Mr. Speaker, I am pleased to rise today to commence debate at second reading of Bill , amendments to the Air Canada Public Participation Act. These amendments seek to modernize legislation to allow Air Canada to more effectively respond to the evolution of market conditions while continuing to support jobs for skilled workers in Canada's aerospace sector. This bill would amend the provisions of the Air Canada Public Participation Act dealing with Air Canada's operational and overhaul centres.
Let me first say that this bill is being submitted for consideration to the House in the context of an historic investment by Air Canada in Canada's aerospace sector. As members are aware, Air Canada has announced its intention to purchase up to 75 Bombardier C Series aircraft and to ensure that these planes will be maintained in Canada for at least 20 years.
Air Canada has also said it plans to support the creation of centres of excellence for aircraft maintenance in Quebec and Manitoba, and the company says it will continue to carry out significant work in other parts of Canada. In other words, this bill comes before this place at an important time for Canada's aerospace sector. Not only is Bombardier producing an aircraft that is a game changer for aviation in terms of its efficiency, environmental performance, and noise, but Air Canada is adding this plane to its fleet, creating significant opportunities for high-value employment.
Quebec has estimated that the creation of the centre of excellence in Montreal alone could produce 1,000 jobs over 15 years, while the manufacturing of Air Canada's C Series aircraft could create an additional 300 jobs. Air Canada also intends to support the creation of 150 jobs in Manitoba, with a possibility to expand beyond that. These are precisely the results that we should be pursuing. They are market-driven investments aimed at improving Air Canada's bottom line and ability to serve Canadians, by investing in world-class technology right here in Canada.
As members are aware, the Attorney General of Quebec took legal action against Air Canada following the closure of Aveos Fleet Performance in 2012, accusing the carrier of non-compliance with these provisions of the Air Canada Public Participation Act. In light of Air Canada's investments in aerospace in Canada, including aircraft maintenance, Quebec has since announced its willingness to discontinue its pursuit of that litigation.
This creates an appropriate context for us to modernize the Air Canada Public Participation Act. This legislation is now close to 30 years old. It was created to enable the privatization of Air Canada, which occurred in 1989. Specifically, I am referring to paragraph 6(1)(d), which calls for Air Canada to have in its articles of continuance:
provisions requiring the Corporation to maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community and the City of Mississauga;
Let me begin by providing to the House some of the history of this legislation. The Air Canada Public Participation Act was brought in at a time when countries around the world were moving away from a high degree of regulation and public ownership in certain sectors, notably air transport. Canada was no exception. To support economic growth, deliver new services to Canadians, and significantly reduce the burden on the taxpayers, the government took several actions. We deregulated the air transport sector. We commercialized our major airports. Also, by way of the Air Canada Public Participation Act, we transformed Air Canada from a crown corporation into a viable and competitive private company.
The air transport sector has greatly evolved since 1989. Now it is common for global air carriers to outsource aircraft maintenance and to distribute their supply chain across different geographic areas, with a view to being more efficient. This is the competitive environment within which Air Canada operates. Other air carriers, Canadian and international, are not subject to the same obligations regarding their maintenance facilities. That means that they can seek out efficiencies in ways that Air Canada cannot.
Ultimately, the result of this is that Air Canada could be less competitive. Furthermore, if Air Canada's ability to reduce costs is limited by the act, that could make air travel more expensive for Canadians. In other words, the Air Canada Public Participation Act could place limits on the company's ability to be competitive and cost effective, with implications for the travelling public and the Canadian economy. This does not support an approach to air transport that focuses on competition and market forces as the best means to deliver value to users. Air Canada, like any company, needs flexibility to evolve within its competitive environment to remain viable.
Of course, we were all concerned when Aveos closed its doors in 2012, resulting in layoffs across the country. Some divisions of Aveos were purchased as part of the bankruptcy process and kept in operation, but others were not. The closure of Aveos meant that Air Canada ceased to carry out certain work in Canada. The minister objected to this, as did many of our colleagues. That is why we are so pleased to see that Air Canada is now investing in Canada's aerospace and aircraft maintenance sector, and in doing so creating concrete employment opportunities for Canadians in this sector. That is precisely the type of outcome we wanted to see.
The Air Canada investment in the C Series and support for the creation of the centres of excellence in Quebec and Manitoba offer specific opportunities for highly skilled aerospace workers, both during the manufacturing phase, and later, for maintenance. Our intention in introducing this legislation is to strike the right balance.
First, we want Air Canada to have flexibility to organize its activities, to match how the air transport sector has evolved and will continue to evolve. At the same time, we want to ensure that the act continues to require Air Canada to carry out aircraft maintenance in certain Canadian regions. This proposed legislation maintains that commitment.
The act currently refers to the city of Winnipeg, the city of Mississauga, and the Montreal urban community. I note that the Montreal urban community, which no longer exists as a jurisdiction, did not include all of greater Montreal. For example, it did not include Mirabel. Also, Air Canada's activities extend throughout the greater Toronto area, not just Mississauga.
Given this, we have chosen to expand the reference in the legislation to cover the provinces of Manitoba, Ontario, and Quebec, which allows for Air Canada's maintenance work to extend to areas around the named cities, as opposed to remaining strictly within the city limits. Furthermore, Bill would clarify that paragraph 6(1)(d) of the Air Canada Public Participation Act requires Air Canada to commit to carry out or cause to be carried out aircraft maintenance, including with regard to airframes, engines, components, equipment, or parts, in Manitoba, Ontario, and Quebec.
However, this does not mean to specify particular types or volumes of such maintenance in each location, or particular levels of employment. In this way, it will be clear that we are not tying the hands of a private company to manage its operations into the future. Air Canada will be able to adjust its activities to respond to the evolution of the air transportation sector in the same way that any other company does.
I would like to remind the House of the nature of air transport and how it has evolved. This is a truly global business, characterized by large international corporations providing services over vast networks, using extremely expensive equipment. It is also highly susceptible to external shocks and is cyclical in nature. Air transport provides essential connectivity, both within this vast country and to the outside world. It is also a major source of employment. Air Canada alone employs close to 25,000 people.
Air transportation has evolved considerably since the 1980s. We have seen important new aircraft technologies, huge global growth in traffic, new business models, and new air carriers. It has also weathered major shocks, such as pandemics, economic crises, and the terrorist attacks of 9/11. We can only imagine how the sector will evolve in the future.
Federal policy regarding Canada's air transport sector places a premium on competition and market forces. We do not subsidize the sector. Rather, we support the user-pay principle with regard to infrastructure and service. This is not the case in all countries.
Since its privatization, Air Canada has existed as a private enterprise without state support, despite weathering some difficult periods. While the federal government participated in bridge financing, along with private partners, to help Air Canada through the credit crunch resulting from the 2009 global financial crisis, this was done on commercial terms. Any loans were paid back in full with interest.
Where both air transport and aerospace are concerned, it is essential that Canada be competitive, but we cannot rest on our laurels as the world of aviation is changing quickly.
I am particularly pleased that our aviation and aerospace sectors have come together, with the recent announcement by Air Canada regarding its purchase of the Bombardier C Series. This will allow Air Canada to operate aircraft that set new standards in aviation by cutting fuel consumption, reducing GHG emissions, and minimizing noise.
These aircraft will be designed, assembled, and maintained in Canada, creating opportunities for well-paid employment. It is hard to imagine a better outcome. This is the sort of result we hoped to see when we raised concerns around the closure of Aveos.
I am also very pleased that Quebec and Air Canada are nearing an end to the litigation based on the Air Canada Public Participation Act.
I commend Air Canada for supporting the creation of centres of excellence that will provide employment for highly skilled aerospace workers in Manitoba and Quebec.
In this context, it is now time to modernize the Air Canada Public Participation Act to clarify its intent. Yes, we want the legislation to be clear that Air Canada will undertake aircraft maintenance in Manitoba, Ontario, and Quebec. However, as it is a company that needs to compete in an evolving global marketplace, we need to give Air Canada the flexibility to meet these requirements in a way that also supports its competitiveness.
I believe that Bill achieves that balance. I hope honourable members will join me in supporting this bill and will quickly refer it to the Standing Committee on Transport, Infrastructure and Communities, where we can hear from stakeholders.
Mr. Speaker, I am pleased to rise today to speak to Bill , an act to amend the Air Canada Public Participation Act and to provide for certain other measures.
As the official opposition critic for transport, I have a number of concerns with both the proposed amendment to this act and the government's timing in introducing this change.
Let us review the facts.
On November 3, 2015, the Quebec Court of Appeal, Quebec's highest court, confirmed an earlier ruling by the Quebec Superior Court that Air Canada had failed to fulfill its legal obligations stemming from the Air Canada Public Participation Act concerning heavy maintenance of aircraft in Montreal, Winnipeg, and Mississauga.
On December 11, 2015, Bombardier formerly requested financial support of $1 billion U.S. from the Government of Canada. This was two months after the Government of Quebec had purchased a 49% stake in the C Series program for that same amount.
On February 16, 2016, Republic Airways, which to that point had placed the largest order for the C Series, streamlined its operations as it filed for bankruptcy protection and cancelled its order for up to 80 C Series aircraft.
The very next day, February 17, Air Canada announced that it had begun negotiations with Bombardier to purchase 45 C Series variant 300 aircraft, with an option for an additional 30.
I will be discussing this announcement further, later on in my remarks.
Considering Air Canada had for years shown no interest in the C Series and had just completed an agreement with Boeing to purchase 61 737 Max aircraft, this announcement surprised virtually the entire airline industry. Prior to Air Canada's announcement, Bombardier had gone nearly 17 months without landing a firm order, so it goes without saying that the timing of this transaction was fortuitous for the aerospace giant.
Furthermore, Airways News, a trade publication, estimates that there is a 40% chance that Bombardier will land another order for its C Series aircraft this year. Therefore, to say that Air Canada has saved the Bombardier C Series program would be an understatement.
Concurrent with this announcement, Air Canada announced that it would undertake the heavy maintenance of the C Series aircraft in Quebec for 20 years and create a centre of excellence in the province.
On the same day that Air Canada made its announcement to purchase these airplanes, the announced that he would lessen Air Canada's obligations under the Air Canada Public Participation Act.
On March 8, the put the bill we are debating on notice.
On March 14, Air Canada announced that it would move some of the maintenance work presently being done in Mississauga and Montreal to Winnipeg, thereby creating approximately 150 jobs in Manitoba.
On March 24, the introduced the bill we are debating today.
Given that it is common practice to put a bill on notice and introduce it within a few days, the 16-day delay from when this bill was put on notice to when the minister introduced it has not been explained. In his short justification for introducing Bill , the hailed Air Canada's decision to purchase the C Series aircraft, combined with the Government of Quebec's and the Government of Manitoba's intention to discontinue litigation against the carrier, as the main cause. He also noted that this would allow Air Canada to be more competitive in an evolving aerospace sector.
While this proposed legislation should have nothing to do with Bombardier, this bill unfortunately appears to have everything to do with Bombardier. If this legislation is part of the government's plan to support Bombardier, then it should just say so.
Let us look at the justification in greater detail, starting with Air Canada's purchase of the C Series airplane.
As was mentioned, Air Canada signed a letter of intent to purchase the C Series aircraft on February 17 this year, with a two-year negotiating window. No money has changed hands, and none will for several years.
Neither Bombardier nor Air Canada has announced the price they have agreed on for the C Series aircraft. However, it is believed to be under $30 million per unit, which is far below the break-even point for Bombardier.
Assuming Air Canada's letter of intent leads to orders at the end of the two-year negotiating window, planes are scheduled to be delivered beginning in early 2020, after deliveries of Boeing 737 Max aircraft are completed, and assuming no delays take place in production.
I would also note that the narrow-body Boeing 737 Max variant 200 and variant 300 airplane that Air Canada is purchasing seats between 160 and 180 persons in a two-cabin configuration, depending on the cabin layout, which is approximately 20 more seats than the C Series.
While I know that all of us here are pleased that Canada's largest airline has made what could be a substantial order for the Bombardier aircraft, none of us should be under any illusion that we will be heading home for the next constituency week on this aircraft.
As is the industry norm, Bombardier will only receive payment from Air Canada once the planes have been delivered, which is many years away. Finally, as with all major orders, due diligence takes time, and either side has the ability to withdraw from the negotiation at any time.
Next is what the Quebec government agreed to, and I will quote Air Canada's press release on this matter:
Subject to concluding final arrangements—
—and those are important words, “concluding final arrangements”—
—the Government of Quebec has agreed to discontinue the litigation related to Air Canada's obligations regarding the maintenance of an overhaul and operational centre following Air Canada's agreement to collaborate with the Province to establish a Centre of Excellence for C Series airframe heavy maintenance work in Quebec.
The Government of Quebec has not abandoned litigation against Air Canada. It has temporarily suspended litigation as both sides negotiate a settlement deal. Until Air Canada takes possession of its first C Series and begins maintenance work on that aircraft, or even concludes its purchase with Bombardier, this deal with the Government of Quebec cannot be final.
The Province of Manitoba, which had originally joined Quebec's lawsuit, has agreed to cease pursuing litigation subject to Air Canada moving approximately 150 jobs to the province. These jobs will be moved to Winnipeg sometime in 2017.
I would note that prior to Aveos filing for bankruptcy, approximately 400 heavy maintenance jobs were in Winnipeg. Air Canada is proposing to bring back 40% of them.
It is clear that with Bill , if something happens and Air Canada does not end up purchasing the C Series aircraft for any reason, whether because of a change in demand for air travel or if the C Series does not fulfill its performance guarantees, the Quebec and Manitoba governments will not have a legal recourse because the law will have changed.
If the governments of Quebec and Manitoba are indeed satisfied with Air Canada's commitments to create and maintain jobs in both respective provinces, there is no need to move as quickly to change the maintenance provisions of the Air Canada Public Participation Act, because no further lawsuits would be forthcoming.
Finally, the minister makes the point that this change would allow Air Canada to be more competitive. The amendment that the minister is proposing in Bill would indeed allow Air Canada to move some of its maintenance work to jurisdictions where presumably the cost of labour is lower, therefore saving Air Canada money.
In making the point regarding Air Canada's competitiveness, the minister has not provided an estimate of the financial benefit this legislative change will give Air Canada, not even for next year. Perhaps this information will come up in today's debate.
What is even more curious is that in its lengthy and detailed submission to the Canada Transportation Act review, which is available online, Air Canada does not mention aircraft maintenance once as a financial concern.
The location where Air Canada undertakes its overhaul maintenance only became a major concern when the carrier lost in court twice on this matter.
In the same public submission, Air Canada, along with virtually every major aerospace sector stakeholder in Canada, lists the air travellers security charge, the rapid growth in airport improvement fees, taxes on aviation fuel, the need for more streamlined customs processes, and the high airport rent collected by the federal government as major impediments to sustained growth of the aviation sector in Canada, especially relative to American competitors.
If the government wanted to take measures that would stimulate the entire Canadian aerospace sector, including Air Canada, it could have chosen to tackle any of the issues above. I would also note that all of these measures have near universal support in the aviation sector and would not lead to a loss of jobs in Canada, but so far, the minister has been silent on all of these.
The Conservative Party believes that Air Canada should become a private sector company that is not supported by taxpayers while ensuring that Canadians have access to reliable air travel. That was the original intent of the Air Canada Public Participation Act when it was introduced in 1988. The act put in place clear conditions to ensure that all of the support Air Canada had received from government to turn it into a profitable crown corporation would not be lost. These conditions will become well known over the course of this debate, but I will take the time and the opportunity to list them here. Air Canada is subject to the Official Languages Act. It maintains its corporate headquarters in Montreal. Seventy-five per cent of its voting shares have to be held by Canadians. Finally and most important for the purpose of this debate, Air Canada has to “maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community, and the City of Mississauga”.
Today, Air Canada is the largest airline in this country and an important international player in the sector because of support from taxpayers over the years.
Upon being privatized in 1988, Air Canada inherited a fleet of 109 aircraft.
All of Canada's major airports where Air Canada first flew to were built with the financial support of the Government of Canada and taxpayers. Today, Air Canada is the largest tenant in nearly every major airport in Canada, with the exception of Calgary and Billy Bishop Toronto City Airport. This gives Air Canada significant influence over each airport's operations and access to the best landing slots in a slot-controlled airport like Pearson. Air Canada also has intangible assets, like landing slots at some of the most slot-controlled airports in the world, such as London Heathrow, Washington Reagan, and New York La Guardia. Earlier this year, Air France sold a pair of its landing slots at London Heathrow for $75 million. For perspective, Air Canada owns 150 weekly slots at that airport.
Air Canada was also the beneficiary of back-to-work legislation in 2012, which was enacted because of Air Canada's importance to this country's economy. I would note that the Liberal Party and the former member for voted against this legislation.
The Conservative Party supports the concept of making Air Canada more competitive relative to other carriers. But as I noted earlier in my remarks, the minister has failed to demonstrate that this will be achieved while ignoring measures that the government could undertake that would achieve this without leading to job losses in Canada.
We know that Air Canada supports these measures because it said so in its comprehensive submission to the Canada Transportation Act review. Therefore, the question remains: Why would the minister undertake to amend this legislation and not take the opportunity to address any of the other measures that Air Canada identified in its submission? Neither this bill nor the addresses any of these. This is, to me, Bill 's greatest failing and why the Conservative Party cannot support this legislation.
To conclude, while it is not clear what level of benefit this legislative change will give Air Canada, we do know that this change will make it possible for the carrier to move thousands of jobs from Canada to other jurisdictions. We also know that the government is missing an opportunity to allow Air Canada to better compete against U.S. and international carriers.
I hope all members will keep this in mind as we continue to debate Bill .
Before I begin, I would like to thank some of my colleagues who worked on this file. This was a team effort, after all.
I would like to thank, of course, my colleague the member for , who is our transport critic, and my colleague the member for , who is our innovation, science, and economic development critic. Both those colleagues have worked very hard on this issue as well.
I also want to thank my colleague from . As an MP from Montreal, he represents a good number of the workers who will be affected by this change. I want to thank my colleague from as well. Since he represents a riding in the Winnipeg area, he is also seeing first-hand the impact of the decisions made here.
This issue also affects me. I say that with a bit of a smile, since my colleague from and I have often talked about the importance of Quebec's aerospace industry, specifically. I am from a suburb in the greater Montreal area, where there are workers and machinists in various industries who work hard, particularly at Air Canada. This bill will therefore have a major impact in my region. That is why I am very pleased to share the NDP's position on this with the House.
First of all, we must condemn the government's lack of rigour on any issues related to the aerospace industry. This government has been improvising ever since it was sworn in back in November. Since the Liberals say they recognize the importance of the aerospace industry in Canada, and particularly in Quebec, I think that they should have a plan. That goes without saying. During the election campaign, the Liberals kept saying over and over again that they had a plan, but they do not seem to have one for that industry, as we can see from the many problems that have arisen.
First of all, regarding Bombardier, we asked the minister on the day that he was sworn in what he planned to do about this file. Of course, I did not expect an answer the day that he was sworn in. However, it has been several months now, and the Liberals just keep saying that the situation is being evaluated and that they presented a budget. We have yet to hear anything about this, and they tell us to simply trust them. Instead of saying “just watch me” like his father, the keeps saying “just trust me”. The problem is that we do not find him trustworthy so far.
The Air Canada Public Participation Act that we are discussing today is very much intertwined with the Bombardier situation. The is using the Bombardier case and Air Canada's promise to buy Bombardier aircraft as an excuse to change the legislation, saying that it is a good agreement and giving them carte blanche to decide how they are going to protect jobs here in Canada.
As my colleague put it so well, the problem is that the bill changes the current legislation and asks us to trust Air Canada to meet its obligations. For now, those are legal obligations, but if the bill is passed, that will no longer be the case.
We seriously wonder whether we are seeing a favour being returned. The seems to want to thank Air Canada for buying Bombardier aircraft, thereby helping the government to off-load this hot potato. This gives the minister some good news to announce during question period, when he is asked about Aveos or Bombardier. He can go on about how nice it was to sit in one of those planes and he also gets to avoid having to defend his colleague, the , who remains unable to tell us when a decision will be made in the Bombardier case.
I do not pretend to know what the government members are thinking, but the facts are not reassuring, neither about the government, nor about the future of Air Canada maintenance jobs, which are supposed to be protected by law.
Before I go on, it is important for me to put things into context to better understand how we got to this point.
My colleagues will remember that Aveos announced that it was filing for bankruptcy in 2012. Naturally, the unions representing the machinists and the Government of Quebec sued Air Canada, accusing it of failing to meet its legal obligations. In fact, almost 3,000 jobs were lost after the news broke.
At the time, we asked the Conservative government a number of questions. Unfortunately, we never got an answer. We wanted to know what the Conservatives were going to do to enforce the law. As usual, we were given all kinds of excuses about market realities, even though there was a law. There were legal obligations. The government was not able to give us an explanation.
We now have a new government. What is important and what we are interested in today are the questions posed by the Liberals at the time. They were so indignant that the current , who is an MP from Montreal, protested alongside the workers in Montreal. As my colleague from said so well yesterday, he wasn't embarrassed to sing Kumbaya, to chant “So-so-so-solidarity” and shout out all kinds of slogans along with the protesters.
After all, people often said that the Conservatives came to change Ottawa and Ottawa changed them. Now, the same thing is happening with the Liberals. They came to change Ottawa and Ottawa changed them. In fact, I would even go so far as to say that the Liberals have not changed. These are the same Liberals that we knew before. When they were in the opposition, they tried to tell us one thing, they were going to protest with workers, but now they are flouting the law by changing it to legalize things that are illegal today, that will be illegal tomorrow, and that will be illegal until the bill is passed. It is completely shameful. It is disgraceful and unbecoming. It is particularly unbecoming because they promised to do things differently. Unfortunately, that is not what we are seeing today.
I would like to continue providing more context. After 2012, the situation changed. With the purchase of the Bombardier C Series, or at least the promise to buy since it is not yet a done deal, the Government of Quebec put an end to the dispute. It was only natural to do so until an agreement could be reached. Meanwhile, the government once again took advantage of the circumstances to make changes.
At the time, the provided a justification. I said “at the time”, as though it were a long time ago, because time flies when promises are being broken. A few months ago, the Minister of Transport explained that this was to allow for more flexibility. This sounds as though Air Canada is being given an opportunity to flout the law, but no one is actually saying so. Air Canada is simply being given an opportunity to legally flout the law. It is being given permission to do things it is not allowed to do now.
I want to raise an important point here. I heard a number of Liberal colleagues say the same thing. I even heard a Liberal member question our trust in Canadian workers and Canada's industrial capacity. I would like to give him some figures that are relevant here. The first figure has to do with the export of supply chains to the Asia-Pacific region. From 2003 to 2013, exports of supply chains grew rapidly by 190%. We lost jobs here in Canada. These jobs are going elsewhere. Supply chain exports to the Asia-Pacific region account for nearly 20% of the overall growth in value of exports.
We can see that more and more aerospace companies are outsourcing to Asia and other countries. Jobs here in Canada in these industries have become unstable. That is why we need a law to protect those jobs. We are not questioning the workers' skills or the quality of our industry. We are questioning whether the current market will protect those jobs. After all, they are high-quality jobs with good working conditions, pensions, and guaranteed income. It is so easy for large corporations to outsource jobs like that to places where labour costs less. That is being done to the detriment of the people we represent. That is exactly why the law was passed at the time, because, to put it bluntly, Air Canada benefited from the money of these same taxpayers who are now going to lose their jobs.
Once again, as one of my colleagues put it so well in one of his questions, over the past few years, in cases where the tax rate was lowered for large corporations, for example, companies often promised to return the favour and keep jobs here in Canada. Unfortunately, that did not happen.
I have some other things to say, but it is almost time for question period, so I will pick this up again later.