieve, which is even greater things in terms of support in Canada in terms of economic growth, connectivity, trade and commerce, and competing with those global tigers out there who actually do get it when it comes to their aviation sectors. That's all we're saying, so let's go. I'm with you.
Thank you, Madam Chair.
My name is Jacob Charbonneau. I am the co-founder and the President and Chief Executive Officer of Flight Claim Canada Inc. I am accompanied today by my colleague Meriem Amir.
Flight Claim Canada Inc. is a multidisciplinary firm, duly registered with the Quebec Bar and made up of a number of professionals governed by Quebec's Professional Code. Through our lawyers, we provide legal services pertaining to air transportation.
The company's primary mission is to advocate for the rights of air passengers by informing consumers of their rights and by helping affected travellers to obtain compensation easily, quickly, and free of risk. We offer our clients a comprehensive service in order to provide them with compensation for delays, cancellations or denials of boarding.
We are proud and honoured to have been invited to these public consultations. So we have submitted a brief, written jointly by Jean-Denis Pelletier, a former Transport Canada commissioner, and myself. In the brief, we highlight the current situation in the airline sector.
In recent months, there have been many discussions, criticisms and complaints regarding air transportation. A number of events have made the headlines, notably cases of overbooking, flight cancellations and delays, failures in passenger care, long waits on the tarmac, and questionable business practices. There is a lack of information about passengers' rights, and pressure from airlines to withdraw advertising intended to inform passengers of their rights. All this is occurring at a time when airlines are raking in record profits.
We therefore feel that that short-term profits and share prices may count for more than client services. Passengers are treated like cargo. The lack of regulations leaves airlines with broad discretion in how they treat their clients. Air carriers suffer few to no consequences from their lack of service to passengers, which leads to general resentment and a loss of passenger confidence in the system.
For this brief, we first of all undertook a survey of our clients who had experienced problems with flights in recent years. We had more than 333 respondents. The following are the highlights from that survey. You can find them in appendix 6 of our brief.
First, we were surprised to learn that, before they heard of us, more than 35% of our clients were unaware that they might be entitled to compensation. Almost all passengers, more than 99% of them, feel that Canada should adopt regulations guaranteeing financial compensation for passengers whose flight is delayed or cancelled.
We also analyzed flight delays and cancellations in Canada, as well as trends in recent years. The following are the highlights from that study.
The number of delayed flights is increasing. The percentage of flights affected by delays of one form or another, in all time slots, went from 12% in 2014 to 15% in 2016. Canadian flight cancellations have also increased. They went from 1.2% in 2014 to 1.4% in 2016. That is a 16% increase. By comparison, with flights subject to European regulations, the rate is 0.4%, or four times less.
We clearly need a law and regulations that will set a minimum level of quality of passenger protection, thus bringing a significant citizen dimension to the liberalization of the aviation market. That means standardized Canadian protection for all users, incorporated into a charter of passenger rights.
Passengers are left to their own devices and do not know who they can turn to for help. They are grateful that there is now a company that can help them navigate their way through the system and obtain compensation. Some of our clients had already attempted the direct approach with the airline and were turned down.
While the Canadian Transportation Agency does have a mediation role, many of our clients prefer to use our services, thereby saving time and benefiting from our expertise to obtain a turnkey solution.
The new law and regulations resulting from Bill must include clear and unequivocal provisions that will reduce differences in interpretation resulting from the existence of gray areas. This new law will make it easier for passengers to assert their individual rights, and will help to restore traveller confidence.
We have therefore focused on current trends and best international practices in order to provide recommendations that will place Canada in the forefront of traveller protection.
The proposed amendments also take into account the financial impact on the airline industry and therefore anticipate measures to limit costs.
Here is a summary of the 15 proposals in our brief.
We propose: to declare Bill to be complementary to the Montreal Convention; to amend section 67.3, referred to in clause 17 of Bill C-49, by replacing “a person adversely affected” with “from or on behalf of a person,” consistent with section 156 of the current Air Transportation Regulations; to amend paragraph 18(2) of Bill , regarding subparagraph 86(1)(h)(iii) of the act, to allow adversely affected persons to be represented by counsel, consistent with our constitutional rights; to enact clear rules on posting the rights and remedies of air passengers in Canadian airports, in particular, allowing companies and associations that defend passengers' rights to advertise in Canadian airports; to require airlines that deny boarding or cancel a flight to provide each affected passenger with written notice of the reason for the denial of boarding or cancellation. Carriers should also make an effort to inform passengers who reach their final destination with a delay of three hours or more of the reason for the delay; to establish more public monitoring of the management of Canadian airports; to apply or follow the European legislation regarding the minimum compensation to be paid in the event of a long delay, cancellation or denial of boarding. It would be helpful if the committee could provide Transport Canada, who will subsequently be writing the regulations, with clear guidelines on the criteria to be used, equivalent to the European guidelines; to define a long delay as being two hours for domestic flights and three hours for international flights; to establish minimum compensation equivalent to that for a cancelled flight for passengers whose flight is delayed on the tarmac for more than three hours, and require carriers to allow passengers to deplane after 90 minutes, in accordance with the carriers' tariff conditions, regardless of whether or not there are extraordinary circumstances; to apply the same right to care found in the European regulations for cases of denied boarding, cancellations or long delays. This care should apply even under extraordinary circumstances that are beyond the control of the airline; to define extraordinary circumstances as an event that is not inherent in the normal exercise of the activity of the air carrier concerned and that is beyond the actual control of that carrier on account of its nature or origin. We also propose declaring that the burden of proving the extraordinary circumstances is on the carrier; to declare that the limitation of action is equivalent to the three-year time limit applicable under common law in Canada; and finally, to make Canadian airports liable in the event of strikes, major renovations or technical failures that cause long flight delays or cancellations. This would entitle passengers to the same compensation and rights as passengers who have suffered damage caused by air carriers.
In conclusion, we firmly believe that the Canadian Transportation Agency and the government should adopt legislation that is as generous and transparent as that existing at the international level. More than anything, the law should be human and protective and should facilitate access to compensation. It should be a clear and unequivocal law that reduces gray areas as much as possible and leaves little room for interpretation.
This legislation is essential for restoring travellers' confidence in air carriers. These measures will allow us to follow best international practices and trends in consumer protection. They will enable Canada to become a leader in the protection of air passengers.
Thank you, Madam Chair.
Ladies and gentlemen, thank you for the invitation to appear before you as part of this committee's study of Bill .
My name is Daniel-Robert Gooch, and I am the president of the Canadian Airports Council.
The CAC has 51 members, operating more than 100 airports in Canada, including all the private airports in the National Airports System (NAS). Our members handle more than 90% of commercial air traffic in Canada, and an even higher percentage of the international traffic.
The CAC's priorities involve promoting safe, strong local airports, improving the traveller experience, value for money in government services, and growing by air a globally connected Canada. Over the last few days we've been listening to the testimony on this committee's study of the Transportation Modernization Act.
Certainly, air transport is a complex industry involving interaction with several different partners on the airport grounds, including airport authorities, and airlines, of course, but also Nav Canada, service providers, and government entities such as the Canadian Air Transport Security Authority and the Canada Border Services Agency.
In terms of the role of airport authorities, they provide the infrastructure needed to facilitate air carrier movement and the processing of passengers. They enforce airport safety regulations, employ airport emergency response services in response to aircraft emergencies, and provide central command to respond to operational safety, infrastructure, and security matters.
Major airports have passenger care response plans in place to support passenger needs during irregular operations. These plans involve the deployment of certain assets as needed, such as airfield buses, water bottles, snacks, and baby supplies. Airports are empowered to activate their passenger care plans when needed, and can call in extra resources to assist in ensuring passengers have the basics they need on a short-term basis. During irregular and regular operations, the goal is always to get passengers to where they need to go in a timely, safe, and secure manner.
Airports strive to improve passenger experience on an ongoing basis. This is becoming increasingly important for airports that have seen tremendous growth in air traffic over the past decade. In the first seven months of this year so far, for example, there has been a 6.3% increase in passenger traffic. This traffic is boosting international visitor numbers, which is contributing to Canada's economy and providing extra tax revenues for government. It's a good news story. But while this is good for business and the Canadian economy, fuller airports can create logistical challenges to delivering the high level of passenger experience that the industry strives for. Canada's airports have made strategic investments in infrastructure when needed to accommodate growth and respond to the needs of passengers. In fact, they have spent $22 billion since 1992 on infrastructure, with improvements to safety, security, comfort, and the flow of passengers.
This growth has put a particular strain on government services at airports, in particular on screening provided by CATSA and on border services provided by CBSA. Travellers are faced with long lineups at security screening checkpoints and at our air borders during peak times. This has a negative impact on passenger experience. In fact, it's the complaint that we hear about most often from travellers.
You may recall that I've spoken about these issues before, at your committee earlier this year as part of your study on aviation safety. I'm pleased to say the file is progressing, but we're not where we need to be yet. Transport Minister has begun important work in this area.
The launch of Transportation 2030 almost a year ago commits to look at CATSA's governance, making it more accountable to a service standard, and its funding more responsive and sustainable. Bill provides a framework for CATSA to administer new or additional screening services on a cost-recovery basis. This will provide added flexibility for airports to supplement security screening services for business reasons, such as giving a higher level of service for connecting travellers, or a separate check-in area for premium travellers. However, this should be accompanied by a full allocation of air travellers security charge revenue from passengers to funding screening by next year's budget. Otherwise, airports have a real concern that the cost-recovery mechanisms in Bill C-49 would become the mechanism used to prop up funding for screening. In other words, passengers today paying their travel security charge for service at screening...not all that money going to the airports. If airports are having to also pay up to get an acceptable level of service, then they will have to raise additional revenue that would then have to be recovered from air carriers and passengers. In other words, travellers would have to pay twice, and travellers should not have to pay twice for this service.
Canada's airports are pleased that the government has recently begun additional work on a long-term structural fix for the problem. Our shared goal should not only be to improve screening wait times, but to also deliver a professional, facilitative customer experience while continuing to provide a high degree of security.
Some airports believe the best approach would be to allow airports a greater role in the delivery of screening at airports, as is the case in Europe and many other parts of the globe, but the important message is that, when it comes to a permanent solution, one size does not fit all. It is important that a fulsome exploration of all options occur before a final decision is made by government.
Finding a long-term solution for screening is essential for passengers, who deserve predictability and value for money, but we also can't be complacent in the meantime. CATSA needs to be sufficiently funded next year to support demand. Government should also restart its stalled investments in CATSA Plus lanes, which is a new approach that is improving traveller experience in the limited sites where it has been deployed. But CATSA isn't able to proceed any further until funding is restarted.
Improving air traveller experience also means improving air service in communities through more air links and lower airfares. The proposed amendment to the Canada Transportation Act to increase foreign ownership limits on Canadian air carriers from 25% to 49% is intended to stimulate traffic and domestic competition, and these are worthy goals.
Canada's airports are delighted with the progress made by this government in all these major areas. We hope that the dynamic approach will continue, and that the work that has been started as part of the Transportation 2030 strategic plan, and through the hearings of your committee, will translate into concrete reforms.
Once again, thank you for giving me the opportunity to speak to you today.
Madam Chair and honourable members, thank you for inviting me to this meeting. It is an exceptional privilege to have the opportunity to present the perspective of air travellers today.
Air Passenger Rights is an independent, non-profit network of volunteers devoted to empowering travellers through education, advocacy, investigation, and litigation. Our Air Passenger Rights Canada group on Facebook has more than 5,000 members.
My name is Dr. Gábor Lukács and I am the founder and coordinator of Air Passenger Rights, which grew out of my advocacy for the rights of Canadian travellers. Since 2008, I've filed 26 successful regulatory complaints against airlines, relating to issues such as liability for baggage damage, delay and loss of baggage, flight delay, flight cancellation, and compensation for involuntary denied boarding.
I'm here today to deliver a cautionary message. Bill does not address the key issue of lack of enforcement of the rights of passengers in Canada, it does not adequately protect Canadian passengers, and it falls short of the rights provided by the European Union's regime. I will be expanding on each of these issues in turn.
The lack of adequate legislation is often blamed for the woes of passengers. This is a myth. The Montreal convention is an international treaty that protects passengers travelling on international itineraries. It covers a wealth of areas: damage, delay, and loss of baggage, up to $2,000; delay of passengers, over $8,000; and even coverage in the event of injury or death. The Montreal convention is part of the Carriage by Air Act and it has the force of law in Canada.
Canada also requires airlines to set out the terms and conditions of travel in clear language in a so-called tariff. Failure of an airline to apply the terms and conditions of the tariff is punishable by a fine of up to $10,000 and is an offence punishable also on summary conviction. Thus, the existing laws, regulations, and regulatory decisions could provide substantial protection for Canadian passengers if only they were enforced by the regulator, the Canadian Transportation Agency. The trouble is that the agency has abdicated its duty to enforce the law. As you see in this diagram, which shows the statistics for the past four years, the number of complaints has soared, nearly quadrupled over the past four years, while the number of enforcement actions has dropped by an equal factor of four.
The agency has also been criticized by the Federal Court of Appeal. In a recent judgment, Justice de Montigny found that the agency erred by ignoring not only the wording of the Canada Transportation Act, but its purpose and intent. Justice de Montigny went on to remind the agency that it has a role to also ensure that the policies pursued by the legislator—you parliamentarians—are carried out. There's no doubt these laws can be improved, and it is our position that they should be. However, without enforcement, the law will remain that letter. Bill , as it is reads now, does nothing to remedy this state of affairs.
Bill suffers from numerous major shortcomings. It misses important areas of passenger protection altogether and undermines existing rights in other areas. First, the bill does not create an enforcement mechanism or any financial consequences for airlines that break the rules, that disobey the rules that are laid down. Thus, breaking the rules remains the most profitable course of action for airlines. Second, the bill offers no protection for the most vulnerable passengers: children travelling alone and persons with disabilities. Third, the bill hinders advocacy groups—such as Air Passenger Rights—in protecting the rights of passengers by barring most preventive complaints that seek intervention before anyone could suffer damages.
All but one of the 26 complaints I brought and that I mentioned earlier were successful and were of this preventive nature. I was not personally adversely affected, but the practices that I challenged were clearly harmful and were recognized as such.
We recommend that the committee remove from the bill the proposed section 67.3 found in clause 17 of the bill.
Fourth, contrary to the testimony of Transport Canada officials that you heard on Monday, Bill does not provide protection that is comparable to the European Union's regime. For the all-too-common event of mechanical malfunction, the bill proposes to actually relieve airlines of the obligation to compensate passengers for inconvenience. This is cleverly hidden in proposed subparagraph 86.11(1)(b)(ii).
In sharp contrast, the European Union's regime recognizes that it is the responsibility of the airlines to adequately maintain their fleets and requires airlines to compensate passengers for inconvenience in the event that the flight is delayed or cancelled because of mechanical malfunction.
We recommend that the committee amend paragraph 86.11(1)(b) to clarify that in the event of mechanical malfunction, airlines are liable to compensate passengers for their inconvenience.
Fifth, the bill takes a step backward with respect to long tarmac delays by doubling the acceptable tarmac delay from the current Canadian standard of 90 minutes to three hours. This is a step backward. It's actually clawing back our existing rights as passengers.
We recommend that the committee amend paragraph 86.11(1)(f) by replacing three hours with 90 minutes and thereby restore the status quo.
In closing, we would also like to draw attention to some troubling facts that deepen our concerns about the impartiality and integrity of the Canadian Transportation Agency. Before this bill is passed by Parliament and before any public consultation takes place about the regulations to be developed, the agency has already sought IATA's input with respect to the regulations that the agency is to draft.
IATA is the International Air Transport Association. It represents the private interests of the airline industry. In our view, this was in disregard of the parliamentary process and of the rule of law. Evidence showing this, for the record, is found in an affidavit submitted by IATA in Supreme Court of Canada file number 37276.
We have also received reports from passengers about agency staff turning them away, unceremoniously advising them that their complaint filed with the agency would be closed. The agency did not make a decision or order dismissing these complaints, yet complainants were made to understand that their complaint had been dismissed. Complainants were either not informed about their right to ask for formal adjudication or were discouraged from exercising that right by agency staff.
In our view, the agency has lost its independence, and the integrity of its consumer protection activities has been compromised. The agency's actions and failure to act to enforce the law, as we see right in the statistics, have undermined public confidence in the agency's impartiality.
We recommend that the committee amend the bill to transfer regulation-making power from the agency to the minister and transfer other responsibilities relating to air passenger rights to a separate consumer protection body.
I would like to thank you for the opportunity to present the concerns of air travellers to the committee. A brief outlining these concerns and also providing detailed recommendations on how to salvage the bill has already been submitted.