Madam Speaker, I am happy to speak on behalf of the official opposition in support of Bill C-47, an act to amend the Air Canada Public Participation Act.
Basically Bill C-47 is an administrative response to the restructuring of Air Canada that took place last year. In that restructuring, Air Canada, a former crown corporation, became a subsidiary of ACE Aviation Holdings Inc.
Bill C-47 requires that the provisions of the Air Canada Public Participation Act in respect of the Official Languages Act and the location of Air Canada's head office in Montreal be applied also to ACE Aviation Holdings Inc.
Air Canada has never given any indication that it intends to abandon Montreal and a few months ago, the company signed a long-term lease in that city.
Air Canada, furthermore, views its language proficiency as a competitive advantage. Like Air Transat, Air Canada is a private sector airline with its head office in Montreal, its hub in Toronto and employees who strive to speak both of our official languages correctly.
Air Canada is committed to using both of Canada's official languages. It is also committed to remaining in Montreal.
The Conservative Party caucus is in favour of this bill because its spirit flows directly from subsection 91(i) of the Conservative Party of Canada Policy Declaration, which reads as follows:
A Conservative Government will support the Official Languages Act ensuring that English and French have equality of status and equal rights and privileges—
If English and French truly have equality of status and equal rights and privileges, these obligations must apply to the leading national air carrier, especially since it is the only one to offer service to many international destinations.
Finally, Bill C-47 is largely a housekeeping bill, its spirit flows from the Conservative Party of Canada Policy Declaration, and Air Canada is not opposed to it.
We will accordingly support Bill C-47.
This having been said, I wonder whether Air Canada's government relations department continues its enthusiastic support of the Liberal government.
Senator David Angus, a former Air Canada board member, has informed me that legislation such as the present bill would subject Air Canada to a much higher level of official languages compliance than what is required of Air Transat. He informed me that the difference between Air Transat's version of bilingualism and Air Canada's compliance with the Official Languages Act costs Air Canada some $11 million a year. Clearly, this issue falls within the expertise of the official languages committee, not the transport committee. It would be my recommendation that Bill C-47 be referred to that committee instead of the transport committee.
At the same time, given that virtually every current and former member of Air Canada's government relations team--let me repeat that every current and former member of Air Canada's government relations team--virtually every single one of them has worked either for a Liberal MP or for the Liberal Party during the last election. I can only assume that Robert Milton and Montie Brewer and Air Canada's senior management support Bill C-47.
As transport critic for the official opposition and a very frequent Air Canada passenger, I have official and unofficial contact with Air Canada at many different levels and I can say that its support of the Liberal government is truly bizarre.
Even as recently as October 31, Liberal Senator Percy Downe called on the Senate to examine current government imposed operating requirements on Air Canada. In particular, he is concerned that Air Canada serves Charlottetown from Montreal instead of Toronto. He told the press:
My inquiry will examine the current, government-imposed operating requirements on Air Canada and the responsibility and opportunity for the Government of Canada to impose additional conditions on Air Canada so all Canadians can enjoy reasonably comparable levels of air service at reasonably comparable levels of cost, no matter where they live.
His statement ignores the fact that Air Canada's Charlottetown service now flies from Montreal in accordance with the transport minister's advice that airlines concerned about high rent at Pearson airport move flights to Montreal. He also ignores the fact that WestJet now offers Toronto-Charlottetown non-stop service with much bigger planes than Air Canada offers.
Nonetheless, the Liberal senator argues, “It is entirely within the power of the federal government to impose service and operating conditions on Air Canada”. In fact, such is the Liberal Party's fascination with regulating Air Canada that in the past three years the airline has been mentioned by name in four separate government initiated bills, Bill C-38, Bill C-26, Bill C-44 and Bill C-47. The company has been mentioned by name in the House some 360 times since the 2000 election.
Based on statements made in the House by Liberal and NDP MPs, they want to tell Air Canada what planes to buy, where to maintain them, where to fly them, what ticket prices to charge, how to advertise and how to manage their businesses. Perhaps MPs with these concerns should go ahead and buy Air Canada stock. Personally, given that Air Canada is a private company, I believe that these decisions are best made by Air Canada management. As a result, I believe that Air Canada probably wants as little government attention as possible.
For example, in June 2003 after Air Canada's first Montreal-Beirut flight had taken off, the government cancelled Air Canada's permission to fly the route. Air Canada had promoted the route for several months and informed the government that the national airlines of France, Germany, Holland, Italy and the U.K. were all serving Beirut. Nonetheless, at the last minute the Liberal government cancelled the route, citing security concerns.
A similar situation happened this past July. The federal government had given Air Canada permission to operate Toronto-Calgary-Shanghai freighter service. At the time Air Canada did not have a suitable aircraft so it leased one from California based World Airways. Here it was following the lead of Canada's military, which leases Russian cargo planes to fly our troops and supplies overseas.
A couple of days before the first flight was to depart, Ajay K. Virmani, whose company Starjet flew the Prime Minister during the last election, complained. He said that Air Canada would compete unfairly against him on the Toronto-Calgary portion of that flight. The Minister of Transport ignored the fact that Air Canada is allowed to fly any size plane it wants on any route within Canada and agreed instead with the Prime Minister's friend. Air Canada was forced to cancel the Calgary stop on its flight to Shanghai as a result.
The cancellation of the Calgary stop on the Toronto-Shanghai service had negative financial consequences for Air Canada in the same way that the company was hurt by the previous decision to cancel the Montreal-Beirut service at the last minute.
However, when the Liberals do not directly target Air Canada, their ill-conceived policies can cost the airline significant amounts of money. For example, Air Canada's major hub is Toronto's Lester B. Pearson International Airport. Air Canada and its affiliate Jazz operate up to 660 daily flights and departures at Pearson airport, serving more than 100 destinations, representing approximately 35% of Air Canada's total operations.
From Pearson, Air Canada flies non-stop to three other continents, Asia, Europe and South America. In this respect, Air Canada's operations at Pearson compete directly against United's hub at Chicago O'Hare, Delta's hub at Atlanta Hartsfield-Jackson and those of Northwest Airlines at the Detroit Metro Airport.
When it comes to Air Canada's Toronto operations, the current Minister of Transport is Air Canada's arch-enemy. He is well aware that federal airport rents and charges together with federal agencies that use free space at Pearson have helped to make Pearson airport the most expensive airport in the world. However, he does not care. He thinks that airlines that are concerned about high rents and taxes at Pearson should fly instead to Montreal.
The transport minister wants us to believe that he has Air Canada's best interests at heart. However, on May 9 when he introduced a package to cut airport rents nationwide, he offered average savings of 52% to Canada's larger airports while only offering 6% to Pearson. This unfairness was underlined by the fact that while other airports faced an immediate rent reduction, Toronto's rent actually increased this year due to a requirement to repay the deferred costs of the SARS crisis of 2003.
Compounding the problem is the fact that when Delta sells a Peruvian customer a Lima-Frankfurt ticket, the routing goes via Delta's hub in Atlanta, which has one of the lowest landing fees of any major U.S. airport. If Air Canada sells the same passenger a Lima-Frankfurt ticket, the routing passes through the world's most expensive airport, Toronto Pearson.
Both Toronto Pearson and Atlanta Hartsfield-Jackson are large well-run airports. However, this year Pearson will pay a staggering $144 million to Ottawa as a result of the transport minister's airport rent, airport taxes policy. On the other hand, Atlanta receives airport support of up to $47 million a year in grants from the U.S. government. The difference has a huge impact on landing fees, taxes and passenger traffic.
As Air Canada and Delta compete for the business of the Lima-Frankfurt traveller, both airlines have similar aircraft and similar costs. However, because of the difference in airport taxes, Air Canada either has to charge more to cover Toronto's high landing fees or make less profit in order to match Delta's price.
By continuing to ignore this situation, the Minister of Transport is delivering a slap in the face to Air Canada's 12,000 Toronto based employees and telling them, “You have to work harder for less so that Air Canada can pay my taxes and compete with foreign carriers”. Unfortunately, although the minister has been made aware of this problem several times, he has chosen to turn a deaf ear.
At transport committee on October 27, one week ago today, in response to yet another call for rent relief at Pearson airport, the minister said, “I have never met a normal person who has talked to me about airport rent unless they have a vested interest”.
I can tell this House that my office is aware of the following vested interests who have called for urgent rent relief in order to let Air Canada compete on a level playing field with its international competitors. They include: the Air Transport Association of Canada; the International Air Transport Association; the Association of Airline Representatives in Canada; the Canadian Airports Council; the Canadian Courier & Messenger Association; the Association of Canadian Travel Agencies; the Canadian International Freight Forwarders Association; the Greater Toronto Hotel Association; and the Tourism Industry Association of Canada.
However, seven significant non-vested interests have joined the call for rent relief as well. They include: the City of Toronto, including council and Liberal Mayor David Miller; the City of Toronto Economic Development Committee; the City of Brampton, Mayor Fennell; the Province of Ontario, including Liberal Premier Dalton McGuinty; the House of Commons Standing Committee on Transport; the Canadian Chamber of Commerce; the Toronto Board of Trade; the Brampton Board of Trade.
It appears there is no way at all to wake up the transport minister or to convince him to move forward to cut Toronto's rent. I want Canadians to understand that no one should be able to claim to be our national transportation minister while undermining the ability of a major Canadian international airline to compete against foreign carriers.
Let me be clear to this House and to all Canadians, a Conservative government would quickly deal with the tremendous unfairness and the oppressive rents that the federal Liberals are charging Air Canada's Toronto hub.
If Bill C-47 is the transport minister's idea of legislation to assist Air Canada, let me paint a very different picture.
A Conservative government would negotiate an open skies agreement with the United States with a view to promoting increased economic opportunities for Canadian air carriers. One way to do this would be for Canada and the U.S. to grant modified sixth freedom rights to each other's countries.
Modified sixth freedom is a way of describing the situation where a Vancouver passenger buys a Vancouver-Minneapolis round trip ticket on Northwest and a round trip Minneapolis-Montreal ticket also on Northwest and combines both tickets to fly Vancouver-Minneapolis-Montreal round trip.
The granting of sixth freedom rights is attractive because they do not require airlines to offer a single new flight, but offers them increasing flexibility to sell seats on any flights that they offer. For Air Canada, modified sixth freedoms would offer increased revenue opportunities in particular at its Toronto hub.
Like many major Canadian airports, Pearson has Canadian customs facilities as well as U.S. preclearance facilities. Typically, U.S. bound Canadians preclear U.S. customs before departure in Canada, but clear Canadian customs after they return to Canada. Often Canadian and American customs and immigration facilities are actually located side by side in the same airport. This operating reality means it would be theoretically possible for an airline passenger arriving in Toronto from Los Angeles to stay in the U.S. precleared in transit zone and board a connecting flight to New York on Air Canada without ever having to step foot on Canadian soil legally.
Given that Air Canada offers non-stop daily flights to 41 U.S. cities from Toronto, as compared to the 60 U.S. cities served by US Airways from Pittsburgh, granting Air Canada modified sixth freedom rights would allow it to make Toronto a mid-size U.S. hub almost immediately and with virtually no additional cost.
Given that the revenue calculations of Air Canada's 41 Toronto U.S. routes are based on transborder and U.S. international traffic, the income from exploiting its potential modified sixth freedom rights would go straight to the bottom line.
Further, given Toronto's geographic location and the impressive number of U.S. destinations that Air Canada serves from it, the potential economic benefit to Air Canada of modified sixth freedoms is quite significant.
Research was done last May by Professor Richard Janda and students Shy Kurtz and David Dubrovsky of McGill University Institute of Air and Space Law. They argue that for the top 15 U.S. domestic pairs, a routing via Toronto would be competitive with a routing via most U.S. domestic hubs. In other words, as a U.S. hub, Toronto would be competitive with Chicago, Detroit, Minneapolis and Pittsburgh.
All that is required for this to happen and to move forward is a forward thinking negotiation and a dramatic reduction in airport rents that the Liberal government currently charges at Pearson airport. The Liberals prefer to see Pearson airport instead as a major cash cow to be exploited, while they take Toronto voters for granted. The Conservatives see Pearson as an engine for economic growth to be nurtured and built upon.
Bill C-47 would require Air Canada to offer bilingual service on all of its flights around the world. Air Canada management willingly embraces this initiative and sees its ability to serve customers in various languages as a competitive advantage, yet another way to lure international travellers to fly Air Canada. This is a positive thing. We have no problem with this as Conservatives. We embrace official bilingualism.
The global airline industry is intensely competitive. The impact of government policy on the major airports that airlines use as hubs cannot be understated. The fact that Amsterdam is served by flights from countries in South America that are not also served from Toronto is symbolic of the problem. Dutch government backed Schiphol airport in Amsterdam has some of the lowest fees in the world, while Toronto has the world's most expensive. This reality and aggressive marketing allowed KLM to profitably serve from Amsterdam destinations which are not flyable from Toronto due to government costs.
Through visionary thinking the Dutch government has positioned Amsterdam's Schiphol airport as a truly global gateway and a major engine for economic growth for its country. For example, the greater Toronto area has three times the population of greater Amsterdam, yet Amsterdam's Schiphol airport is significantly bigger than Pearson and handles nearly 50% more passengers. Amsterdam's airport has flights to 251 destinations, over 100 of which are outside of Europe. Pearson on the other hand has flights to 110 destinations, only 42 of which are outside of Canada and the United States.
I understand that the size of an airport and the number of flights it receives are dependent on a number of factors, such as geography, history and the economic development of the area. Nonetheless, forward thinking Dutch aviation policy has allowed Amsterdam to grow into the world's ninth busiest airport. This is particularly impressive when we realize how close it is to London Heathrow, Paris Charles de Gaulle, and Frankfurt, all of which are among the world's top eight busiest airports.
I would like to suggest that part of the reason Amsterdam's airport is so successful is that the Dutch government has been at the forefront of negotiating open skies agreements with other countries. In addition, the Dutch government sees Amsterdam airport as a major driver of that country's economy and that is reflected in various government policies which support the development of the airport.
This House will soon pass Bill C-47, an act to amend the Air Canada Public Participation Act. The Minister of Transport will be happy to see Air Canada providing bilingual service wherever in the world he flies.
In the meantime, this same minister must do everything he can to further the economic opportunities for Air Canada and the other Canadian airlines by enacting the measures proposed in this House. From Air Canada's perspective, the minister may well want to address this issue, but his progress to date has been less than impressive.