TRAN Committee Meeting

STANDING COMMITTEE ON TRANSPORT

LE COMITÉ PERMANENT DES TRANSPORTS

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, June 2, 1999

• 1544

[English]

The Chairman (Mr. Raymond Bonin (Nickel Belt, Lib.)): I call the meeting to order. We are here today, pursuant to Standing Order 108(2), to study the competitiveness of Canada's air transportation system.

We are pleased to welcome the Tourism Industry Association of Canada, represented by Debra Ward.

Welcome.

Ms. Debra Ward (President, Tourism Industry Association of Canada): Thank you very much.

The Chairman: You've been here before; you know the system.

Ms. Debra Ward: I've been here before, and I think I'm familiar with your system, yes.

The Chairman: This committee is very casual. We are here to share information and to learn from you. Please feel comfortable. I know things will go well, as they usually do.

You may make your presentation, and then we'll go on to questions from members.

Ms. Debra Ward: Thank you very much.

[Translation]

First of all I'd like to apologize because the French translation of my text is not ready. I'll send it to you tomorrow. Once again I apologize. Thank you.

• 1545

[English]

I'd like to thank you for seeing me here today. It's good to see some of you again. Hello. The last time some of us met was at the TIAC parliamentary dinner in the fall. I hope those of you who were there all had a good time and were able to look at tourism in a whole new way after the dinner than how you did before.

Before I get into my formal remarks, I would really like to commend you on the initiative you've taken to address these issues you laid before me today. When I saw your terms of reference, I was pretty overwhelmed by the scope. I thought, “Holy cow!” This is quite a large undertaking that you've taken on for yourselves, and one that, if I can say it, is a bit overdue.

In fact I had a lot of trouble trying to craft prepared notes to deal with all of this, and I don't think I have enough to cover it all. So what I'd like to do today is just give you a broad view of what tourism sees as the major issues as they relate to the air and aviation industry, and maybe at another time, when we focus in on more issues, we can come back and specifically deal with very close and focused issues.

The Chairman: Excuse me for interrupting. What we are doing now is gathering information. Because of the wide scope of our mandate, you have an opportunity to influence the direction the committee will take. We tell everyone this, and we're sincere about it. So feel free to try to influence it, because others have been offered the opportunity and have seized it.

Ms. Debra Ward: That's great. Thank you. I hope to help you look at travel as a component of tourism in a new way and then go further in future meetings.

The Tourism Industry Association of Canada speaks on behalf of and unites the different sectors within the tourism industry. We don't represent any one group or sector. We speak on the interconnectedness of transportation, destinations, and tourism operators, and how all those elements have to come together to make a successful tourism industry.

The other thing I like to do at these tables is speak on behalf of the small and medium-sized tourism operators across Canada who can't speak for themselves at these tables. In that sense I'm their proxy, and I try my best when I'm here to bring to these tables the specific concerns of small and medium-sized tourism businesses, which make up about 85% of our industry. For these businesses, not only their success but their ability to survive depends on their ability to get travellers to their doors in a manner that is safe, cost-effective, and efficient. They rely on our association to bring that sense of urgency to these tables, and I again thank you for that opportunity.

As for the size of tourism and what it means for the economy, it's huge. That's not news. So many of you know the industry well. Right now it's topping $47 billion annually to Canada. About $17 billion of that is related to airfare, either outbound or domestic. For the last few years, it has been growing faster than the economy in general. About $13 billion a year comes in from foreign exchange, making it one of the top rankers of foreign earnings in Canada. And it employs over half a million Canadians, which is about 5% of the labour force.

The government's share of tourism receipts is equally impressive. The Buchanan report, done in 1994, came out with the number that for every dollar tourism generates, the federal government earns 23¢ on that dollar. Provincial and municipal governments make 22¢ on that same dollar as well. From that, our conclusion is that governments have a vested interest in ensuring tourism works, not only for the economic and social benefits, but because tourism has proven a major generator of funds for governments over the years.

In the past, a lot of tourism's growth was a combination of good luck and good management. Not any more. Today Canada's success relies on being able to deliver a complex set of interrelated goods and services to entice people to go to Alberta, not Colorado, or Toronto, not New York.

International tourism is an export industry, and tourism is competing globally and with the same intensity as manufacturers and high-tech. That's what I wrote in my notes, but frankly I think the intensity is even hotter in tourism, because so many countries are now looking at tourism as a major, prime generator of international trade. The competition for the travelling public has never been greater than it is today. They've never had more choices, they've never had more price options, and they've never had easier ways of getting to more places than they do today.

• 1550

There's no question that tourism delivers economic and social benefits. I won't go through the litany here. But in order to attract the international customer today and keep our domestic customers—keep Canadians travelling at home—we have to have strong ties with the rest of the world and strong domestic links. That's where the main connection between a strong air industry and a healthy tourism industry comes in.

I'm no expert on the aviation industry. I'm an outsider. There are a lot of experts out there, and it's a very complex sector. I won't claim to know it well. But I really believe that some myths around air travel are embedded in the way we think. Those myths have a real impact on policy and on government decision-making.

One of the myths we seem to have is that tourism is a cash cow and that it's a rich business person's kind of travel, so you can add a fee here and a charge here and a tax there, because one of two things happens: either it's a business traveller and they write it off, or it's an occasional leisure traveller who only may travel once or twice every couple of years, so they don't know they're getting dinged. When you look at the gross numbers, air travel is on the rise, and governments—well, not only governments, but governments and people who charge user fees of various descriptions and for various reasons—add their piece on.

All of you travel, I'm sure, more than I do—and I travel far too much—so you know this is nonsense. You know air travel is as necessary and as prosaic a mode as bus travel, train travel, or car travel. It's not the jet-setters flinging off to Europe in first class. As for business class, I would guess the majority of people there are there because they've used points or they've used points to upgrade their economy fare. Very few people are paying full-fare business, because very few people can afford to pay full-fare business. There's no point telling a business person they're going to be able to write off the expenses against their taxes. They have to make a profit first. And as you know, a lot of our small business people and entrepreneurs have a long time coming before they have to worry about profits.

When you move to the back of the plane, which is always nice and full, there's again a myth that it's filled with occasional travellers visiting mom and staying over on a Saturday. Well, I know for the Tourism Industry Association, I have to take an awful lot of Saturdays away from my family, because we can't afford full-fare economy on membership. So when travelling, it's necessary for me and for other people to have a Saturday stay-over.

Again, when you look at excursion fares, with all the limitations and restrictions, you find a lot of business people who are using it because they have to get to where they're going, but they cannot afford to pay full fare. This is their compromise.

The other myth—and we're seeing this a little less now, but we still see it—is that air travel is not essential, that there's always another way to get there. You can always pick up a phone, take a train, or do something. Anybody who was around when Pearson shut down over the winter, when you saw the wrath and anger of people at the idea that this essential service was not open to them, when you saw the news reports of the hundreds of thousands and millions of dollars being lost over a short period of time when air wasn't moving, knows air travel and the ability to get on a plane when scheduled and land when scheduled are as essential to strong business and to tourism as any other link, regardless of modality.

We can talk about the Nav Canada strike or the looming air traffic controllers' strike. That would be devastating to tourism, and I urge and hope that as members of Parliament, you'll take whatever action is necessary and help in whatever way you can to avert that.

• 1555

If government policymakers believe air travel is for the rich or the people who have write-offs, and/or that it's a nonessential service, what do you do? Well, you tax it. Of course you tax it. It's a luxury. Or you increase your user fees or you increase your charges. You don't have to be government. You could be Nav Canada; you could be an airport authority. A number of different organizations are asking people to pay more and more and more.

All of this leads to my main area of concern, because I'm not here talking about the airline industry for the airline industry's sake; I'm here talking about it and its impact on tourism. What is the impact of these decisions and of these ways of thinking on the tourism industry?

As I said earlier, tourism and travel, including business travel, are highly competitive. If it's too expensive, if it's too complicated, if it's too much of a hassle, they will go somewhere else or they will not come at all. If you give them more reasons not to come than you give them to come, they will not come.

And this is not only leisure travel; this is not only low-end travel. This is international conventions, which bring in thousands of people for weeks at a time, which are some of the most high-spending groups you have. This is also meeting travel and incentive travel, which not only increase business trade opportunities for a destination, but also lead to future tourism potential down the road. If somebody comes to Ottawa for a meeting and thinks it's a great town, he might come back and bring his family six months later. So you lose that double-hit opportunity.

And who are we competing with? First and foremost, we're always competing with the States, because very few Canadians are more than an hour's drive from a competitive airline service that runs under its own different set of rules.

I have to tell you frankly that government is holding onto the wrong end of the stick on this one. The model we always seem to be using is, what do we need to do to build and keep a strong air transportation system? That always seems to be the fundamental question. We can turn that on its head and look at transportation as the physical network that supports the movement of goods and services to and within Canada. In other words, transportation, including air transportation, is an enabler of trade—in our case, tourism trade.

If that's the case—and that's what I believe—then the question isn't one of transportation by itself. The question is, what should our transportation system look like in order to maximize economic opportunities for Canadians, period? If transportation is this, then all these other things can happen.

Of course I'm here for tourism in particular, but tourism is part of the larger issue of international trade and domestic economic growth. If you look at the questions that way, some answers start falling out, and the answers are as follows—and a lot of this has already been done.

The system obviously should be deregulated whenever possible, not for deregulation's sake, but so that it can be flexible and respond to the marketplace and go where the opportunities are.

For example, Canada is now trying to find a position for itself in international travel, either as a mover of cargo or as an in-transit opportunity. As far as the global traveller is concerned, it makes no difference whether you stop in Toronto or New York. It makes a tremendous difference to Canada if we capture that kind of traffic, when you step back and see the blue planet and how people travel.

One of the questions we should be asking is, what can we do as a nation to make Canada the world's hub? Is there a role for Canada in that? I don't know if that question has been asked in a deep way yet.

Also, in tourism, the government has always had and continues to have a very important role in the creation and maintenance of certain kinds of infrastructure. There are various ways I can say this, but let me put it this way: there has been a lot of passing the torch of infrastructure needs to the private sector, in some cases in partnership, and in some cases it's now a private sector responsibility.

The fundamental issues about Canada—the east-west ties that bind, the need to link a small population in a big country, and all that—are still the responsibility of government, on behalf of the people of Canada, in the most profound way that we are a people and a country. That fundamental principle holds true with certain kinds of airport and air infrastructures as well, whether you're looking at remote or various other kinds. Again, when there's more time, we can talk about that kind of thing in more detail.

• 1600

The last point I have is probably the most difficult for me, because it takes up most of your own inquiry questions and it deals with very difficult and complicated questions of foreign ownership, scheduled versus charter, issues around cabotage and fifth freedoms, and all that kind of stuff. For now I'd just like to leave a thought with you rather than get into those things in detail.

All of those questions should be asked and answered within the context of what's best for the travelling public, for trade to Canada, and for the Canadian people—not what's best for a company or what's best for a region necessarily, but what will help Canada grow and prosper in the largest and best sense of that.

The airline industry, with or without anybody's help, is changing dramatically in Canada even as we speak. They are more market-responsive, they are more flexible, and they're certainly as lively as they can be within the current commercial realities. I just want to give you a couple of examples of that and what that means to Canada.

Icelandair brings people to Halifax now. Some of you around the table must be aware of this. I think currently it's three days a week, and they may be increasing it shortly. The people from Iceland come to Canada for one reason, and I bet you don't know what that reason is. It's to shop. That's right. They shop their brains out. You can smell burning plastic for miles. Then they turn around and go back home. It's a fabulous, unprecedented opportunity.

Another very good one is that Lufthansa has a subsidiary called Condor Air. Condor will be flying directly from Frankfurt, stopping in Whitehorse, and going on to Juneau. They alone will be bringing 4,000 to 5,000 people in from Frankfurt to the Yukon. For those of you who have had the opportunity and privilege of going up to the Yukon and seeing how they're developing their tourism industry and what it means to them, this is an unbelievable delivery of demand to the supply in a perfect way.

In Atlantic Canada, we've always had the problem that airfare is just too expensive for normal demand. The price elasticity just isn't there. Canadian charter services are now starting to come in and fill that gap. Of course, as you all know, when you get on a charter instead of a scheduled flight, it's a different level of service. There's no comparison. But sometimes people just want to get there, and charter is what they want. It opens the market; it opens up the field for new opportunities and new choices for consumers. That will be a great help to Atlantic Canada, in the same ways that you're seeing increased price choice and service choice in Western Canada because of WestJet. It's the same kind of opportunity for consumers.

The airport authority issues—and there are lots of them—are being worked through for the most part. We've taken the first big step, which was identifying the problems. That was a big learning curve for everybody, because I don't think anybody really knew what we were getting into when the airports were privatized. It was a learning process on the government side and on the private side.

I get a sense from speaking to the authorities, as I have been doing over the past little while, that there is a willingness on the government's part to sit down and talk through some of the issues, find solutions, and realize that perhaps some of the ideas they had going into this five years ago are not so practical today. I commend the government on that and urge more and better working with the authorities and allowing the authorities to grow and develop their own sector in a responsible way.

Finally, my last point is about the Canadian scheduled carriers. The two major domestic carriers are two of the best airlines in the world, period, bar none. I would not presume to speak on their behalf and tell you what their issues are and what you should do to resolve them, but I would say whatever they need that we can provide to help them do a better job themselves, either as support, as we are in TIAC's case, or as government or policymakers... The more we can allow them to compete internationally and position Canada as a leader, the better off we'll all be along the food chain.

• 1605

Again, I'm driving home the idea that the more we build demand, which is tourism's job, and the more we can allow all the carriers to respond to that increase in demand, the better off we'll be.

Those are my prepared notes. I'd be happy to answer any questions you have. Thank you very much.

The Chairman: Thank you very much.

We'll now proceed to questions, five minutes for the first round. That's five minutes for the question and the answer, total.

Mr. Sekora, Mr. Dromisky, and then Mr. Casey.

Mr. Lou Sekora (Port Moody—Coquitlam—Port Coquitlam, Lib.): You're a Canadian tourist bureau. Are you connected with the provincial tourist bureaus? How are you connected with each other?

Ms. Debra Ward: We have sister associations in the provinces, which are members of ours, and we work with them on issues on an ongoing basis.

I'm not sure if that really answers your question.

Mr. Lou Sekora: How are you funded?

Ms. Debra Ward: By members.

Mr. Lou Sekora: By members.

Ms. Debra Ward: By members and by our conference, yes.

Mr. Lou Sekora: I've noticed a lot of ads on TV and so on about tourism, and they're great. I'm wondering if we can possibly do a little more with air and train transportation.

Ms. Debra Ward: Combining the two?

Mr. Lou Sekora: Yes, a combination of both. There doesn't seem to be too much of that.

Ms. Debra Ward: A lot of packages offered worldwide are fly-train holidays. The commercials you're referring to are by the Canadian Tourism Commission, which is a joint government-industry body with shared funding from government and industry.

There are a number of fly-train packages. They don't advertise it, because they're very successful selling it to tour packagers and operators. So you'll get people from around the world who come to Canada on a plane, get on a train and take their train holiday, and then fly back.

What I can do for you, if you're more interested in this subject, is have somebody from the Canadian Tourism Commission who is expert on how it's being done and where it is being done contact your office.

Mr. Lou Sekora: I'm from British Columbia, and the fact is if you had planes coming to Vancouver and advertised the train trip through the Rockies—and they're just beautiful; it is really, really beautiful country—you could do a tremendous amount of business, a much bigger business, as far as tourism is concerned. Whether you fly into Alberta and then take the train back to Vancouver, British Columbia or the other way around, it's just wonderful.

Ms. Debra Ward: I had the privilege of doing that too, and it is wonderful.

I had assumed that a lot was being done already, but I will find out for you and let you know how much is being done.

Mr. Lou Sekora: Thank you very much.

Ms. Debra Ward: Sure, my pleasure.

The Chairman: I'd also like to tell the members that the Tourism Commission has been invited to appear, and they will be appearing in the fall.

An hon. member: Good.

The Chairman: Mr. Dromisky.

Mr. Stan Dromisky (Thunder Bay—Atikokan, Lib.): Thank you very much, Mr. Chairman.

Thank you very much for your presentation, Debra.

I'm keenly interested in the kind of relationship your association has with the major carriers that do carry the tourists into and out of and around this country. Does your association have any kind of relationship with the carriers?

Ms. Debra Ward: They are members of our association.

Mr. Stan Dromisky: Do you have any input into the decision-making? Can your association contribute in any way to the carriers? What strategies do you use, and do they listen?

Ms. Debra Ward: That's a great question. It's a large question too. Let me just chop it down so that I can answer you properly.

We get involved with them as the tourism advocate, and because we're the tourism advocate organization, many of the things we do are in parallel. So we find ourselves most of the time, though not always, in violent agreement. What's good for the airline industry is often also good for the tourism industry.

In terms of operational issues, I think you might be asking about scheduling, pricing, and that kind of stuff.

Mr. Stan Dromisky: Whatever.

Ms. Debra Ward: We're not directly involved. Those tend to be corporate decisions, and we've not really gotten into that with them.

I wonder why you would ask that though. It's a very different question.

• 1610

Mr. Stan Dromisky: I was just wondering, because we're talking about a multibillion-dollar industry here. You're giving us some very startling figures regarding the dollars involved in just this one aspect, the aviation industry.

Surely since you people have the know-how, the machinery, and the techniques for gathering information, that information would automatically be shared with the air carriers. There are problems within the air industry, and I'm wondering if some of these problems can, in other words, be identified by associations such as yours.

Ms. Debra Ward: Well, yes, on that particular piece, all this information I'm giving you now is something they know and do use. In terms of the problems with the air industry, a lot of them have to do with issues such as seasonality, yield management, and that kind of stuff, and I'm not sure how we can help them there.

We always try to look for ways to work better and more closely with them, so if you have any specific ideas...

Mr. Stan Dromisky: Also, looking at the other side of the coin, do you feel there are any weaknesses in the major carriers, in the airports themselves, in the authorities and how they operate those airports, or in the municipalities where these airports are located and the access and transportation to them? Can your association identify weaknesses where the needs of the passengers or the tourists are not being met adequately?

Ms. Debra Ward: That's a very good one. I can tell you one right off the top of my head: downtown airport links, intermodality links. Another one is the ability to single-ticket, because of continuous journey rules on GST.

These are all issues that are on our plate, and these are the kinds of issues we tend to nibble away at together. We find one of the greatest strengths TIAC has is that we don't have a vested interest. In broad terms, it doesn't matter to us if airline X makes more or less than airline Y.

Mr. Stan Dromisky: I understand that.

Ms. Debra Ward: It doesn't matter to us, as long as they're safe, scheduled, and consistent, and as long as pricing is consistent and we can get people on planes every day. That's our bottom line.

As for whether people can do things better, the short answer is absolutely yes. We find ourselves, interestingly, on the pointy end of a lot of different guns sometimes, because we talk with the airport authorities, the airlines, and the destinations, and sometimes they do not agree on what the issue is. You'll hear very different stories from those different groups.

What we try to do, both at this table and every day as TIAC, is find the common interest amongst the vested interests, speak to that common interest, and find ways to almost broker the differences between the different sectors.

That's why I tried to take the approach I did with the committee today. I don't want to talk about the airline industry by itself. I don't think there's any point in tourism or airlines doing that. I want to talk about the importance of getting this piece right within the Canadian economy, and all the pieces that go with it, such as the airport authorities, intermodal connections to downtown cores, the problem of too many airports, and all those things. I want to look at all of that within the context of the Canadian economy and what Canada needs to grow and prosper.

Mr. Stan Dromisky: Okay, thank you.

The Chairman: Mr. Casey.

Mr. Bill Casey (Cumberland—Colchester, PC): Thank you.

You're touching on a lot of really interesting subjects here. I'd like to home in on the airport authorities. You mentioned that a couple of times. One of the major airlines was here a few weeks ago and said the smaller airports are increasing their fees to the aviation industry so much that they may not even be able to go to some of the smaller airports any more. Are you running into this situation?

Ms. Debra Ward: I am running into a variation of that, but the same kind of thing.

The airport authorities are desperate to find ways to capitalize, to improve, and to compete with other airports, and there are only so many pockets they can go to. Frankly, I think there's a learning curve going on right now, when I stand back and look at these guys going at it.

After a lot of debate around the table, I think there will be a compromise. You're not going to pull away from a destination if you're making money going to that destination. If your airline is making money going to point B, you're going to continue to find a way to go to point B, but you're going to sharpen your pencil with the airport authority, as the airport authority would have to do too.

• 1615

The Government of Canada has a tremendous amount of work to do, and it has a responsibility to sit down with the airport authorities and find out what the real issues are, where the real problems are, and then work towards solving them.

Secondary airports were never intended to make money. Nobody ever thought they would.

Mr. Bill Casey: Does the federal government or the Department of Transport work closely with the airport authorities you deal with? I know it's a learning curve for everybody, but do they seem to have an interest in addressing the issues that the smaller airports are running into?

Ms. Debra Ward: There's a willingness, but they're still learning what the problems are.

I shouldn't say government writ large. Some of the people who are handling this are caught between a rock and a hard place, frankly, because being Canada, with the fact that the population is not there and a host of other things, what we consider a secondary airport in Canada would barely be considered worthy of an airport in a lot of other countries, because of population.

They have to deal with some very important regional equality issues, and at the same time they're asking these people to show a profit on something that was never designed to make a profit. It was designed to serve.

Mr. Bill Casey: Yes, to provide a service.

Ms. Debra Ward: It was designed to serve a public good.

So government takes from the public good side, business takes from the “show me the money” side, and they have to do a lot of talking before they find the Canadian compromise in the middle that I believe would work at the end of the day.

Mr. Bill Casey: You mentioned as one of your last comments that there are too many airports. Do you consider that Canada has too many airports? Would that increase efficiency and competitiveness?

Ms. Debra Ward: That was probably a slip of the tongue.

Mr. Bill Casey: Was it?

Ms. Debra Ward: It was an off-the-cuff remark, frankly. There are places where there are probably more airports than there is demand right now, and you have a choice. You can either increase demand to fit the infrastructure we have, or you can take a look at the infrastructure and say, “Maybe we're overbuilt here.”

If we are overbuilt, do we want to stay overbuilt because it's serving other needs and other ends—and that's an appropriate stand for government to take—or do we say, “No, this is a transportation facility, not a regional development program” and take a different approach? I don't think those questions have been asked.

Mr. Bill Casey: I just have one last very specific thing. Do you think the airport fees that are charged at the airport are discouraging tourism?

Ms. Debra Ward: I don't think they're discouraging it, but if they're not handled properly, they're annoying people, and that's even worse. I have to be very honest about that particular issue.

Mr. Bill Casey: What's a good way to handle it? Should we put it in the price of the ticket?

Ms. Debra Ward: Ideally it should be in the price of the ticket. For tour operators, give them enough warning so that they can price their package and include it in the package, so that the tourists themselves who are buying their all-in-one-price thing don't have to see it and don't have to know about it. Allow people to prepare for it. Allow some discussion around it and some transparency in how it's being used and what it's being used for.

Everybody wants better facilities at all airports. When you travel, you see some of the big airports internationally are becoming destinations themselves. They have retail destinations and transit destinations; they offer a host of services. If we're competing internationally, our airports need to be there, and they need to find a way to fund that development and that capital investment.

What they're doing is correct, but on the ticket is ideal.

Mr. Bill Casey: Okay, thank you.

[Translation]

The Chairman: Mr. Guimond.

Mr. Michel Guimond (Beauport—Montmorency—Côte-de- Beaupré—Île d'Orléans, BQ): My first question is for Ms. Ward. You've made a number of statements and I think that you're very familiar with this subject. I am ready to take you at your word, but I'd like to know whether you or your association regularly do surveys among tourists.

Do you have any data or statistical tables that you could provide our clerk, to be distributed among us, so that we could have an idea of what the tourists like or do not like, what they appreciate or do not appreciate?

• 1620

I'd be interested in knowing whether you have any specific data relating to our study. We are examining the competitiveness of the air transport system and I think the point of view of the Tourism Industry Association of Canada is very relevant to this. It would be easier if you had such studies relating to airports, and if not, we would be interested in knowing what the tourists appreciated or didn't like. That is my first question. You may wish to answer afterwards. I'll attempt to limit myself to 5 minutes and I suppose we'll have enough time.

Let's take the case of Japanese, Korean or Hong Kong tourists landing in Vancouver on a Japan Airlines chartered flight. Let's assume that they don't only want to see the city of Vancouver but also want to visit the Okanagan Valley or Prince George in the north.

We could also take the example of German tourists arriving in Toronto on a chartered Lufthansa flight. They want to visit the copper mines in our chairman's riding in northern Ontario. It could just as well be French tourists arriving in Dorval with the intention of visiting Quebec City.

I'd be interested in knowing your opinion. Do you think that the present structure of regional carriers in Canada is a hindrance to the development of the tourist industry?

The tourists arrive in the three main airports I mentioned to you; 350 passengers getting off a Boeing 747 or 767 and what they're offered for their trip to Quebec is a place on a Dash 8 or on a Beech 1900C for 19 passengers. How many trips would be required to take all these passengers on a chartered Boeing 747 Air France flight to Quebec City?

Do you think that this holds back the tourist industry? If so, have you already made representations to the two main carriers in Canada, Air Canada and Canadian? You could also point out that in order to serve the regions of Canada, they do not have the appropriate type of aircraft or equipment for the tourist industry to be profitable.

[English]

Ms. Debra Ward: You guys are asking me really good questions today. I'm going to answer your second question first.

[Translation]

It is a very important question, it is the difference between the tourist industry and the air industry.

[English]

In the air industry, demand drives supply, not the other way around.

[Translation]

I'm sorry but I'll have to explain in English, we are dealing with difficult concepts.

Mr. Michel Guimond: It isn't a problem for me, even if I am a separatist. I think that I'll be bilingual when I leave here, something that my English-speaking colleagues have not yet understood. Some of them have been members of Parliament for 12 years or more and they won't speak a word of French when they've finished. They are the worst but that is their problem.

Ms. Debra Ward: I'll try to express myself in French if I can, but they are difficult concepts.

[English]

In order to get an airline, especially a scheduled carrier, to put on the right kind of plane—and I've been on the Beech, the F-28, and all of those planes, so I know exactly what you're saying—they will say, “Show us how we can make money on this route with this equipment all year long.” Because that's what they have to do when they're there. They can change the equipment, but they can't change the route. They can't be like a charter company and say, “Okay, we're going to go away now, because the tourists only come in the summer.”

This is what I was referring to earlier about allowing the marketplace to drive the policy and the decisions made around transportation. You're right; people will not fly on certain aircraft, because they're too uncomfortable, they're too small, they're too noisy, and they're too awful to be on.

The scheduled carriers know better than I do, but they're in a difficult position, because once they commit to a route, they have to use it or lose it. They have to be there for the eight months the tourists aren't. What are they going to fly and how are they going to make their money on that route?

• 1625

The charters and the regional carriers are now starting to come in and pick up that slack, and that's why I believe the charters and the regional carriers are the key to success here. When you get 5,000 Germans coming to Whitehorse, as they are on Condor, which actually uses a smaller craft, you start getting infrastructure development and new routes. So all of a sudden you're starting to serve a higher pitch of demand, and that's where you're going to start seeing a better kind of aircraft and a better schedule.

So what you get into is what they call a virtuous cycle.

[Translation]

A good news cycle, so to speak.

[English]

because the greater the demand, the higher the competition. Other airlines start getting interested in hiving the cream off that. They bring in better craft and better materials and compete on schedule.

There's only one problem in the regions: there's not enough competition on those routes, so they get away with it. It then becomes tourism's job—my job and the job of everybody who works with me—to increase demand, to get more people to come here, because if more people come here, then they have to put on better planes.

So it's a chicken-and-egg situation. It all has to work together. But I know what your point is exactly.

On the first question, if you have time for that...

The Chairman: Oh, yes. Today we have time.

Ms. Debra Ward: Okay.

There's an awful lot of paper on the questions you're asking, a lot of statistics. I am frankly not sure, just off the top of my head, how good some of it is or how useful some of it is, but again, I would be more than happy, if you can be specific about what you're looking for, to work with my colleagues to find that information. We have a lot of information on inbound travel, for example—buyer demands.

We also have a lot of anecdotal information that you might find helpful. This is a suggestion through the chair, with respect. Tour operators bring in a tremendous amount of people from overseas. JTB, for example, and Japan Airlines are bringing in hundreds and thousands of people. They're the customer. It's the tour operator in that case, not the tourist, who is the customer. They may have some insights you would be interested in hearing about what works in Canada and what doesn't. That is anecdotal information.

The Chairman: I have some information for my colleagues.

Things have been tried and may work in other countries, but they don't work here, because Canadians are just starting to learn to work together to complete one another instead of competing all the time.

There are systems such as the Eurorail pass. You're all familiar with the Eurorail pass. You buy a pass on the train in Europe and you go for a month. Those existed for airlines in the States. They called them VUSA, Visit U.S.A. You bought this ticket and you had unlimited flights within the United States. You had to pre-book and you had to buy it before you came to the country.

In Canada we could never make that work, because the two major carriers don't talk to each other. They have no interest in working together, and it's hurting the tourism industry. But then, in all fairness, why should the two major carriers offer a deal when the majority of people coming in are coming in on charters, their competitor?

So it's a mishmash, but the day the industry can start working together, you should be able to buy a ticket and use it on a plane, a train, or a bus to go to all these places. As our colleague mentioned, if 500 people fly in on a charter and they want to go to Halifax, they have to buy a side-trip return, which sometimes will be more than their ticket across the Atlantic. Then if they want to go to another place, it's another side trip. It's just not feasible. And it should be.

I would hope you would address that. It's very difficult, because I'm asking you to talk about your members, but the two major carriers competing the way they are and not cooperating for the benefit of their own customers is hurting tourism in this country.

You don't have to respond, because they are your members, and I want to be fair with you.

• 1630

Ms. Debra Ward: I would like to respond in part. I can't respond as fully as I might if this were in camera, but I would say airlines worldwide are recognizing this. This situation is certainly not unique to Canada.

In the 1970s and the 1980s, the attitude was that the way to become top dog was to kill your competition, and a lot of decisions were made around that kind of thinking all over the world. A lot of airlines and travellers are suffering because of the kind of approach that says survival is most important.

One of the things that always strikes me about the air carriers—and I would like to say this for the record—is that their dedication to what they do is quite astonishing to me sometimes. It's in their blood or something. I admire it without really understanding it. I believe they do eventually, at the end of the day, put the traveller first, regardless of other business decisions. They just love moving people around.

The Chairman: Are there any other questions?

Do you have closing remarks?

Ms. Debra Ward: No, other than to say I hope I have an opportunity to meet with you again and discuss some of this in more detail. I enjoyed this. Thank you.

The Chairman: And we thank you very much for an excellent presentation and for bringing to the committee the perspective of the consumer, because so far we've been talking about the provider. Thank you very much.

Ms. Debra Ward: Thank you. I appreciate the opportunity.

The Chairman: Thank you, colleagues.

The meeting is adjourned.