I call this meeting to order.
Welcome to meeting No. 21 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.
Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, February 3, 2022, the committee is meeting to study the issue of reducing red tape and costs on rural and urban Canadian airports.
Today's meeting is taking place in hybrid format, pursuant to the House Order of November 25, 2021. Members are attending in person in the room or remotely using the Zoom application.
Per the directive of the Board of Internal Economy of March 10, 2022, all those attending the meeting in person must wear a mask, except for members who are at their place during proceedings.
I'd like to make a few comments for the benefit of witnesses and members. Please wait until I recognize you by name before speaking. To those participating by video conference, click on the microphone icon to activate your microphone, and please mute yourself when you are not speaking.
With regard to interpretation, for those joining on Zoom, you have the choice, at the bottom of your screen, to choose either floor, English or French audio. To those in the room, you can use the earpiece and select the desired channel.
As a reminder, all comments should be addressed through the chair.
For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can. We appreciate your patience and understanding in this regard.
Appearing before the committee, for the first half of today's meeting, are Monsieur David Rheault, vice-president, government and community relations for Air Canada; Mr. Howard Liebman, senior director, government and community affairs for Air Transat; Madame Suzanne Acton-Gervais, interim president and chief executive officer of the National Airlines Council of Canada; and Andy Gibbons, director, government relations and regulatory affairs for WestJet Airlines Limited.
Witnesses, on behalf of the committee, I'd like to welcome you to our committee today and thank you in advance for your testimony.
We will now begin the opening remarks with the National Airlines Council of Canada.
You have five minutes, and the floor is yours.
Good morning, members of the committee, and thank you for the invitation.
My name is Suzanne Acton-Gervais. With me today are some members of the National Airlines Council of Canada's executive committee and board of directors: Mr. David Rheault, vice-president, Government and Community Relations, Air Canada; Mr. Howard Liebman, senior director, Government and Community Affairs, Air Transat; and Mr. Andy Gibbons, vice-president, Government and Regulatory Affairs, WestJet.
The National Airlines Council of Canada is an association of Canada's four largest passenger airlines: Air Canada, WestJet, Air Transat and Jazz Aviation.
As airlines, we operationalize and implement policies on behalf of the federal government.
Prior to the pandemic, the council members collectively carried more than 80 million passengers per year. Airports were experiencing unprecedented growth and passenger volumes. Canadians were better connected to each other and to the world than ever before.
Few industries have been as impacted by the pandemic as Canada's airlines and their workers. We were the first hit, the hardest hit and the last to recover. ln order to recover, airlines must be competitive in a global context.
Our members serve over 302 destinations across the world. However, Canada's legacy public health restrictions, many of which remain in place exclusively for travel, set us apart from a growing list of over 50 countries that have removed barriers to travel altogether.
Since the outset of the pandemic, airlines have worked to protect employee and passenger health. Our most valuable asset will always be our people, and the airline sector needs more workers to support the return to travel. However, we rely on the Government of Canada to process credentials for airline workers and travellers at a speed that keeps pace with Canadian travellers' needs and our member airlines' operations. Transport Canada, the Canada Border Services Agency, the Canadian Air Transport Security Authority, Service Canada, airports and Nav Canada all need to be properly resourced to ensure that travel and tourism can resume to prepandemic levels.
Travellers need confidence that their journey can be predictable, timely and enjoyable, with clear service standards. Recent reports of backlogs at airports and excessive wait times are concerning, and must be immediately addressed and rectified by the federal government.
We are meeting today during tourism week in Canada. We welcome the supportive statements made by the , the and others. However, I would say to them that one of the most important actions they can take right now to support Canadian tourism is to address the untenable situation at our airports.
Before I conclude, I would note that Canada's airlines are customers of Canadian airports and of Nav Canada. ln Canada, it is well documented that high taxes and fees imposed on Canadian airlines and travellers create a competitive disadvantage for Canada's aviation industry versus other jurisdictions. These include airport rents, air traveller security charges, airport improvement fees, Nav Canada navigation fees and city taxes, among others. The pandemic highlighted flaws in Canada's user-pay model and exacerbated this competitive disadvantage.
Facing fewer travellers during the pandemic, a number of institutions increased their fees to compensate. When combined, these fees hamstring the aviation sector and associated local economic benefits. The federal government could take the immediate step of reviewing all third party fees and charges and consider reinvesting these amounts back into the airports.
With the continued cooperation of the federal government, Canada's airlines will contribute to a return to the connected lifestyle that matters to all of us. We need to connect people to each other and Canada to the world to keep our economy moving.
We look forward to your questions.
Thank you, Mr. Chair, and I want to thank the witnesses for being here today.
I'll preface my questions by saying that, for the most part, when we're embarking on a study like this.... Not to be political, but taking in some of the comments made and positions already taken, I want to concentrate on the irritants. Of course, with that said, I also want to concentrate on the challenges with respect to delays, some of the barriers already mentioned—why those barriers are in place—and implications.
For example, we heard in the past that the spread of COVID-19 among passengers, employees and supply chains resulted in some cancellations and delays in the airline industry. How do we deal with that? How do we ensure that airlines can participate in our travel economy in a seamless manner? How do we get people to move around comfortably?
I have a couple of questions. I'll concentrate these questions on Ms. Acton-Gervais's responsibility on behalf of many of the airlines.
First, I understand that part of the problem relates to traveller behaviour. Specifically, people used to plan their travel months ahead of time, but now wait much later to reserve their tickets. Ms. Acton-Gervais, have you observed this, in particular? That's the first question. The second question is, do you have any data you can share with the committee about this particular issue?
It is my turn to thank the witnesses for their presence. We are very grateful to them.
My first question will be for Mr. Liebman, from Air Transat.
We recently learned that Air Transat has partnered with Pascan Aviation to facilitate connections to international destinations from regional airports. Some might say that this arrangement is a win-win situation, where one carrier benefits from the other carrier's traffic. This is a type of arrangement that can be seen in other areas as well. What is interesting in this case is that we are talking about regional air transport.
Mr. Liebman, do you think there will be more associations like this in the future? Do you think that if there were agreements of this type throughout Quebec and Canada, it would allow for a better coexistence of large companies and small carriers?
Allow me to respond in my own language.
On regional travel, we've signed many interline agreements and co-chair agreements and have been innovative. We didn't need the government to encourage us in this direction. There was a market that we wanted to serve.
A great example of that is in western Canada, where we partnered with Pacific Coastal, a smaller British Columbia-based airline. We jointly share the operations of C-32 aircraft so we can bring service to places like Medicine Hat, Lethbridge, Lloydminster, etc., many communities that had never had any competition. Out east, we have a full interline agreement with PAL.
Coming out of the pandemic—and Monsieur Rheault touched on this—it's become increasingly clear that regional travel is how these communities across Canada stay connected to each other in the world. However, the way that the government treats air travel under the user-pay model is very different from other modes of transportation.
If you look at a province like Newfoundland and Labrador.... The federal government currently subsidizes rail passengers—I have nothing against rail—from Montreal to Moncton, to the tune of hundreds of dollars each.
Thank you very much, Mr. Chair, and thank you to our witnesses for being here today.
I will ask for my colleagues' forbearance while I ask some questions that are very specific to northwest B.C., but I imagine they would apply also in other areas of Canada.
In the region I represent, there's a vast discrepancy in the price air passengers pay for flights to the same hub airport. For instance, I had my staff look at the cost of flying in the first week of July, from Terrace to Vancouver, from Smithers to Vancouver and from Prince Rupert to Vancouver. The lowest fare each day to fly from Terrace to Vancouver averaged $198. From Smithers to Vancouver, it was $302, and from Prince Rupert, it was $443. These are the same airplanes, approximately the same distance and yet a dramatically different cost. This is something that has a profound impact on communities that are facing unaffordable airfares.
Ms. Acton-Gervais or Mr. Rheault, I'm curious as to whether you could explain why it costs over double to fly out of Prince Rupert and half as much again to fly out of Smithers.
That's great. Thank you. That's clear from our witnesses here.
Every single airline and the industry present is calling for the removal of on-site mandatory random testing, duplicate questions at customs, and, again, the vaccine mandate.
I want to turn to Mr. Gibbons for my second question. I'll begin with you, and if anybody would like to weigh in, please do. You mentioned, in response to one of the questions, that it would be helpful for every stakeholder to have information on the science being used to make these mandates or these decisions.
Have you been presented with this information by the government?
The data we've been presented by the government is the aggregate public data about the general COVID situation that we're in, the state of the pandemic, and the number of cases and hospitalizations.
The Public Health Agency, Mr. Jeneroux, throughout the pandemic, has had the percentage of inbound travellers who have tested positive for COVID, so there has been some public data that everyone has shared.
Our requests are more around the precise policies that we see, and what the precise benefits are to the overall COVID equation. I'll use the example of the omicron mandates that were put in place. We wanted to better understand what exactly these measures were going to prevent or not, with specificity for the airline sector.
It's more about precisely understanding the recommendations that were made by public health officials and how the government was informed in terms of these decisions, so we can take away questions like this at committee and take away discussions about who's with science and who's not. We have to move past that and talk very strictly and purely about—
That is a good question. I believe some of this came up at committee the other day, because someone asked the about standards of care. That's one of the issues that's coming to light here, with these delays.
Just to give you an example, Mr. Jeneroux, there are some evenings in Toronto where 700 of our guests have to be reaccommodated onto other flights. Oftentimes, we will have almost half a dozen flights on which families are prevented from leaving the airplane just to enter the customs hall.
In our industry, we have a very strict regulatory environment, as we should as a federally regulated company. When it comes to something like a tarmac delay, we have obligations that at 30 minutes you have to do this and at 60 minutes you have to do that. You have to make sure water is there; you have to make sure that communications to the guests are clear, that you're communicating why the delay is happening and what they're entitled to and not entitled to.
As part of this, in terms of improving the overall system and traveller experience, we are observing that for every touchpoint for the traveller in Canadian society, airlines are seemingly the only ones with service standard obligations and regulatory requirements that need to be met.
I think it's an open—
Thanks for the invitation to speak to you today about this. I'm going to focus, particularly, on our airport, which is the Smithers Regional Airport, or YYD. It's owned by the Town of Smithers, which is a community of about 5,400 people, with a service area of about 20,000, including many other small communities and indigenous communities.
Before the pandemic, YYD was run like a business, and it essentially it paid for itself. We had 68,000 passengers in 2019. Last year, in 2021, we had 37,000, which was at about 50-60% of revenues. Prepandemic, scheduled passenger service was provided by two airlines: Air Canada and Central Mountain Air. There were four flights per day. Today, there is one flight, provided by Air Canada in a Q400 with a 78-passenger capacity.
The airport provides a base for charters to remote camps and tourism lodges for fishing, hunting, etc. Our hospital also receives patients from across northwest B.C., with about 260 air medevacs per year. The airport plays a role during emergencies. During recent extraordinary wildfires, the airport was a base for wildfire crews, aircraft and military personnel. Of course, residents choose where they want to live based on amenities.
In the last few years, we've made many improvements to the airport, terminal modernization and runway. Coming up next will be runway lights, etc. We are very much a grant-dependent airport. We're grateful for those grants, as well as for COVID money and money from the regional air transportation initiative.
Research shows that the Smithers Regional Airport is one of the lowest-cost airports for an airline to land a Q400—that is the aircraft currently being used by Air Canada—so it's not the fees that we charge that deter flights. That said, we do have a passenger fee to help with revenues.
The question is whether government red tape makes airports more expensive. Probably, but some regulations can be difficult. Some safety regulations, I suggest, are well accepted.
I want to suggest, though, that there may be a different view on regulations that could help airports in communities like ours, which are reliant on one airline. During the pandemic, the Canadian government offered support to airlines. I support that, and I think it's time to offer that to small and medium-sized airports.
Consider regulation that might link miles flown to the price charged. For example, in our area, flying from Terrace to Vancouver and Smithers to Vancouver are about the same mileage, and the same aircraft is often used. However, it is often way more expensive to fly from Smithers. People comment that you can buy a ticket to other parts of Canada—other parts of the world sometimes, for less—and that unfair pricing hurts small communities. It's not just Smithers.
Don't get me wrong. I am happy to have Air Canada serve our community. I flew with them yesterday and I'll fly home from Regina on Air Canada. However, if there isn't competition, there needs to be a reasonable way to regulate it so that one community isn't paying a higher price than its neighbour for the same service, the same aircraft and the same distance.
Residents choose to drive, sometimes on very dangerous winter roads, to save money. Businesses and industries choose to locate themselves at and operate from other bases.
A lack of consultation on scheduling hurts too. Last year, ski operators had to scramble after a late-season schedule change affected their clients, driving them to other airports. I'm hearing the same from guide outfitters in our community who are finding their clients are being driven away because the current one flight per day on an early morning schedule doesn't suit them.
Air Canada has too big an influence on the health and future of our community. Its use of third party contractors at the airport further reduces the quality of experience for passengers when a flight's delayed or bags are lost. The people behind the counter don't work for the airline. They work for a contractor who can't offer them help. They're told instead to phone the airline, and we all know that phoning an airline, especially when a whole planeload of people are trying to phone, doesn't help.
Customers don't understand the nuance of who works for whom, and our airport gets the blame. Air Canada's going to get those passengers anyway, especially if people have to drive down the road simply to fly from Terrace or Prince George. It doesn't provide a reason for them to work with us. I suggest reasonable regulation could create a path toward an equitable system for small airports like YYD, which is so critical to our community, as the airport is such a significant cultural and economic driver.
I have one other area, and I might not get through it in time. It's about transport or landing systems, but I want to focus on this piece about the regulation for airlines when we have one airline with no competition. We really can't afford to have more and more people leaving small towns because of a lack of opportunity. Our cities can't support more people, and citizens want to live in different parts of our province and country. In this day and age, though, we can't thrive without adequate air access.
I understand the need to review regulations and to remove those that no longer serve a purpose. I urge you, though, to consider the upside of regulation, which is to create fairness. We at the Town of Smithers do not have a lot of clout with Air Canada, yet our economic health is tied to the decision-making of that airline. We are ready to be part of a successful network of regional airports, serving our residents and our neighbours and jumping into provincial emergencies when we need to, but reliable, fairly priced, quality air service is essential to our community.
I'll stop there to make way for questions.
I'd like to thank the committee for having me today. I will make my remarks in French.
The subject of airport costs is broad and complex, and we could talk at length about the negative consequences of the federal government's withdrawal from the airline industry. The representatives from Air Canada, WestJet and Air Transat made this point very well earlier.
My remarks today will be more focused on the cost recovery implications of the two federal agencies, the Canada Border Services Agency, CBSA, and the Canadian Air Transport Security Authority, CATSA.
Although I am indeed involved in regional air transportation as the head of the Coopérative de transport régional du Québec, as the chair of the committee mentioned, it is as president of the Mont‑Tremblant International Airport that I would like to speak today.
The Mont‑Tremblant International Airport, which has been in operation for 20 years, is a tourist airport, and 80% of its general aviation revenues come from international flights. Commercial domestic flights at the airport are operated by Porter Airlines and Air Canada.
So it's on behalf of my airport, but also on behalf of several other regional airports in Canada, that I would like to talk to you about a major inconsistency.
In the 1990s and earlier, when the federal government designated an airport as an airport of entry, or AOE, the cost of customs services was borne by Ottawa. However, a new practice has been in place for several years, that of providing a service, but on a cost‑recovery basis. The CBSA was the first to do this, and I think our airport was one of the first to experience the effects.
In 2006, due to the real demand for international air traffic to our airport, the federal government designated it an airport of entry. The CBSA then informed us that, despite this designation, it would only be able to provide customs clearance services there if we agreed to pay for them. We then understood that the operating budget from the federal government had not been increased to take into account the new services to be provided to our airport.
So we were faced with an impossible choice: to be treated differently from other airports or not to have customs clearance services. Since the viability of our airport is directly related to international flights, a refusal would have meant its closure. Since the fee at that time was only $275 per aircraft, we decided to stick to our principles and accept this practice. However, 15 years later, the clearance of a 4‑ to 15‑seat aircraft at the Mont‑Tremblant airport has increased from $275 to $1200.
There is a fundamental question as to why some regions of Canada pay their customs services out of the taxes paid to the federal government, while others, such as ours and Charlevoix, have to pay their customs services in addition to the taxes they pay to the federal government. A fundamental principle of our democracy is therefore being flouted.
In English, one says, “No taxation without representation.”
We must note that the Canada Border Services Agency, by invoking the cost recovery principle, has given itself the power to tax and, as an agency, it is not accountable to the public.
As a result, this creates two classes of citizens in Canada: those in cost‑recovery regions and those who are not.
As if that weren't enough, in light of the absence of government leadership, the Canadian Air Transport Security Authority has also recently decided to recover the costs for the services it provides.
Therefore, the federal government must regain control of the situation. Since it is the federal government that has the choice of whether or not to designate an airport of entry or a screening point, it must provide these agencies with the budget they need to carry out their mandate. It should also put an end to these agencies' practice of recovering their costs.
My questions are for Mr. Larivière, as well.
Given the Government of Canada's concept of airports, it really doesn't seem to understand how important regional air transportation is. The focus seems to be on international travel, but flights within Quebec and Canada are even more of an essential service and should be treated as such. That's my opinion, but I'm not sure whether you'll agree with me on that.
Do you think the approach should depend on the airport's designation, or at least it's size or the region it's in? For example, would it be appropriate to say that, in smaller regions, the central government will cover a larger portion of certain fees, instead of having those fees passed on to users? After all, we are talking about an essential service.
We feel the weight of that. For the benefit of the other folks here, from Smithers, our nearest community, it's two and a half hours down the road to the nearest airport. We feel a bleed when people feel the attraction, as the previous witness said, of a cheaper flight. It's one thing to have passengers making the decision, but also, because there has been a decision to increase the frequency from our neighbouring airport as well, there seems like a greater attraction in price and a greater attraction in opportunity. It's not just individuals making a decision to choose a different or a cheaper flight. It's businesses also making a decision that their businesses might be better served.... Even though, primarily, our community—Smithers and the Bulkley Valley—might have been the community of choice, economy matters, so if there's increased frequency and sometimes the perception, often the reality, of a lower price from a neighbouring community....
Again, it is the same mileage, as I mentioned before, so it's often the same aircraft and the same flown miles, but the price is cheaper. Those are things that are very difficult for us to compete against, so once a business chooses to relocate to another community, it's very difficult to get it back. It may be a small business, but sometimes these are large industrial operators that are going to take residents with them.
There's a whole cycle that happens after that. When businesses and residents choose to relocate, it takes from you some of the things that drive your community. I was listening the other day to decisions being made regarding health care and how health care services may be located. These things link together, so it's hard to tether out only the impact of the cost of air travel, because it spills out to the entire success of the community, whether or not businesses will be there, whether extenuating programs will be located there, and particularly, as the previous witness commented, on tourism. We're a tourism centre, so our tourism businesses have to be able to greet their clients, and clients have to be able to connect to other communities, so they're not going to overnight in Vancouver and then overnight in Smithers because we have one flight per day. The economic and cultural cost to the community with the relocation of businesses, I think, is severe.
It does affect affordability. It's less obvious than it used to be, because it's hidden in the fee, but of course people know it's there. We have a fairly high passenger fee. It's $30 per person. It's high, and people know it's there.
There's one thing I think, though, about requirements for a certain level of service. The federal government regulates the airports and tells us how to operate them. That's okay, except that, as a small airport, sometimes we're told we have to upgrade something or that a system is not adequate and must be upgraded by a certain time. That's fine, but because we are so reliant on the grant system, it seems to me—not just with airports but with many systems where we fall under the regulation of other orders of government—if you know we must make an improvement in order to function, what I suggest is that the money should be there at the same time.
If we receive a new regulation that says lighting must be to a certain standard or water must be to a certain standard, and it's known that the only place to get the money to do that is through a federal grant, why don't they come together? Otherwise, it puts all this tension on a local service provider, the municipality, which is then trying to figure out how it can possibly get the money.
We don't write the regulations, but we have to respond to them in the time frame given, and the only place we have to go to get the financing is to other orders of government. I think one of the things that makes sense is, rather than creating the heartache and agony, attach the funding to the program. Then, when you tell us to do something, we know how and by when.