Mr. Speaker, I am pleased to speak to Bill C-26 and to tell the members of the House the few reservations the Bloc Quebecois has with respect to this bill.
We will, of course, support the principle of this bill at second reading. This bill amends the Canada Transportation Act, the Competition Act, the Competition Tribunal Act and the Air Canada Public Participation Act and amends another act in consequence.
When we look at the context of the bill, we realize that it follows on a series of federal government disasters in air transportation. After putting the entire industry at risk and leaving the regions to their own devices and after showing political favouritism toward its Onex friends, Canadian Airlines and American Airlines, the Minister of Transport was obliged to accept the opinion of the Bloc Quebecois. It was high time and we were very pleased at that.
Why will we support this? Essentially, it is because, since 1993, the Bloc Quebecois has been asking the government to stop artificially buoying up Canadian Airlines International at the expense of Air Canada, to the tune of hundreds of millions of dollars. For six years, the Bloc Quebecois has been saying Canada could not support two international carriers.
The federal government's attitude has blocked the expansion of Air Canada, and thus the economy and employment situation in the Montreal region, out of political opportunism. We are therefore in favour of the bill, because its purpose is to provide a framework for the merger of Air Canada and Canadian International Airlines.
Another reason is that the Bloc Quebecois has been involved throughout its whole existence in decrying the lax manner in which the Official Languages Act is applied by the federal government. The fact that this government was heavily subsidizing Canadian International Airlines, which was not subject to the Official Languages Act, was insulting. By allowing the merger of two carriers under the Air Canada banner, this bill will ensure that the new carrier is subject to the Official Languages Act.
This represents some progress, particularly since the bill picks up the main thrust of the recommendations in the Bloc Quebecois dissenting opinion, rather than those of the Standing Committee on Transport. Compliance with the Official Languages Act, however, requires more than merely making this carrier subject to the act. It needs to be enforced, and it is the federal government's responsibility to see that it is. We all know that its record in this area is none too good. A careful eye must therefore be kept on the situation. The Bloc Quebecois will make itself the Official Languages Act watchdog.
Another reason why we approve in principle of this bill on second reading is that it also contains a whole series of measures aimed at reinforcing competition. This is particularly important because Air Canada will become the dominant carrier in Canada and in Quebec.
Where international connections are concerned, there is not much risk of a monopoly developing, because Air Canada will have to compete with the other international carriers. Where the regions are concerned, however, particularly isolated ones, competition is far from assured.
The bill contains some worthwhile measures, but is far from guaranteeing that these measures will be sufficient to provide decent service at decent prices in the regions. I will get back to this a little later on. It is one of the reservations I alluded to a few minutes ago.
Finally, this bill contains provisions relating to the effective control of air carriers in Canada. We know that, last fall, the Minister of Transport, the minister responsible for carriers, was prepared to sell both air carriers to American Airlines, through Gerry Schwartz, a Liberal friend. It took a superior court ruling to put an end to this folly.
The minister seems to have returned to a better frame of mind with this bill, but it is difficult to understand why he wants to increase the individual share ownership limit from 10% to 15% in the case of Air Canada. We think that the existing limit of 10% has served Canadians and Quebecers very well. To increase that limit to 15% seems to be a futile measure on the part of the minister, who probably just wants to save face. But the fact is that he could once again lose face instead.
With this bill, the minister maintains his power to unilaterally amend by order in council the 25% limit on an air carrier's capital fund that can be owned by foreign interests. This provision is totally unacceptable and constitutes a denial of our parliamentary institution.
If, some day, the minister decided that he wanted to change this provision, why would he not introduce an amendment in the House? The fact is the minister is giving himself or maintaining this arbitrary power, because he knows full well that he has lost the confidence of this House, of the air transportation industry and of Quebecers and Canadians at large.
The purpose of the bill is to provide a framework for the restructuring of the airline industry following Air Canada's acquisition of Canadian Airlines International and its subsidiaries.
The bill is therefore necessary, but is flawed as it now stands. Several problems remain, especially those having to do with regional service.
First of all, let us take another look at the Bloc Quebecois' dissenting opinion in committee. In December, the Bloc Quebecois decided to present a dissenting opinion to the Standing Committee on Transport in order to express its disagreement with the majority report on the following points: Air Canada's share ownership, foreign ownership in Canadian carriers, airline safety, compliance with the Official Languages Act, airfares, service to outlying regions and, finally, the future of regional carriers.
I would like to take a brief look at each of the points in the dissenting opinion. I will add one thing, however. When I mentioned airline safety, I should point out that this is not addressed in the bill.
First, there is Air Canada's share ownership. In its dissenting opinion, the Bloc Quebecois recommended that the rule limiting to 10% the volume of voting shares in Air Canada that may be held by a single individual or group be kept. The bill proposes raising this limit to 15%. The Bloc Quebecois does not agree that this change is necessary. A 5% increase in this limit, however, would not present an obvious risk of control in fact being taken of Air Canada. A 5% increase is clearly not huge.
However, if it is not a huge percentage, why is any increase at all needed if the bill's definition of control in fact is not amended?
The Carriage by Air Act contains a definition of control in fact but it was not helpful in the case of American Airlines' takeover of Canadian. In the bill before us, the definition is strictly limited to 25% of voting shares. This is not enough, because some recent cases have shown that such a limit is not sufficient to prevent foreign control.
The Bloc Quebecois is of the opinion that this definition must include a reference to control of operations and investments. For example, AMR held only 25% of voting shares in Canadian Airlines International, and yet it controlled the company through a service contract and a right of veto on important decisions by Canadian Airlines International, which gave AMR de facto control over the company.
Sadly, we must keep reminding the government, a nationalist government that shows its colours everywhere, of this. It is sad that the government has to be reminded of the Nagano games with regard to its desire to be nationalist and to show it.
Just think about the ultranationalist speeches the Liberals made when we wanted to discuss the possibility of a continental currency. Just think about the tens of millions of dollars spent each year by the Liberal government to promote Canada in a way that, more often than not, looks like crude propaganda. In that context, is control of an international air carrier not of the utmost importance?
Jobs in that industry are, for the most part, strategic, good paying jobs that bring valuable knowledge. A healthy air transport industry is essential to an advanced economy. Rhetoric seems to be enough for this government. But it is not for the Bloc Quebecois.
Last fall, we found ourselves in the rather ironical situation of bearing, as the Quebec sovereignty party, the standard of Quebec's interests of course, but also of Canada's interests, against the Government of Canada, which was prepared to hand over control of the industry to Americans. Ridicule does not kill. That illustrates our basic positions. We are sovereignists and we are proposing partnership with Canada.
This example illustrates our position perfectly, because in the Onex-Air Canada matter, Quebec's and Canada's economic interests were mixed. We got calls from Toronto, Ottawa, the Maritimes and elsewhere in Canada. Canadians wanted us to continue our fight. They were ashamed of their federal government and they were right. The minister has to understand that and not start this business all over again.
With Bill C-26, the minister continues to give himself the right to amend the 25% limit by order. As I said earlier, this is totally unacceptable. If the minister wants to amend the rule sometime, let him do so in the House. Let him introduce an amendment to the laws concerned and allow it to be debated where it must, where the representatives of the people sit to debate it.
I also want to return to the Official Languages Act. The government adopted the Bloc Quebecois's position on official languages. Our position essentially reiterated the opinion expressed by the commissioner before the Standing Committee on Transport.
We are satisfied with these legislative measures, but the Bloc Quebecois remains somewhat concerned about the application of these principles. Although, Air Canada has long been bound by the Official Languages Act, its affiliated regional carriers have frequently been lax in their application of this law. It is not enough to pass legislation. Legislation also has to be enforced. On that, this government's record is none too good.
I would now like to say a few words on the price of airline tickets. These prices are often out of line, particularly in smaller communities. To counter this practice, the bill establishes some measures, based on competition and price monitoring.
The two organizations responsible for enforcing these measures, the Commissioner of Competition and the Canadian Transportation Agency, have seen an increase in their powers and in the means at their disposal. However, the bill should provide that an assessment be made every year in the first three years after its passage, to validate the results obtained through these measures and to ensure that the commitments made by Air Canada management have been honoured. Fine promises have to be kept, and that requires regular checks.
As far as the service to remote areas is concerned, the bill deals neither with services provided or not provided by the airline companies nor with the quality or diversity of these services, except to require carriers to consult with elected officials in the region before abandoning a regional route and to inform them of their intention to do so. As well, the minister reserves the right to reduce the 120 day period that the airline companies have to abide by before abandoning a route.
It is completely unacceptable, because it leaves to much room to arbitrary decisions. In this case also, the bill should provide that an assessment be made every year in the first three years after its passage, to validate the results obtained through these measures and to ensure that the commitments made by Air Canada management have been honoured.
When one feels one is being watched, one is always more careful to comply with self-imposed policies and directives.
Canada is huge, and so is Quebec. People living in remote areas need an efficient, affordable and well maintained transportation network. This government's policy goes in the opposite way. For this government, it would appear that regions are not financially viable.
This is an inept way of dealing with the issue of regional transportation. It is certainly not a coincidence that the government has serious political problems in the regions. The government has abandoned the regions, and this is best exemplified by transportation.
Let us talk also about the future of regional carriers. This issue is tackled only indirectly in the bill through the provisions dealing with competition, mainly. The Bloc Quebecois, in its dissenting opinion, was against the creation of a new regional carrier under the control of a dominant carrier.
Since Air Canada has given up that project, we are satisfied with the measures dealing with competition. However, the bill should provide that an assessment be made every year in the first three years after its passage, to validate the results obtained through these measures and to ensure that the commitments made by Air Canada management have been honoured.
The Bloc Quebecois is consistent in its positions. On three occasions we asked that an assessment take place every year to make sure the goals are being met.
I also would like to speak about the problems of service to remote areas. The two main problems faced by people in remote areas are high air fares and lack of frequency of flights. Moreover the quality of aircraft and the use of French might also be a problem.
The possible solutions, apart from strict regulation, all involve increased competition.
Access to adequate air service must be looked at in the context of the deterioration of the transportation infrastructure in remote areas. These areas are increasingly isolated, which hampers their economic development. As we know, safety has been compromised by the minister. I would like to say a couple of words on this topic to illustrate my point.
The crash of the Air Satellite plane, which killed seven people on December 7 last year, only minutes after take off from the Baie-Comeau airport, and the crash in Gaspé, which took the lives of four people on April 13 last year, have brought back to the fore the issue of air transportation safety, an issue the Bloc Quebecois had already started examining.
It should also be pointed out that the air traffic control system was privatized and sold to Nav Canada in December 1995 for $1.5 billion. The auditor general underlined in his report of October 1997 that the value of this monopoly had been estimated at $2.4 billion by Transports Canada's financial advisers, while the Department of Finance estimated it at $2.6 billion. Yet, it was sold for $1.5 billion.
Before November 1, 1996, air navigation services were provided by Transports Canada and mainly financed through the air transportation tax paid by airline passengers. These services are now provided by Nav Canada. Since November 1, 1998, they are exclusively financed through fees paid by the airlines. The air transportation tax has therefore been eliminated pursuant to the Civil Air Navigation Services Commercialisation Act.
For Nav Canada, the customers or users are not the passengers but the airline companies. Therefore, Nav Canada's concerns are based on those of its clients, whose natural imperative remains net profit. I would not go as far as to say that passenger safety has become a secondary issue, but the fact that Nav Canada is not directly responsible to voters but to its corporate clients has an impact on the way it perceives its role. This is why we fear that this agency, in its decisions, might not fulfil its primary responsibility, which is to ensure passenger safety with the greatest prudence, diligence and even zeal.
Yet, a quote from Nav Canada's Internet site suggests that this is not the case. I quote:
The corporation will be all the more successful in serving its customers if it is able to allocate its resources where they are the most needed. This is why it has undertaken a review of the levels of service provided in all its facilities, so that they will match the volume and type of traffic in each location.
Here is another quote from Nav Canada found on Internet:
As a matter of fact, under the Civil Air Navigation Services Commercialisation Act, we are only allowed to collect revenues necessary for the provision of services, including the reserves necessary to make investments and to maintain a stable financial structure. This is what we have done. Any surplus has to be given back to customers , in this case as deferments.
Consequently, Nav Canada last year returned $65 million to the users of its services, mainly Canadian Airline Internationals and Air Canada. It is clear that Nav Canada's interest lies not with the passenger-user, but with its customers.
Considering that Air Canada and Canadian Airline Internationals recorded losses in 1998 of $16 million and $137 million respectively, one can well imagine what happened, with the airlines wishing to pay less, Nav Canada adopting a cost-benefit approach, and the government being concerned about a company disappearing.
Need I remind hon. members that Canadian Airline Internationals could not have survived without the $20 million annual fuel tax reduction, without the heavy dose of favouritism in awarding it the most lucrative air links, without a great deal of flexibility as far as the repayment of interest-free loans are concerned?
By allowing the establishment of less costly standards for the airlines, Transport Canada has played along with Nav Canada's priorities. What are these priorities? Are they the right priorities?
In a press release on September 30, 1997, Nav Canada stated the following:
The company aims to reduce annual expenses by approximately $135 million, in constant dollars, by August 31, 2000.
Last August, Nav Canada returned $65 million, as I have already said, to users of these services, mainly to Canadian International Airlines and Air Canada. Would it not have been preferable to reinvest these amounts in passenger safety? But the question is whether the right priorities were selected.
Eliminating the Baie-Comeau airport control centre on April 1, 1995, which was not even replaced by a flight information station, is not an example of promotion of air transportation safety in the region, nor is the elimination of the flight information station at the Gaspé airport in 1998 and the threatened elimination of the flight information station in Roberval.
Indeed, the presence on site of air traffic control specialists or professional skywatchers, and take off and landing runways help lower the risks.
On the subject of risks, we are focussing particularly on the risks of being unable to detect quickly that an aircraft is in difficulty or to locate quickly a crash site near an airport.
We are also focussing on the fact that, without a flight information station at an airport, it is impossible to provide pilots with precise weather information, in real time.
We note that the Minister of Transport wrote the following on June 15 to our leader, Gilles Duceppe:
Nav Canada's aeronautical study must prove to me that interruption or reduction in levels of service would not unacceptably increase risks to air safety.
It would appear that the minister believes that there can be an acceptable increase in safety risks. That is what he believes.
I would also like to say a few words about high prices. The regular plane fare from Sept-Îles to Montreal is about $800. This creates a vicious circle in that higher prices lead to decreases in the number of travellers, and decreases in the number of travellers lead to ever higher prices, until the route is not longer profitable.
What are the possible solutions?
The great majority of those surveyed believe the only viable solution is increased competition. WestJet and, to a lesser extent, Air Montreal, have shown that it is possible to offer interregional services at low prices.
For example, Air Montreal offers a one way ticket from Québec to Îles-de-la-Madeleine for $170 or from Québec to Mont-Joli for $125.
Most people believe that the solution lies in increased competition. However, the various decision makers may consider different solutions.
Among the other solutions being considered there is of course the abandonment of regional subsidiaries by Air Canada. Others believe that all regional carriers should have access to Air Canada's network for reservations, transfers and airport terminals. Some are looking at regulating airfares instead, while others, including the Bloc Quebecois, are looking at a tax reduction for regional carriers. Others yet are considering allowing foreign carriers, including American operators, to do cabotage.
On the issue of frequency, few solutions have been proposed so far. However, the lower the airfares, the more people will fly, thus making it profitable for air carriers to maintain a line.
I want to say a word on the duopoly of Air Canada and Canadian Airlines International. This duopoly had flights at the same times, with planes that were half empty. We are of course talking about regional transportation. Many of these lines were not profitable but the two carriers could put up with some losses because they would make up for them by transferring regional travellers onto their international flights.
Let us take an example. As I mentioned earlier, a traveller from Sept-Îles can buy a ticket to fly from Sept-Îles to Quebec City to Paris for about $800. A company such as Canadian Airlines could afford to lose $100 on the Sept-Îles to Quebec City flight, since it was making $150 on the one between Quebec City and Paris. This makes a difference of at least $50. The two companies had an interest in losing money between Sept-Îles and Quebec City, since the planes were full between Quebec City and Paris, thus allowing them to make up the loss incurred during the first leg of the trip.
If the two companies had merged, the planes would have been full from the start in Sept-Îles and travellers could have enjoyed even lower airfares. That is why the two carriers were ready to run the domestic flight in order to be able to take passengers on international flights and make the passenger who only wants a domestic flight pay a hefty price. This sort of passenger is not desirable.
The same logic applied when the two carriers dropped their fares in order to maintain their duopoly over certain domestic markets. The logic of the international market therefore played against the logic of the domestic market.
We can hope that profits will enable Air Canada to lower its fares but other measures will undoubtedly be necessary to resolve this problem. The Bloc Quebecois will suggest some solutions in committee.
That concludes my remarks on Bill C-26 at second reading. We hope that the government will be receptive to any future amendments the Bloc Quebecois may wish to move during committee deliberations, so that insofar as possible we can find a long term solution to this transportation problem, which is not new in Canada.
