FINA Committee Meeting

37th PARLIAMENT, 1st SESSION

Standing Committee on Finance

COMMITTEE EVIDENCE

CONTENTS

Monday, February 25, 2002

¹

1530

The Chair (Mrs. Sue Barnes (London West, Lib.))

Captain Kent Hardisty (Executive Vice-President, Air Line Pilots Association, International)

¹

1535

¹

1540

The Chair

Mr. R. Neil Raynor (Executive Director, Canadian Airports Council)

¹

1545

¹

1550

The Chair

¹

1555

Mr. Randall Williams (President and CEO, Tourism Industry Association of Canada)

º

1600

º

1605

The Chair

Mr. Jason Kenney (Calgary Southeast, Canadian Alliance)

Mr. Randall Williams

Mr. Jason Kenney

Mr. Neil Raynor

Captain Kent Hardisty

Mr. Jason Kenney

Mr. Neil Raynor

Mr. Randall Williams

Mr. Jason Kenney

Mr. Neil Raynor

Mr. Jason Kenney

º

1610

Mr. Neil Raynor

Mr. Randall Williams

Mr. Jason Kenney

Mr. Randall Williams

Captain Kent Hardisty

The Chair

Mr. Yvan Loubier (Saint-Hyacinthe--Bagot, BQ)

º

1615

Mr. Neil Raynor

Mr. Yvan Loubier

º

1620

Captain Kent Hardisty

Mr. Randall Williams

The Chair

Mr. Yvan Loubier

º

1625

The Chair

Mr. R. Neil Raynor

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

The Chair

Mr. Randall Williams

The Chair

Mr. Art LaFlamme (Senior Representative, Canada, Air Line Pilots Association, International)

The Chair

Mr. Bryon Wilfert

Mr. R. Neil Raynor

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1630

Mr. Bryon Wilfert

Mr. R. Neil Raynor

The Chair

Mr. Bryon Wilfert

Mr. Randall Williams

Captain Kent Hardisty

º

1635

Mr. Art LaFlamme

The Chair

Mr. Randall Williams

Mr. Neil Raynor

The Chair

Mr. Ken Epp (Elk Island, Canadian Alliance)

Mr. Randall Williams

Mr. Neil Raynor

Mr. Ken Epp

Captain Kent Hardisty

º

1640

Mr. Ken Epp

Mr. Randall Williams

Mr. Ken Epp

Captain Kent Hardisty

Mr. Ken Epp

º

1645

Captain Kent Hardisty

The Chair

Mr. Randall Williams

Mr. Jason Kenney

The Chair

Mr. Kenney

Mr. Neil Raynor

Ms. Pauline Picard (Drummond, BQ)

Mr. Randall Williams

Ms. Pauline Picard

Mr. Neil Raynor

º

1650

The Chair

Mr. Ken Epp

The Chair

Mr. Ken Epp

Mr. Randall Williams

Mr. Ken Epp

Mr. Neil Raynor

Mr. Art LaFlamme

º

1655

Mr. Ken Epp

Mr. Neil Raynor

Mr. Ken Epp

Mr. Neil Raynor

Mr. Ken Epp

Mr. Neil Raynor

Mr. Ken Epp

Mr. Neil Raynor

Mr. Ken Epp

Mr. Neil Raynor

»

1700

Mr. Ken Epp

Mr. Randall Williams

Mr. Ken Epp

Mr. Randall Williams

Mr. Ken Epp

Mr. Randall Williams

Mr. Ken Epp

The Chair

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CANADA

Standing Committee on Finance

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NUMBER 080

l

1st SESSION

l

37th PARLIAMENT

---

COMMITTEE EVIDENCE

Monday, February 25, 2002

[Recorded by Electronic Apparatus]

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[English]

    The Chair (Mrs. Sue Barnes (London West, Lib.)): The order of the day is Bill C-49, an act to implement certain provisions of the budget tabled in Parliament on December 10, 2001. As per the unanimous direction of this committee on Thursday, the clerk recontacted a list of witnesses who were designated, and we now have a distributed brief from one of those witnesses. As I understand it, two did not get back to us, and we have witnesses who wish to appear. After that, I also heard from one other witness, but I advised him that the will of the committee was to hear the specific list of witnesses and then to move to clause by clause tomorrow.

    So we'll go with that for today. You'll see that you do have your notices of meetings for tomorrow, for the clause-by-clause and also for the steering committee on Tuesday afternoon.

    I'd like to welcome, on behalf of the committee, from the Air Line Pilots Association, International, Captain Kent Hardisty, the executive vice-president; Art LaFlamme, senior representative for Canada; and Roman Stoykewych, who is the legal counsel. Welcome. Thank you very much, and my apologies if I've tampered with your names in an unusual fashion. From the Canadian Airports Council, we have Mr. Neil Raynor, executive director; and from the Tourism Industry Association of Canada, Mr. Randall Williams, who is the president and CEO. We've seen him here before. Welcome to all of you.

    We're going to do this by asking each of you to go for approximately 10 minutes, or whatever, as succinctly as you wish, and then we'll go to questioning from the members of the committee. We'll go in the order of the agenda here.

    Who would like to start for the Air Line Pilots Association, International? Captain Kent Hardisty, go ahead.

    Captain Kent Hardisty (Executive Vice-President, Air Line Pilots Association, International): Thank you, Madam Chair, committee members, good afternoon. As to the introductions, on my left again is Mr. Roman Stoykewych, our senior legal counsel; on my right, Mr. Art LaFlamme, senior representative, Canada. We took the liberty of preparing a package, which you should have. I'll just outline what is in the package very briefly.

    You will see, I believe, on the left side of the package two documents. The first is a statement of our association president, Captain Duane Worth of the Air Line Pilots Association, which was provided to the Committee on Commerce, Science, and Transportation of the U.S. Senate, and also underneath that is my statement on aviation security to the House of Commons Standing Committee on Transportation on November 8. That's for your review and interest at the point you deem appropriate. On the right side, in both official languages, are the documents to which we'll be referring today.

    ALPA represents more than 64,000 professional pilots who fly for 45 airlines in Canada and the United States. As the representative of employees whose very lives depend on the safety and security of the air travel system, ALPA has since its inception in 1931 devoted itself to ensuring that air travel is both safe and secure. ALPA has developed extensive knowledge and expertise in aviation security issues.

    ALPA has long been a leader in working with other parties in the United States and Canada in developing improvements to aviation security, and these efforts have been stepped up in recent months.

    Our president, Captain Duane Worth, led the U.S. rapid response team on aircraft security that was tasked with developing recommendations to be delivered to Transportation Secretary Norman Mineta. Additionally, the U.S. Federal Aviation Administration appointed ALPA security committee chairman Captain Steve Luckey to chair a committee examining new security technologies.

    Captain Worth and other ALPA representatives have provided testimony before Congress on numerous occasions since the events on September 11, 2001. Meanwhile, in Canada, at ALPA's initiation, security representatives from ALPA have been meeting with senior officials from Transport Canada's Safety and Security Directorate in Ottawa to discuss the vital issue of our nation's aviation security and to begin the development of a new security aviation blueprint. ALPA pilots and staff have participated in the newly formed Aviation Security Advisory Committee as well as the aircraft security working group and the airport security working group.

    Especially in light of these positive steps already taken to deal with this critical problem, we are troubled by the direction that the proposed legislation has taken and are gravely concerned about what we believe to be serious deficiencies in the proposed Canadian Air Transport Security Authority Act.

    The proposed legislation does little but create an expensive bureaucracy that will be unresponsive to the insights and the interests of the people on the front lines of aviation security. It will accomplish little more than transfer screening authority from the airlines to the airports. Moreover, the proposed security authority would work in an operational and fiscal bubble that does not reflect the fact that aviation security, both in terms of its importance and in terms of its complexity, is an issue that transcends the immediate use of airports. We are disappointed that the planned legislation does not adequately address the core issues or security issues in Canada.

    Before turning to a more detailed assessment of the proposed legislation, we wish to express that our most serious concern with the proposed legislation is with what it is not, that is, a substantive attempt to address the core issues of the security of air transportation. Given the critical importance of the issue, we believe that the government must address the issue of the security of air travel legislatively, in a comprehensive manner, establishing enforceable standards for the secure operation of the air transportation system. The proposed legislation does not do this. Instead, it proposes to delegate responsibility away from government both for the setting of these standards and for the delivery of security services to the public. In fact, we view this proposal as an unacceptable step backwards.

    ALPA is deeply concerned by the proposal to create an authority with an 11-member board of directors to deal with the screening aspect of security. We believe the security functions within the authority's proposed mandate could be carried out more effectively and efficiently by experienced security personnel within the transport ministry. We are particularly concerned with the apparent restriction on the proposed authority's mandate to the screening aspect of the provision of air transportation security--clause 6.

    As I indicated before in our ongoing discussions with officials from Transport Canada Safety and Security Directorate, ALPA has made it clear that Canada needs a new aviation security blueprint. We need global thinking to address this critical issue.

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    The handing over of the screening aspect of the security problem to a separate authority with its restrictive mandate is a piecemeal solution--an exercise in ad hocery that will be unable to address the core issues related to security. It is not clear to us, for example, whether the new security authority could meaningfully deal with broader security issues, such as the use of air marshalls, passenger information systems, and the creation of a national pass system utilizing technology, including biometrics.

    ALPA outlined its proposals for the changes that need to be made to the security system in its November 8, 2001, submissions to the House of Commons Standing Committee on Transportation.

    The proposed legislation's silence on these issues appears to indicate that these and other important issues may not be fully addressed by the authority. Moreover, in our view, the creation of yet another bureaucratic layer to deal with the issue of airport security will reduce the likelihood of it receiving the public attention it deserves and, more importantly, would preclude the necessary public scrutiny of proposed solutions. The issue deserves to be the subject of public debate on an ongoing basis.

    We are concerned that the creation of an authority will serve only to reflect the government's responsibility for maintaining a secure transportation system. We therefore urge the committee to recommend that an authority be provided a global mandate to deal with all aspects of aviation security. If such a mandate is not feasible, then security functions should continue to reside directly with the Minister of Transport, and the government should not proceed with the creation of a Canadian Air Transport Security Authority.

    While we have serious misgivings about the proposed authority's ability to deal with security issues, we are nevertheless heartened to see that at least some provision has been made for stakeholder representation on the proposed authority's board of directors. The men and women who work directly in the industry have the most at stake when questions of aviation security arise, and they are the ones who will be best positioned to provide realistic solutions to security problems. ALPA, as I've indicated, has decades of experience in this issue. Because our members' lives are on the line everyday, we believe they have, and should have, a great deal to say on the issues of aviation security.

    However, we do not consider the proposed two representational seats on a board of eleven to reflect these facts. It is essentially token representation. To create a body that is truly responsive to the critical front-line issues of security, a far greater proportion of the board members should be drawn from the industry. Moreover, we are deeply concerned that the qualifications criteria for non-representative board members in subclause 12(1) are both vague and insufficient.

    Security is a highly complex technical area that cannot be quickly mastered by gifted amateurs. For the board of directors to be effective in this area, many years of direct professional experience in the area is a prerequisite. Accordingly, were this committee to accept a proposal to create a security authority, we urge you to require that each member of the board of directors have an extensive professional background in aviation security. We also recommend that a more substantial proportion of the authority's board originate directly from the aviation industry, including front-line personnel such as airline pilots.

    If nothing else, the events of the last six months have made clear to everyone the importance of effective security measures in the aviation industry. It has become clear that a new way of doing things is necessary to protect the travelling public from previously unthinkable acts. It is also clear that the current system's reliance on poorly trained, underpaid contract employees to deliver this crucial service to the public is unacceptable.

    For these reasons, we are greatly concerned that part I of the bill contemplates the contracting out of this security work. In ALPA's view, the significance of the security function and the history of its inadequate delivery by security contractors make it clear that this function should be governmentalized. The events of the last six months have made clear that the provision of security at airports, like police and military functions, is inherently a governmental activity. Canadians must be able to expect that performance objectives can be set, measured, and executed directly by a public authority and not through an intermediary. The Government of Canada must reassert its responsibility and authority for the security of Canadians. We therefore urge the committee to amend the bill to preclude the Minister of Transport from delegating the screening of functions contemplated by the bill to non-governmental third parties.

    I would also like to briefly address the issue of the Air Travellers Security Charge Act. Finally, we object in the strongest possible terms to the assessment of what can only be characterized in the present economic climate as a punitive levy on the Canadian domestic airline industry. Canada has seen the disappearance of numerous airlines in the last several months, and only last week attempts at a restart of Canada 3000 were abandoned for economic reasons. The imposition of a $24 surcharge on domestic flying will at this time only serve to further erase the operating margins that remain in the Canadian industry. It will be particularly crippling to short-haul domestic carriers, such as Air Canada Regional and WestJet.

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    We find it ironic, to say the least, that legislation intending to improve air travel in Canada could assist in its very demise. The government appears to be willing to provide only the security the immediate users of the air transportation system are willing to pay for. However, the application of the user pay concept is completely unfair and not properly applicable to this context.

    The events of the last six months have illustrated the critical importance of the aviation system to the overall functioning of the national economy. Its support, particularly at this critical time in its history, is patently in the broader public interest. The attempt to place the aviation security issue in a fiscal bubble, as Bill C-49 proposes, in our view constitutes an abandonment of the government's responsibility over a critical part of the nation's infrastructure. We therefore recommend that the security charge scheme be abandoned in its entirety.

    Thank you for the opportunity to appear before the committee to outline ALPA's views on this critical issue and to set out our serious concerns in respect of this legislation. The association looks forward to working with Parliament, Transport Canada, and other participants in the airline industry to ensure that there is a safe and secure aviation system in Canada. However, to summarize, we do not believe the proposed legislation is a step in the right direction.

    We'd be pleased to answer any questions you may have. Thank you.

    The Chair: Merci.

    The Canadian Airports Council, Mr. Raynor, please.

    Mr. R. Neil Raynor (Executive Director, Canadian Airports Council): Good afternoon, Madam Chair. My name is Neil Raynor, and I'm executive director of the Canadian Airports Council. Thank you for giving us the opportunity to be here this afternoon. I bring the regards, and unfortunately the regrets, of my chair, Larry Berg, who is the president and CEO in Vancouver. Unfortunately, because of the short notice, he was not able to join me here today.

    We represent the people who operate Canada's airports, and the CAC thinks it's most important that we discuss the important matters of Bill C-49 that are underway and under review by this committee. I will keep my opening remarks brief to allow enough time to respond to your questions. We've provided a package, and I think you'll find most of the material you need in there.

    First let me give you some background about the Canadian Airports Council. CAC is the voice of airports in Canada. It was founded in 1991. The CAC represents the interests of airport authorities from coast to coast and was established as a direct result of the federal airport devolution program. CAC only represents Canadians and has worked very productively over the past few months with Transport Canada and other departments to develop a Canadian security solution.

    Our membership includes 36 airport authorities, which between them operate 95 airports. They range in size from the GTAA, which operates Lester B. Pearson, serving well over 25 million passengers a year, to smaller airports that serve fewer than 25,000. So we have the whole range, from the very largest to the very smallest. Representing such a broad group inevitably means there are many nuances and site-specific issues that will determine a specific airport's detailed position on the fundamental questions being addressed by this committee. What I present today is the overall industry perspective.

    CAC members are non-share entities, specifically established to run and develop the airports as self-sustaining entities. There are no shareholders, so any profits that our members generate are reinvested back into the business, back into infrastructure, and back into the communities they serve.

    Let me turn to the security agenda. With respect to Bill C-49, I would like to focus my comments on two particular aspects of the legislation, both related to air travel security. These aspects are how the Government of Canada intends to deliver security at Canada's airports and the proposed air transport security fee and the burden it will impose on air travellers. In particular, CAC is concerned that air passengers are being asked to fully fund all the new security requirements through user fees. As such, air passengers are being treated differently from users of other modes, at a time when the aviation industry faces unprecedented difficulty.

    Before I go any further, let me say that Canada's airports commend the Government of Canada for its efforts to date in working with airports, airlines, and other stakeholders to reassure the public that it is safe to fly. It is safe to fly. The creation of CATSA by Bill C-49 provides a framework for a fundamental reorganization of the delivery, management, and oversight of airport security. Our industry believes this approach can materially improve the level of security and safety at Canada's airports.

    In particular, CAC is pleased that Bill C-49 addresses a number of issues raised by airports and other stakeholders about changes required to improve security arrangements in the aviation sector. The federal government's plan will enable CATSA to monitor and enforce compliance with national quality standards, while allowing day-to-day operations, recruitment, and personnel management to be carried out locally by others. We think that's critical and crucial to the success.

    However, the CAC's main concern about the structure and mandate of CATSA, as set out in Bill C-49, is that the legislation is not clear about the federal government's preferred option for the delivery of airport security. The legislation devotes great detail to the terms and conditions required for airport authorities to carry out these duties, but it gives the CATSA significant latitude to contract out these services to private security firms directly.

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    We see the need for the new authority to have enough flexibility to tailor its approach to local conditions and existing on-the-ground capacity. For example, in the case of certain smaller airports, this could mean employing private security firms to deliver the service, rather than the local airport authority. However, CAC believes Canada's airports have unmatched qualifications to deliver this service at the local level to the national standards expected by the Canadian public. As non-share, not-for-profit corporations, the overriding concern of these airport authorities that deliver security services will be to improve the level of security and safety at their airport without the burden of having to generate a generous financial return for shareholders.

    Canada's airports are ready, willing, and uniquely able to take on the role of integrating and delivering all the security functions at Canada's airports. We agree that security should not follow a piecemeal approach. We believe an integrated approach is required, and the airports are in the best position to deliver that integrated capability.

    Bill C-49 will be significantly improved by clearly indicating that airport authorities are the Government of Canada's preferred vehicle for the local delivery of pre-board screening. For those airports that are willing and able to take on these responsibilities, the Government of Canada should be unequivocal concerning its direction to the board of CATSA. CAC recommends that this be incorporated into the legislation.

    Turning to the air transport security fee envisioned in Bill C-49, there are a number of issues of concern to airports. These include the need to improve the level of transparency and accountability related to the administration of the service fee and also the impact of the service fee on demand for short-haul, price-sensitive flights and the implications for a competitive airline industry.

    I would welcome any questions the committee members may have for the CAC on these matters. But of primary concern to us today is the impact of the $24 air travel security fee on air travellers and passengers at a time when the aviation industry is particularly vulnerable. Considerable evidence indicates that a $24 round-trip fee will discourage air travel. Indeed, the Canadian Tourism Commission, the CTC, recently stated that while Canadians have said they intend to take a winter holiday in similar numbers to the 2000-01 season, more will travel by car. The CTC has stated that the cost of air travel, followed by the general economic downturn, is a more significant deterrent to air travel than security concerns.

    While CAC is aware of the potential security risk better than anyone, the proposed $24 charge is a significant disincentive to air travel. Furthermore, it comes at a time when the price of the air ticket is already significantly inflated by an array of fees and charges for navigation services, fuel surcharges, federal and provincial sales tax, and self-financed airport improvements. This situation stands to become worse as a number of federal charges on the aviation industry, such as airport rent, are scheduled to increase in the coming years.

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    The upshot of this situation will be to make air transport more expensive, meaning fewer people will fly for business or leisure purposes. This is a recipe for further hardship not only for the aviation industry but for the economy as a whole. The resulting impact on economic activity and employment will, of course, also negatively affect tax revenues. We welcome the Minister of Finance's commitment to review the charge this fall, but recommend that this review be mandated in the legislation.

    In conclusion, while CAC has focused its comments on some areas of concern related to this legislation, we regard the federal government's decision to reorganize aviation-related security under CATSA as a positive and constructive step toward improving safety and security for the travelling public. We would welcome greater clarification about the government's preferred option for the delivery of security at the local level and strongly urge improved transparency and accountability in relation to the financing of the authority and its activities.

    We are hopeful these suggestions will be considered by this committee, by Parliament, and by the Government of Canada as the legislation moves forward.

    Thank you, Madam Chair, for the time and the opportunity to address the committee.

    The Chair: Thank you.

    Mr. Williams, please.

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    Mr. Randall Williams (President and CEO, Tourism Industry Association of Canada): Good afternoon, on this nice golden Monday as we celebrate yesterday's hockey game. I hope nobody was working yesterday. I even took Friday afternoon off to go watch Belarus.

    I'd like to start by thanking the finance committee for giving the Tourism Industry Association of Canada the opportunity to speak with you about our position on Bill C-49, and speak more specifically on the air traveller's security charge.

    As you may be aware, TIAC is the leading national private sector advocate for policies and programs that enhance the viability and sustainability of Canada's tourism industry. Our advocacy efforts focus on the removal of restrictive legislative and regulatory barriers to the growth and cultivation of the Canadian tourism industry.

    The tourism industry is a major economic sector in Canada. In the year 2000, tourism spending grew by almost 8% from 1999 to over $54 billion. The industry consists of 159,000 businesses, primarily small businesses, in every community in Canada, and employs more than 540,000 people directly. From a government perspective, the tourism industry produces an estimated revenue of $16.7 billion in taxes. And to know the importance of the tourism sector to the overall economy you just need to look south of the border to see the President of the United States for the first time ever appearing on advertising to support the travel and tourism industry.

    Given the above-mentioned statistics, I would argue that the tourism industry is a major pillar of our national economy. As such, TIAC believes that the air travellers security charge will do much to hinder the tourism industry's post 9-11 recovery, and subsequently we're strongly opposed to the implementation of this new tax. We believe that added security and policing costs must be paid out of our base taxes and not on a user fee system. Placing Canadian security and safety on a user fee system is a terrible precedent.

    Another reason for opposing this tax is that this tax will further hurt an industry still recovering from September 11 terrorist activities and the economic slowdown that we're currently in. The Canadian tourism industry was feeling the effects, of course, of the economic slowdown prior to 9-11. Hotel occupancy rates were down, airlines were reducing their flight schedules, and tour operators were seeing reduced business. The Canadian tourism industry post-September 11 estimated $1.5 billion in losses in revenue in the aftermath of that date. Consumer confidence plummeted, and as a result, discretionary spending was also greatly reduced.

    The security charge represents a minimum of a 4% increase in the cost of travel at precisely the wrong time for our economy. The average air ticket in Canada is under $600 and $24 is roughly 4% of that $600.

    During a period of economic slowdown this price increase will hurt leisure travellers particularly. For example, this new tax will cost a family of four a minimum of $96 extra to fly from Ottawa to Charlottetown for a family vacation. This equates to more than one night's accommodation or additional dollars that the family could be spending in the local economy. And I say a minimum because in some circumstances travellers will be asked to pay more and then apply for a refund later.

    The intention of the program is to have individual travellers pay $24 for a trip, but because the systems can't handle it and where you have different air carriers being used and they don't know that the tickets are being charged, some customers who fly from one city to another city, to another city, using two or three different airplanes will be charged $24 several times and then they will have to apply for a refund later on. The bureaucracy of that, the costs inherent, the disruption to travellers, the inconvenience caused, will be tremendously hurtful to the travel industry.

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    The proposed fee is punitive to Canadian travellers when one considers the security tax charged in other countries. In the United States where the terrorist attacks occurred, the fee is only $5 for a round trip. Even after factoring in the exchange rate, this is about $8 Canadian. How can the federal government justify a $16 price difference from that fee? An American coming up to Canada will pay $2.50 to get into the country and $12 to leave. And that final amount he has paid will reside in his mind as he's leaving our country and leave a negative image.

    Are the security measures in Canada going to be three times better than those introduced in the United States? I don't believe so. Was Canada that far behind the U.S. in its national security, so we have a lot of catching up to do? I don't think so. Why the excessive fee?

    The surcharge presents a competitive barrier to short-haul regional and economy carriers. Economy carriers will be hurt because this new tax will equal a higher percentage increase in their ticket prices. For example, a $24 fee on a $200 ticket is obviously more onerous than it is on a $2,000 ticket. Air competition and service to smaller centres is already an issue in this country and this initiative will compound the problem.

    The tax contributes to the U.S. competitive advantage as well. The Department of Finance is considering having any ticket purchased by an American, or any non-resident, for Canadian air service exempted from the security tax. This will mean Canadians will use American travel retailers to buy their tickets, draining commercial tourism receipts to the United States and causing Canadian businesses to lose sales, a competitive disadvantage to Canada.

    The travelling public already pays too many surcharges on top of the base ticket price. For example, a $99 ticket from Edmonton to Calgary ends up costing the consumers $189 due to the surcharges, which include an aviation fuel surcharge, airport improvement fees, taxes, NAV CAN surcharges, and now the air travellers security charge.

    While we understand the need for the federal government to address airport and air carrier security issues and don't disagree with the need to implement them in the wake of September 11, we firmly believe the government has misread the public's appetite for excessive user fees, even when measured against the value of promised increased security. In fact a recent EKOS Research poll commissioned by the Canadian Automobile Association in January demonstrates that 32% of those surveyed are opposed to the air travellers security charge. Furthermore, 16% of leisure travellers state that they fly less as a result of this new tax.

    In many cases, 16% is our margin for profit, and this will kill some businesses in this country. This is a major hit on Canadian tourism and could cost the industry hundreds of millions of dollars in revenue in every corner of Canada. It is TIAC's position that safety and security are the financial responsibilities most Canadians expect to be paid for out of their existing taxes, not through user fees and additional taxes.

    The EKOS poll also tells us that more than 70% of frequent travellers would prefer that the government take responsibility for all or some of the costs associated with the new security measures. In addition, 54% of those who do not travel by air share this view. These results gathered in January 2002, combined with the reasons mentioned earlier, clearly demonstrate that the public does not support the air travellers security charge.

    Additionally, a recent meeting between government officials from the Department of Finance, Canada Customs and Revenue Agency, and Transport Canada, as well as stakeholders representing the tourism industry and the North American airlines and travel agents, clearly demonstrated the administrative and logistical difficulties this legislation will create both for the travel industry and the federal government, let alone the inconvenience it will create for travelling consumers. TIAC strongly encourages the finance committee to amend Bill C-49 by removing the air travellers security charge from this legislation.

    Thank you.

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    The Chair: Thank you very much, Mr. Williams.

    Mr. Epp or Mr. Kenney. It will be a 10-minute round.

    Mr. Jason Kenney (Calgary Southeast, Canadian Alliance): Thank you, Madam Chair.

    Thanks to all the witnesses for coming out. I hope you didn't have to miss any of the hockey game in order to prepare your submissions on short notice here.

    As for my first question, all three witnesses operate within the airline, tourism, or airport industry. Are any of the witnesses aware of anybody in either the airline industry or the tourism industry who supports the $24 round-trip flat fee? Are you aware of any organizations or individuals who have expressed support for this?

    Mr. Randall Williams: I'm aware of a number of other organizations that are opposed to the fee, including the Canadian Association of Convention & Visitors Bureaux, which includes Tourism Toronto, Tourism Montreal, as well as members of the provincial and territorial industry associations that we represent as well. We haven't heard of anybody who's in favour of this air travellers security fee.

    Mr. Jason Kenney: I take it that holds for the other witnesses.

    Mr. Neil Raynor : Yes, that's exactly the case. I've seen considerable correspondence to the Minister of Finance from the airport community across Canada and levels of government across Canada, and it's all been negative.

    Captain Kent Hardisty : From an operational perspective, we're aware that certainly within the airline industry itself--the operators--there's very little appetite for this type of approach. It obviously impacts very heavily on their bottom line, when we're looking at yield management in the domestic market.

    Mr. Jason Kenney: Thank you.

    Were any of the three organizations here contacted by the Department of Transport or the Department of Finance prior to the budget or the tabling of this legislation, to consult about the potential impact of this fee?

    Mr. Neil Raynor : I can tell you the airport industry was not.

    Mr. Randall Williams: The Tourism Industry Association of Canada was also not approached. In fact, we had tabled complaints to the minister about the other fees that are currently in place, saying it destroys the integrity of pricing airline tickets when you have all the other fees. The next thing we knew, we had another fee added to that mess.

    Mr. Jason Kenney: Does that holds for the airline pilots as well?

    This is directed to the airports association. Many airports, including Edmonton International and Kelowna, for instance, have invested hundreds of millions of dollars in new infrastructure in the past couple of years to accommodate projected increase in air passenger growth. All witnesses have testified, I believe, that this will have a negative effect on passenger loads. We've had previous witnesses testify that low-cost short-haul airlines, in particular, may end up cutting routes into small airports, such as Kelowna, which have created additional infrastructure to handle that short-haul traffic.

    Do you believe that some of the airport authorities might experience financial difficulty, and if so, to what extent? Could it be to the point of bankruptcy for some of the very small ones?

    Mr. Neil Raynor : I guess the potential is there. The ones you mentioned are fairly significant airports. There are a couple of things we have to bear in mind. Those airports you mentioned, and many more across the country--pretty much all the major airports--are self-financing. That is, the air traveller finances the infrastructure.

    Airport planning, infrastructure planning is a long-term venture. You can't turn it on and then turn it off. You have to work on your 10-, 15- and 20-year projections, and we do, with Transport Canada, take the lead on that. They've been very effective in the past.

    The events of September 11 could not have been anticipated in those sorts of planning judgments. So there is the potential that some of those facilities will not be used to the same degree as was anticipated in their original planning.

    Mr. Jason Kenney: Thank you.

    I think all the witnesses are aware that the government--Mr. Raynor made implicit reference to this in his submission--through the finance minister has indicated a willingness to review the effect of this $24 tax next fall, after it has been operational for several months.

    I'm wondering if any of the witnesses could comment. Do they think it is a prudent approach to actually implement a tax that could have an immediate negative impact on passenger loads, an impact on airlines reducing routes and service, and review and reverse it only six months from now? Do you think this would be an efficient approach to building the airline industry in Canada, or would it be better, if the government intends to review it, to do it now prospectively, rather than retrospectively?

º  (1610)  

    Mr. Neil Raynor : From the airports' perspective, from our analysis and from everything I've read and heard, the $24 will be a disincentive to travel. On that basis I would suggest that it would be better to review it prospectively, but then continue to review it in light of events. Where we're coming from at the moment, there seems to be very little appetite to change the level or the implementation, and on that basis we welcome the review as the next best thing.

    I guess I'll leave it there.

    Mr. Randall Williams: I think the government has to remember that the key principle behind paying taxes, and one of the key base responsibilities, is to provide security for the people of this country. That's what you pay for in your taxes. I don't believe we can put that on a user fee basis. I don't think Canadians or their representatives want to change....

    I can understand certain costs being done on a user pay system, where there may be optional...but security and safety is not an option. It's a right of all Canadians to feel secure and safe in their offices, where more people were killed on September 11 than in airplanes .

    I think we've gone down a slippery slope here by suggesting that we can put a user fee on safety and security, and I think this is the more fundamental question the Government of Canada needs to respond to.

    Mr. Jason Kenney: So I take it, Mr. Williams, when you passed through security here in the Parliament buildings this afternoon, you didn't have to pay a security fee to finance it.

    Mr. Randall Williams: No. And the same question....

    I mean, what happens, God forbid, if something happens in another mode of transportation, or in our school systems, or somewhere else in this country? Terrorism is a national issue that must be covered off in our tax base, and it can hit us on any front. To target travellers through this user system is a terrible precedent, as I said in my remarks.

    Captain Kent Hardisty: If we may, we'll follow up and support those comments wholeheartedly. There's an inference here that somehow this is a unique issue to those passengers who are travelling, that this is specific to their needs only, and it's not. This is an issue of national security and public interest.

    To speak plainly, those airplanes that were utilized as instruments of terror on September 11 were used for the purpose of attacking a nation, not any particular group. So we don't separate this from police services, fire services, or the military. This should come out of general revenue, plain and simple.

    Please don't implement this approach. It will cause some very difficult times for a number of the carriers, I'm quite certain.

    The Chair: You can take another minute, if you'd like it.

    Mr. Jason Kenney: No, I'll take it next round.

[Translation]

    The Chair: Mr. Loubier, please.

    M. Yvan Loubier (Saint-Hyacinthe--Bagot, BQ): Thank you, Madam Chair.

     Good afternoon. I did not want to interfere with Mr. Raynor's dream, but the review process he mentions is no free gift. This review process we are dealing does not concern the collection of $2.5 billion for security from the tariff, but the processing of this indirect tax that we are now asked to pay.

    If I were you, I would not trust this review process because there have already been many of them, especially in 1992-93 when the Liberals assured us that the GST would be abolished. Now it is 2002 and we still have the GST. Unfortunately, this is human nature. And human nature is weak. When a tax is levied, it is easier to maintain it than to get rid of it. Now, we can take it for granted that it will remain.

    Given the fact that it will remain, I put the question last week to Mr. McCallum who was here to present Bill C-49, and with his customary arrogance, he maintained that the questions that he was being asked about the truly noxious effects of this new indirect tax were ridiculous and that this tax would have no impact because it was only marginal. He felt that it was a ridiculous exaggeration to invoke, for instance, the threat of underdevelopment in the outlying regions, and the fact that their development potential will be harmed because these regions can often only be accessed by air.

    I am looking at the analysis provided by the Tourism Industry Association of Canada. It says a great deal. Regarding the impact of this tax, they say that 16% of tourists said that they would no longer travel or they would travel less by plane because of this new fee. This is understandable because since 1983, whereas in the United States the cost of air transport went down by 43% due to deregulation, here it went up by 9 to 10%. That shows that we are not competitive as far as rates are concerned. It is often more expensive to go from Montreal to the Magdalen Islands than to go from Montreal to Paris or London. This is abnormal.

    I understand travellers who say that this part of the government's policy is very harmful. What could we do about this? Here, let me give you the government's official response. According to what John McCallum told us last week, there is no problem: we are exaggerating about the devastation of regional economies, he has no problem with jeopardizing the development of many regions in Quebec and in Canada.

    How can we get this government to understand that an air transport tax will ensure the demise of some regions and lines that are already going out of business because they are not competitive? Provide us with some new arguments, because we are running out of them.

º  (1615)  

[English]

    Mr. Neil Raynor : We have taken the position in the long term that this is a national security issue. Well before the events of September 11 the federal government devolved the cost of policing and security to airports. An amendment took place subsequent to transfer. That burden was never anticipated at the time of transfer at many airports. This just adds to that burden.

    Because we are not-for-profit organizations, only one group, ultimately, pays for this, and that is the traveller. So that's our first point, and I'd echo what Mr. Williams said earlier in that regard.

    We haven't conducted our own research, but all the evidence we hear from a number of independent sources, and everything we understand about the propensity to travel, and everything we know about the most active developments in the market, at the low-cost end, indicates that this will have a significant impact. If we had our preferred option, this security charge would not be put in place.

[Translation]

    Mr. Yvan Loubier: According to what you just said, how would a 16% decrease in the number of air travellers at this time impact the market within Canada? Does 16% represent your last year's profit margin, more or less, or does it represent much more? It seems to me that 16% stands for a lot of travellers. If we apply this to the current number of travellers, how much money would that be?

º  (1620)  

[English]

    Captain Kent Hardisty: Probably the operators would be best-positioned to answer that question. We could suggest, however, that of course it would be dependent upon the fare structure. There are so many models out there in terms of fares today that to get an accurate reading you would have to know exactly where. But it is clear, from our discussions with the operators, that the low-yield market is where they're operating today, and that's where this issue hits home and hits hard fast.

    In their view, it would be very detrimental to service to small communities, to new services. They perhaps would have to start to retract service and move into the lesser-frequency, longer-haul types of situations to increase yields. The smaller the aircraft, the more expensive it becomes. When you start putting those types of fees on it you take away the ability to schedule the operations in the fashion they're looking at.

    Mr. Randall Williams: I would say it's fairly well recognized that in Canada air travel is an expensive mode of transportation. A survey released by the Globe and Mail two to three weeks ago showed that pricing of air travel in Canada since 1983 has gone up by 10%, while in the U.S. their air travel prices have dropped by 40%. So I would suggest to you that in Canada we're going in the wrong direction in terms of trying to make air travel affordable for all Canadians, and that was before the $24, which is another 4% on top of the 10%.

    When you put that in perspective, adding 4% to a 10% increase, that's quite substantial. And I don't think it's fair for anybody to minimize the $24 as not having any effect. I think that is disrespectful to a lot of Canadians who, when they want to visit friends and relatives who live right across this country, are very conscious about their travel costs. You know, $24, or $96 for a family, is a lot of money to a lot of Canadians, and it will have an impact.

[Translation]

    The Chair: Yvan.

    Mr. Yvan Loubier: With regard to the funding of new security measures, the government could have funded them from its general budget. Besides, the federal government's mandate is to fund security from coast to coast in Canada. In the meantime, the Finance Minister does not know what to do with the surpluses that are coming out of his ears. If he did his job, he could fund security measures without increasing taxes on passengers, but he is not doing that.

    How can we explain that we have to fund these measures out of the consumers' pockets and especially those of users of airline services in small municipalities?

    Let us not forget that there is a list of airports that will be affected. There are 15 in Ontario and 20 in Quebec, out of a total of 90. When we look at the airports impacted by these tariffs, it is exactly as Mr. Hardisty said. The ones to be most penalized by this tax will be the small airports, small population centres, local populations. Let us take, for instance, the Alma airport. They are talking about levying $12 or $24 from each passenger. The same applies to Bagotville, Baie-Comeau, Chibougamau, Gaspé, the Magdalen Islands, which have already undergone unbelievable cuts in transportation services, as well as Kuujjuaq.

    I cannot believe that travellers in Kuujjuaq, where population density is so low and where the cost of travelling south, which passengers only do when they absolutely have to, is exorbitant, will have to pay an airport security tax that will probably have more to do with the security of the Pearson, Dorval and Mirabel airports than to the Kuujjuaq airport.

    How can we explain such a silly policy? It is inconceivable.

    As you said, small local populations which are already poor will have to pay. Why were these choices made? Is there any logic to them? Do Kuujjuaq, Grande-Rivière, Alma and Bagotville have some kind of unbelievable need for security measures against terrorism?

º  (1625)  

[English]

    The Chair: Mr. Raynor, go ahead.

    Mr. R. Neil Raynor : Again, I have a very short answer. I know of no transportation policy perspective indicating that this is an appropriate way to go. It is inappropriate to charge people travelling through the St. Clair Tunnel for security, but this is not being applied at the moment. It's entirely inappropriate to expect the air traveller to fully fund, and perhaps over-fund, security in this one mode. So I know of no reason in transportation policy that you would actually implement this sort of charge.

    The Chair: Thank you.

    Mr. Wilfert, please, you have 10 minutes.

    Mr. Bryon Wilfert (Oak Ridges, Lib.): Thank you, Madam Chair.

    I just wanted to clarify that the tax is going to apply to 90 designated airports and therefore small and remote airports will not be subject to the fee per se. There seems to be some misunderstanding, shall I say, that it's applying across the board to every airport, which is not the case.

    Also through you to our witnesses, Madam Chair, in terms of the United States, could they clarify what their understanding of the fee is? My understanding is that it's three-tier in nature and in fact can be even more complicated and costly than the fee proposed in this legislation.

    The Chair: Mr. Williams.

    Mr. Randall Williams: Thank you.

    The fee in the United States is $2.50 per segment, to $5 for a round trip. From what I understand, that's the maximum. We're looking at $8 Canadian for the same trip. It's supposed to be a $24 maximum In Canada.

    In the meetings we had with our American counterparts, we did not hear that it was more complex or confusing in the United States because it was done on a segment-fee basis. In other words, because every segment of the trip was $2.50, to a maximum of $5 for a round trip, it was simpler and easier to implement.

    As for the argument about how only 90 airports will be affected, La Ronge in northern Saskatchewan is one of the airports in the 90. So the suggestion that smaller communities are going to be exempted from this and it's not going to hurt them is a little bit misleading. There are few airports left outside of this 90 that will be exempt.

    The other things is when you take off from an exempt airport and land in an airport that charges, then you start paying. You're not free for the whole trip. Someone leaving from an exempt airport in wherever to Ottawa, and then to Toronto, and then off to wherever, will pay the $24 charge. The 90-airports issue is a bit misleading.

    The Chair: Thank you.

    Mr. LaFlamme next.

    Mr. Art LaFlamme (Senior Representative, Canada, Air Line Pilots Association, International): Thank you, Madam Chair, members of the committee.

    I just wish to say that the 25 biggest airports in Canada cover off 95% of the scheduled passenger traffic. The additional 65 airports would only cover off another 3%.

    The Chair: Mr. Wilfert.

    Mr. Bryon Wilfert: I have a question, through you, to the airport authorities. I'm wondering how Vancouver, for example, has a three-tier approach: $5 within British Columbia, $10 across the country, and $15.... How do they justify this, since it's all one airport?

    Mr. R. Neil Raynor : They justify it on the basis of ability to pay and the effect it would have on the traveller. Your ability to pay a $10 fee flying from Vancouver to Halifax...with the price of that ticket, it's obviously a much smaller percentage of that total air transportation bill than flying, say, from Vancouver to Victoria--a 20-minute flight--the price of which is something like $97.

    That's the reason it was implemented, and quite frankly, it would be much simpler for the airport authority to implement a fixed and single fee. But responding to the consumer, they actually implemented a three-tier fee for those reasons. So it would be simpler to do it as a one-tier fee, but I think it is more appropriate to do it as a three-tier fee.

    We've suggested to the Department of Finance that there are options for collecting. Again, I go back to my original position that this is a national security issue and should be fully funded by the federal government. But if the federal government has taken the view that it will not fund it, partially or fully, and if it's going to collect a fee, there are other options. One could be distance based; it could be based on the price of the ticket. There are a number of options, but the flat fee would seem to be the very worst option.

º  (1630)  

    Mr. Bryon Wilfert: That's where I was going with that question. How amenable would your association be to a tiered approach, and how would you see that being administered, if it were on a tiered basis, either by distance or some other factor?

    Mr. R. Neil Raynor : In terms of amenability, I think we're all d'accord to a more progressive system. We believe a more progressive system is required. So I think the right change would be welcomed. What that change should be, I think, is still open. There are a number of people who have put forward some very good suggestions. They're competing suggestions, but I think many of them--most of them, quite frankly--are better than the flat tax type of approach.

    The Chair: Is there anybody else on that answer? No? Okay.

    Are you finished, Mr. Wilfert?

    Mr. Bryon Wilfert: I'll leave with a quick question, Madam Chair, with regard to the issue of user fees in terms of NAV CANADA and others that you cited. The travelling public is paying for those. There is a move by all orders of government, whether they're municipal, provincial, or federal, to move into the area of user fees.

    Your suggestions, gentlemen, all seem to centre around the fact that we're talking about the issue of security and therefore it shouldn't be paid by the user; it should be paid by the general public, whether they use that particular mode of transportation or not--which is or is not a debatable point. But I appreciate your comments.

    The issue then really would centre on the fact that if it were to come out of general revenue, there are going to be those people who clearly never fly who will say that may be discriminatory against them, versus someone who will say they're already paying, for example, with NAV CANADA. It is something we regulated, and it seems, for all intents and purposes, to work fairly well.

    Do you have any comments on that, in terms of why for NAV CANADA and not for this, other than your central issue, which seems to be that security should be paid by everybody?

    Mr. Randall Williams: Thank you.

    Our position is that we don't think there should be any fee, and we don't believe the NAV CAN fees, the fuel surcharges, or those airport improvement fees should be in place either. We feel they are deterrents to travel. When a company advertises a seat-sale price of $99, and the traveller goes to buy the ticket and finds out it's $189, I don't think that should be acceptable to Canadians, and certainly not to their representatives.

    We believe the NAV CAN and other fees should be paid for in part of the cost structure. We don't believe it should be an additional fee, and we've made that presentation before to government, prior to the introduction of the air travellers' fee.

    The Chair: Yes, Captain.

    Captain Kent Hardisty: If I may, I'll make a comment, and then Mr. LaFlamme would like to make an additional comment.

    First, I'd like to address this issue and I'd like to speak as plainly and simply as possible.

    What we're talking about here--I would like everybody to think back to the events of September 11, and I know time tends to move those issues into the corner and they take on a different perspective--is keeping airplanes out of the hands of those who would intend to use them as weapons of mass destruction. That is a national security issue. We're not discriminating here. We're talking about each and every Canadian who is in this country being protected by their government from those who would intend to do harm to this nation through the use of the air-transportation system.

    Art.

º  (1635)  

    Mr. Art LaFlamme: Thank you, Captain Hardisty.

    This fee, if you like, is going directly into the consolidated revenue fund, so security will be paid from general revenues. Call it what you will, this is not a dedicated fee to pay for security.

    The Chair: Mr. Williams.

    Mr. Randall Williams: This is supplemental to that comment. I'd like to say I find it discriminatory that we're charging travelers, rather than the other way around. I think there are still a number of examples of taxes paying for things people don't use in this country.

    There is a whole bunch of things people get benefits from taxes on, and they don't use those benefits but they're seen as basic requirements of the Canadian public for the public good. I think this is a public good question. I think it's discriminatory to charge travelers for a public good item.

    Mr. Neil Raynor: If I may piggy-back on that comment, I would agree with everything my colleague has just said in terms of charging travelers. You've singled out travelers, but you've actually gone further than that--or the proposal is to go further than that. It is to single out air travelers, which makes it even more inappropriate. Thank you.

    The Chair: Thank you.

    Mr. Epp. We'll go for 10 minutes. I think we'll do a full, complete round.

    Mr. Ken Epp (Elk Island, Canadian Alliance): Thank you very much.

    I have, first of all, a question of both the airline association and the travelers group here. Mr. Hardisty, you said you thought the board should not be established, that it should be a straight government issue. I believe one of you said if there is such a board it should be comprised not of--and these are some of my words that I read into it in my thinking while you were speaking--not of political appointees, of failed candidates for the government that just got a majority government, but of people who are competent in the area of security and in the area of managing a security agency.

    Yet, Mr. Williams, I believe it was you who said you don't want a piecemeal system in this country; and yet you said it was appropriate that there be this board overlooking it, and each individual airport authority would apply presumed national standards. You need to reconcile this for us, because I'm hearing that actually the idea of a separate air security board is not your first wish. I hear a little bit of a conflict in the testimony here.

    Mr. Randall Williams: For the record, I wasn't the one who said “piecemeal solution”.

    Mr. Neil Raynor: I didn't raise the issue of piecemeal solution--it was raised elsewhere--but I guess I did respond to it in my notes.

    There are many examples in air transportation and many other modes and many other areas of life where you set national standards. Fire-fighting standards, for instance, at Canada's airports are set nationally; they're implemented locally. I would suggest fire-fighting is, and the fire-fighting service is, a sine qua non in providing safety in the event of an accident. You set national standards; the regulator monitors those standards, and comes in to audit those standards. You implement national standards that way. I don't see this being any different.

    You need rigorous standards. We would welcome those. But you then implement locally, because you're probably in the best position to do that. That's our view. We've seen that in very many areas.

    Mr. Ken Epp: Thank you.

    Mr. Hardisty, I want to hear from you. You said, first of all, you didn't think your group had a sufficient representation on this very important board. Yet you also, I think, said the board is not the way to go.

    Captain Kent Hardisty: In order of approach, our preference of course is not to create this board--quite simply because it's not global in its scope. It's too narrowly focused and doesn't take into account all of the security issues we need to be concerned with today.

    If the government pursues the approach that's currently within the legislation, it's our strong recommendation to at least put people in there who know something about the security industry and how it works: stakeholders whose front-line experience can be put to use. I believe that's how we presented.

º  (1640)  

    Mr. Ken Epp: I would next like to go to the issue of the fee itself. Quite a large number of people have represented to us against a head tax because of the disparity in the charge as a percentage of the ticket, for example, for small local routes versus longer routes. On the other hand, we see that the cost of putting somebody through security is the same whether they're going 20 miles or 2,000.

    There's that question with respect to the cost, and I think this also impacts on the airport authority, because most of the smaller airports have shorter routes. For example, Grande Prairie does not have an international airport. There are no flights leaving from Grande Prairie that go much farther than Fort MacMurray, Edmonton and Calgary. That's about it, maybe Prince George and some other places. They're all relatively small and yet they would carry the same fee.

    What is the implication of this, particularly when in the documentation we heard about Saskatoon, where this fee would actually collect more money than the total operating costs of the airport? How many of these small airports fit into that category and what would be your solution to it? Should there still be a fixed fee? Should it be smaller? Do you like the U.S. model, where you have $2.50 U.S. per leg up to a maximum of two legs, then that's it for your trip? Or would you rather see a percentage of the ticket? What model do you prefer?

    Mr. Randall Williams: The model we prefer is to not have a fee. That's the simple solution, I guess, and easy to implement. You then pay for security at airports and on board airplanes through the taxes that Canadians pay. And you manage that income of revenue against your expenditures as a government, and you do that all the time. So that's the solution.

    Right now, what you're talking about is a situation where, if you live in a small community in Canada and need to catch a plane to go to your destination, you will be paying a higher security fee as a percentage of your travel than somebody who lives in a large urban hub, because $24 on a small aircraft out of Grande Prairie is a hell of a lot more of a cost than to a larger airport.

    Mr. Ken Epp: That's the difference between flying and driving.

    Now I have a question for Mr. Hardisty. Do you fly? Are you an active pilot?

    Captain Kent Hardisty: I am.

    Mr. Ken Epp: Okay. My question to you is, how safe do you feel on your airplanes these days? Do you feel more safe than before this incident on September 11? Then the more important question is, if this bill is passed--and we have a reasonable expectation that with the government's record and using its majority it will pass in its present form--after it is implemented, will you feel even safer yet?

    Captain Kent Hardisty : That's an interesting set of questions. I think the answer we've given, and I'm very comfortable giving, is that we can do better. We can do much better and must do better because the system still has not, in our opinion, responded to all of the events of September 11. Many areas have been left still undone. So does this legislation go towards enhancing the system? It's a step. But it's not sufficient, it's not all the way there. So will I feel any more comfortable? My answer would remain the same, that we must do more.

    Mr. Ken Epp: I have a general impression. When I go to the airport now, they do something different from before September 11. They now make me turn on my solar calculator to show that it works. I just hold it up to the light and hope, if the airport's paid its electricity bill, there's enough light there to make it go on. I have to light up my cell phone, my pocket day timer, my computer, and they took away my little one-inch blade. In my head I said, ``They've done this to a law-abiding citizen, how now is this flight safer?'' And I don't think that it's safer at all. I think it's less safe, as a matter of fact, because now I have to fight those suckers with my bare hands, whereas before at least I had a little one-inch blade.

    Anyway, what is your anticipated change? These are the things they're doing to us now. Are we going to start having body searches? What are they going to do that's different from what's done now?

º  (1645)  

    Captain Kent Hardisty : This highlights for us part of the global problem here. We're focused simply on one aspect. In ALPA, in what we call security, we have zones or perimeters. Those perimeters start at home and work all the way down to the cockpit. This is only one narrow area we're talking about here. You can't design any one of those systems to be absolutely foolproof.

    We need to have a number of fail-safe systems. If one part fails, you can continue to fail to the next system, and hopefully it will be picked up. But no one part of it is going to be absolutely 100% foolproof. All of this legislation assumes that when you go through screening, the whole flight has been properly dealt with in terms of security presumptions. That is not the case, and that is why this bill does not go the distance for us.

    The Chair: Mr. Williams, you wanted to add something.

    Mr. Randall Williams: Just as a follow-up to that, I have an interesting question that needs to be answered about safety after the fact, after this is introduced. Who do Canadians hold responsible or liable in the event of failure? I think the airlines were responsible for security and safety prior to September 11. Now the government has taken that on, but can the government be held liable?

    If we're charging a $24 fee for safety and security, and if something should happen, God forbid, who can the public hold liable for that? Are we, the public, the Canadian citizens, losing that accountability because of this fee? That's one question that I think needs to be answered.

    Mr. Jason Kenney: Madam Chair, could I just ask a question?

    The Chair: Before we go, Mr. Kenney, you have ten seconds.

    Mr. Jason Kenney: Thank you.

    It's to Mr. Raynor. The Saskatchewan airport authority has said that the fee that would be collected there would exceed their entire operating budget. To your knowledge, is this true? If so, how many other airports might be in the same position?

    Mr. Neil Raynor: I can't comment directly on that. I don't know, so I won't hazard a guess. But as a result of that very interesting comment, we're going to have a look at the position at a number of airports. We're going to pull that information together. I'd be very happy to supply that to the committee, if it's the committee's wish that I do so.

[Translation]

    Ms. Pauline Picard (Drummond, BQ): I have a brief question, Madam Chair. Were you told how this tax would be collected? Will it be done through the airports, or travel agencies? How will we collect this tax from those who buy their tickets on the Web?

    I know that this tax is to apply as of April 1. Thus, you should be able to organize things in order to collect that tax. But who will collect it?

[English]

    Mr. Randall Williams: It's my understanding that the airlines are responsible for collecting and submitting the taxes. When they receive payment for the airline tickets, the charge is supposed to be applied and the airlines submit that to the government. It's the airlines' responsibility to collect the air travelers security charge.

[Translation]

    Ms. Pauline Picard: Currently, airports levy a $10 tax. This will probably be done in the same way, will it not?

[English]

    Mr. Neil Raynor: I said no, but I meant yes. I think at all airports, you will not see a separate security charge. It will be a separate line item charge on your ticket. It will be collected by the airlines when you book. If you book on the web today, for instance, the fuel surcharges are automatically generated by that system. You will see the same with the security charge. It will be collected automatically.

º  (1650)  

    The Chair: On the government side, are there further questions? Did we complete the round?

    Mr. Epp, go ahead.

    Mr. Ken Epp: Thank you very much, Madam Chair.

    The Chair: You can take the last 10 minutes.

    Mr. Ken Epp: I would like to follow up on my previous question, because I think I didn't get the answers from all of you.

    You say you'd like no fee at all. But the Americans find no objection to a $2.50/$5 fee. And that is small enough that it is not going to impact even on a small carrier, whereas the $24 fee, with a family of four, is obviously going to make a big difference on a short flight. Would that not be acceptable? I'm just looking in terms of the kinds of amendments we should be making to this bill before it gets passed by the government.

    Mr. Randall Williams: It would be more palatable for the tourism industry if there were a small fee attached to each segment of air travel than it is currently. If there were a $2 or $3 fee charged to each segment, it would be more palatable than the current situation.

    Mr. Ken Epp: Okay. Does anybody else want to comment on that?

    Then my next question has to do with the local airport authorities. When this new board is implemented, it's my understanding from the legislation that the individual airports still have the authority to implement this, or will enter into a contract with the security authority to deliver the service at the airport. How do we propose in Canada to have any uniformity in the administration of the procedures, even, let alone the security standards in our hundreds of airports across the country?

    Mr. Neil Raynor: Let me answer your second question first, or the second part of your question first. Then I'll answer the first part.

    Standards will be set nationally. And if the airports that take on this task don't meet those national standards they will be disenfranchised; they will no longer be certified by the regulator. The regulator and the authority will take back this responsibility. So there is an enormous influence available on the airport authorities that take on this responsibility to get it right. They will have to meet the national standard in exactly the way they do today. They meet the national standards for fire-fighting. It's no different.

    In terms of commonality of practice, in security matters sometimes it's better not to have identical systems in place but to have equivalencies. By that I mean that where you have a great number of bags going through the system you may be able to automatically check those bags. You may spend multiple millions of dollars employing technology to check bags. When you have, say, one or two flights a day--and some of those 90 airports on the list only have one or two flights a day--then perhaps you'll check them by hand.

    That is not a diminution. It is not a lower level of security; it's a different way to achieve the same end. So you will not see one uniform implementation, or one equipment used at every single type of airport across the country, however the security is organized. But what you should see, what you should expect, what CATSA and the regulator should insist on, is that there are national standards and that national standards are met.

    Mr. Art LaFlamme: ALPA does not agree with Mr. Raynor's comments at all in this regard. What we are proposing here is adding one more layer to a situation that already exists. We have security companies contracted by airlines providing security screening. These are in turn regulated by Transport Canada. Now you'll have the same situation, but done by airports rather than airlines. You'll have the security authority operating under regulations set under the Aeronautics Act, which are the purview of Transport Canada, which has an obligation to see that those regulations are enforced. So you have an additional layer of bureaucracy involved in providing what appears to be the same situation: basically, a security company that's contracted by somebody to do screening.

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    Mr. Ken Epp: But right now, for example, when I go through security in the Edmonton airport, where I travel frequently, I may have an Air Canada ticket, but other people have tickets from other airlines going through that same line-up. So who's paying for it now? Is it not through the airport?

    Mr. Neil Raynor: I'll answer that.

    You're paying for it right now. That is a direct charge on the airline until March 31. It's the lead airline that organizes it. So I think I'm fairly comfortable in stating that Air Canada would organize pre-board screening at Edmonton. They would charge back to the airlines in proportion to the passengers going through the facility. They would charge back and collect a fee from those carriers. Ultimately that flows back to the passenger.

    Mr. Ken Epp: Will Air Canada have to work together with Continental Airlines and all the other airlines in the industry that use the same gate wing?

    Mr. Neil Raynor: That's what they do at the moment. But it's more that Air Canada would organize--in effect take responsibility for the whole of the pre-board screening operation--and they would do that under a contract. But they would charge back to Continental, KLM, or....

    Mr. Ken Epp: Isn't that bizarre--

    Mr. Neil Raynor: Well, that's the current situation. I'll let you finish the question.

    Mr. Ken Epp: I was just going to say it must be bizarre for one airline to have to provide security services for another airline.

    Mr. Neil Raynor: That system will cease March 31. On April 1, CATSA will repatriate responsibility for pre-board screening.

    Mr. Ken Epp: That will be an improvement then.

    Mr. Neil Raynor: We support the federal government's objectives here. I think they're going down the right route. They are taking it back. They're taking responsibility and liability for that function. Yes, it's the right way to go in our opinion.

    Mr. Ken Epp: Okay. I have one last question for Mr. Raynor.

    You said this legislation is not clear. I don't believe that in your presentation you went on to elaborate on which part of it is unclear. Do you have specifics in mind?

    Mr. Neil Raynor: At the moment the legislation allows CATSA to implement pre-board screening one of three ways. It can delegate that responsibility through a formal approach with the airport authority....

    Why I say there will be an improvement in involving the airport operator is that every other aspect of policing and security currently undertaken at airports is under the administration of the airport operator--every other aspect of security. It's at the curbside, in terms of perimeter security, security on the apron--all that is the responsibility of the airport operator. The one little piece today that is not is the pre-board screening. And we believe that security will be significantly enhanced for a whole bunch of reasons--and I can elaborate those if you wish me to--by integrating all those security and policing operations together.

    To go back to your question on the legislation, the legislation gives CATSA the opportunity to organize in three ways: delegate to the airport authority, contract with security firms directly, or indeed have employees who will carry out this function. Transport Canada--the federal government--have said that their preferred option where airports are able to take on that responsibility is for the airport authority to get that delegation.

    What I've said in our submission is that we believe the legislation should reflect what the federal government has said outside of the legislation. That is the preferred option because they see the advantages of that integration. Security would be very much more enhanced, and again I can go on to the reasons why that will be so.

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    Mr. Ken Epp: I apologize for saying that was my last question, because I have another one.

    Did you read the part of the legislation that has to do with penalties and collecting of the tax? Clearly the federal government is going to require the agents to collect the tax. I guess, Mr. Williams, this would be mostly in your area. The agents have to then remit it, similar to legislation for Canada Pension Plan and income tax and UI deductions from your employees where you have to remit it.

    Did you have any concerns in the legislation regarding the very high penalties that are involved here, including up to six months in jail for failing to do the paperwork correctly? Does that bother you at all? You didn't mention it of your own accord and I hate to badger the witness.

    Mr. Randall Williams: I think you're speaking of travel agents.

    Mr. Ken Epp: Yes.

    Mr. Randall Williams: Travel agents will collect, and then they submit that to the airline. Right now, when travel agents collect an airline ticket, those funds and all the funds that are due to the airline are transferred to the airline companies. So it passes through the agency, but they do not remit the tax. As I said earlier, it will be the airline that collects the tax--maybe through an intermediary, but they'll collect the tax--and then submit it to the government.

    Mr. Ken Epp: So you're not worried about it, because it's the airlines that are going to jail.

    Mr. Randall Williams: We are concerned. It is an administrative headache, as I referred to in my remarks, that I don't believe we should be going to. I think the user fee should not be introduced.

    Mr. Ken Epp: Okay.

    Other witnesses have indicated that it's going to be a very difficult tax to administer because of people doing different legs on their trip. Some will do part of it by car and then go back again on the airplane. So does each one of those constitute a separate leg? You could land up on a trip actually paying $48 instead of $24, according to that. Then there could be arguments as to whether or not it should have been charged.

    Madam Chair, I think I've probably utilized more of my time than I should have, and I thank you for your indulgence.

    The Chair: Thank you.

    I have no one else on my list, so it remains for me to thank you for your appearance today. We appreciate your coming in. Thank you very much.

    Tomorrow, the committee will start clause-by-clause at 9:30 a.m.

    The meeting is adjourned.