Bill C-10 (Historical)

An Act to amend the Air Canada Public Participation Act and to provide for certain other measures

This enactment amends the Air Canada Public Participation Act to provide that Air Canada’s articles of continuance contain a requirement that it carry out aircraft maintenance activities in Ontario, Quebec and Manitoba and to provide for certain other measures related to that obligation.

Air Canada Public Participation Act

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, I will be sharing my time with the member for Aurora—Oak Ridges—Richmond Hill, who will deliver her speech when we come back next week.

On March 24, 2016, our government introduced Bill C-10, an act to amend the Air Canada Public Participation Act and to provide for certain other measures in the House of Commons. The purpose of the bill, more specifically, is to amend the sections of the act that have to do with Air Canada's operational and overhaul centres.

It is important to point out that this bill is being introduced at a time that is quite historic for the Canadian aerospace industry. As members will recall, in February 2016, Air Canada announced that it planned to purchase up to 75 C Series aircraft from Bombardier, and that it would carry out the maintenance of those planes in Canada for at least 20 years, beginning with the first delivery.

Air Canada will also help establish a centre of excellence in Quebec for the C Series aircraft, as well as another centre in western Canada, to be located in Manitoba. These centres will be able to not only service Air Canada's planes but also to offer those services to other national and international airlines.

In other words, we have introduced a bill at a time that is pivotal for Canada's aerospace industry. Not only is Bombardier offering a product that is a game changer for the aerospace industry worldwide, due to its efficiency and environmental performance, but our most important Canadian airline, Air Canada, clearly intends to make massive investments in the renewal of its fleet of aircraft.

Investing in a cutting-edge product that was designed and manufactured mainly in Canada will improve Air Canada's ability to compete globally and to serve Canadians.

In this historical context, we propose to modernize the Air Canada Public Participation Act, which we find to be outdated in part.

More specifically, the bill amends paragraph 6(1)(d) in the provisions requiring Air Canada to maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community, and the City of Mississauga.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

I know that the member would like to finish his speech, but it being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper. The member will have time to continue his speech the next time this bill is debated.

The House resumed from April 15, 2016, consideration of the motion that Bill C-10, An Act to amend the Air Canada Public Participation Act and to provide for certain other measures, be read the second time and referred to a committee, and of the amendment.

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, I will pick up where I left off on Friday.

The law clearly intended for Air Canada to continue maintaining its aircraft in certain regions of Canada. At the same time, the law was designed with one key public policy objective in mind, which was to privatize a crown corporation and allow it to become a competitive and viable private company.

As members no doubt realize, the airline industry has changed quite a bit since the law came into force in 1989. In 2015, Air Canada carried more than 41 million passengers and provided regular, direct service to 63 Canadian airports, 56 American airports, and 86 other airports worldwide, in Asia, Oceania, Europe, Africa, and South America.

Air Canada cannot escape the highly competitive international market. For example, the other national and international airlines are not subject to the same requirements regarding their maintenance facilities.

We must also consider Air Canada in the context of the global marketplace, a market that is characterized by large, multinational companies that operate over vast networks and with extremely expensive equipment.

Given the market's cyclical nature, it is also very sensitive to fluctuations. All it takes is an unfortunate incident, such as a pandemic, an accident, or a terrorist act, for the market to flounder and an airline's revenue and profit to be significantly affected.

Air transportation provides vital connectivity both within our vast country and with the outside world. It is also a significant source of jobs. For example, Air Canada alone employs nearly 25,000 people.

In light of this economic context, we believe that the Air Canada Public Participation Act may be limiting the company's ability to be competitive and profitable.

We therefore believe that the current law is inconsistent with an approach to air transportation based on competitive and market forces as the best way to provide passengers with reasonably priced services.

Like any company, Air Canada needs more flexibility in order to operate in a competitive environment and remain viable in the long term. Accordingly, the federal policy on Canada's air transportation industry focuses on competitive and market forces.

We also apply the user-pay principle for infrastructure and services, which is not the case in all of the countries that compete with us. As such, we cannot rest on our laurels because the aviation world is changing rapidly.

Naturally, we were all concerned by the closure of Aveos Fleet Performance, which resulted in layoffs across the country. Although portions of Aveos were purchased during bankruptcy proceedings and continued to operate, some employees did not end up finding work in their field.

Of course we were concerned by this closure and by the fact that Air Canada stopped having certain kinds of maintenance done in Canada. Air Canada's recent announcement about the C Series and its collaboration in developing centres of excellence gave us hope that highly skilled workers would find work in this high-tech sector.

Air Canada's plan to purchase C Series aircraft would bring together two sectors that are vital to Canada's economic development: air transport and the aerospace industry.

It would enable Air Canada to operate cutting-edge planes, thereby reducing its costs, its fuel consumption, and its greenhouse gas emissions, while minimizing noise.

The planes will be designed, built and maintained in Canada. The creation of centres of excellence for the maintenance of C Series planes in Quebec and Manitoba will certainly have a positive impact on the industry and will probably attract other air carriers to use the services available.

The Government of Quebec estimated that the centre of excellence could create 1,000 jobs over 15 years. In addition, manufacturing the C Series planes would enable Air Canada to create another 300 jobs.

Moreover, the creation of a centre of excellence for western Canada would create an additional 150 jobs in Manitoba.

In closing, changing the language used to describe the activities and where they might be held, will allow us to modernize the legislation and make it more relevant.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Madam Speaker, I want to comment on the fact that across Canada we are seeing growing disparity. We know that well-paying jobs are getting harder and harder to come by. A lot of that has been led by a past Conservative government that did not really put the time into making sure we look after workers.

Knowing that we are really giving power to a business to make some decisions that would potentially leave workers behind in this country, and knowing that this would open the doors to allow a company to bring workers in rather than making sure those jobs stay with Canadians, how does the hon. member feel that is going to make an impact in this country?

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, I do not see it quite the same way as the member does. I agree that protecting workers is very important, but I see these changes permitting Air Canada to bring in not necessarily fewer workers but possibly more workers, because it can leave the no-longer-existent Montreal urban community, go off the Island of Montreal, and go outside of Winnipeg. It can go to other parts of the provinces and do the maintenance.

The aircraft Air Canada is purchasing, the C Series, is not manufactured on the Island of Montreal but very close. These purchases create jobs. The aviation industry creates jobs. The ability to have market flexibility allows the airline to remain competitive, which would guarantee the 25,000 jobs at the airline and not just a few.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Speaker, I wonder if the member could tell the House what savings Air Canada would gain from the legislation, and how many Canadian jobs these savings would cost Canada.

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, I cannot speak for Air Canada in terms of how many jobs would go up or go down. However, I can say that the bill before us would help with the competitiveness of Air Canada, because it would take locks off it, which its opponents do not have. I think that is important to help Canadian business.

[Leona Alleslev, Liberal, Parliamentary Secretary to the Minister of Public Services and Procurement]

Madam Speaker, it is a privilege to speak today. The bill is about modernizing the Air Canada Public Participation Act to make it more in keeping with the realities of the global air transport sector, and to ensure that the act will continue to be relevant as the aviation sector evolves in the future.

First, it is important to recall that the Air Canada Public Participation Act was brought into force in 1988 primarily to provide the federal government with a legislative framework to enable the divestiture of Air Canada. This was made possible by permitting the government to organize Air Canada not as a federal crown corporation, but as a share capital enterprise incorporated under the Canada Business Corporations Act.

By holding Air Canada as a share capital enterprise, the government could dispose of its equity in the company by allowing Air Canada to issue shares for public investment, which the company did through two public offerings, the first in 1988 and the second in 1989.

Air Canada returned nearly all the proceeds from those share offerings to the Government of Canada, allowing a return to be realized as compensation for support the company had during the time it was a federal crown asset.

With that second public offering, Air Canada was fully divested by the government, and it has since been engaged in the air carrier industry as a private sector company.

The Government of Canada's divestiture of Air Canada was in keeping with the evolution that was happening to Canada's air carrier industry at that time.

Then, under the legislated framework of economic deregulation that began in 1987, Canada's air carrier industry was evolving from being a regulated industry to one that had to deal with market forces. Competition was the order of the day, providing discipline to pricing and capacity in the marketplace.

Nearly three decades have passed since deregulation took effect, and it is now time to update the Air Canada Public Participation Act to reflect the evolution in the aviation sector. I am referring particularly to the obligation in paragraph 6(1)(d) that requires Air Canada to include in its articles of continuance "provisions requiring the Corporation to maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community and the City of Mississauga".

To be viable as a going concern in today's air carrier industry means that inputs from the supply chain must be cost competitive, and that includes the provision of aircraft maintenance.

Air Canada is the only carrier, both domestic and international, that has obligations such as these. All of the other carriers, including other Canadian air carriers, are free to take advantage of competitive undertakings to support their aircraft maintenance.

The Province of Quebec, with intervening support from the Province of Manitoba, and Air Canada have been litigating the matter of that company's aircraft maintenance for a number of years.

This began with the insolvency in March 2012 of Aveos Fleet Performance, a third-party provider of aircraft maintenance repair and overhaul services. On February 17 of this year, the Province of Quebec and Air Canada mutually agreed to pursue an end to their differences in favour of a better way forward.

Then, on March 14, the Province of Manitoba and Air Canada announced a collaboration of their own. In both cases, these ways forward include co-operating in the establishment of centres of excellence for aircraft maintenance, one in Montreal, and the other in Winnipeg.

As well, Air Canada is committing to maintaining all of its newly acquired CS300 aircraft in Quebec for at least 20 years. These aircraft will also be designed and manufactured by Bombardier of Quebec.

In Manitoba, Air Canada will be facilitating and supporting the establishment of a western centre of excellence by three of its longstanding suppliers and partners, including Hope Aero Propeller and Components, which specializes in propellers, wheels, brakes, and batteries; Airbase Services, which specializes in aircraft interior equipment maintenance; and Cargojet Airways, to which Air Canada has agreed to lease one of its Winnipeg hangars on favourable terms to enable it to establish aircraft maintenance activities.

The centre of excellence in Winnipeg is expected to create 150 jobs, starting in 2017, with the possibility of further expansion and job creation in the future. These are net new job increases.

These developments are consistent with a company and an industry that must continually seek competitive ways of operating to stay in business. These are progressive developments whereby the parties are collaborating instead of litigating. This conduct should be encouraged.

The legislation, as it is currently written, lent itself to this litigation about how it should be interpreted. That is why this government is proposing to amend the Air Canada Public Participation Act to remove any doubt that Air Canada can seek best-in-class, cost-competitive aircraft maintenance wherever it is offered, a choice to which all other air carriers are entitled.

At the same time, we are reinforcing the expectation that Air Canada will continue to carry out aircraft maintenance in Manitoba, Ontario, and Quebec.

The amendment would also induce providers of aircraft maintenance in Canada to be cost competitive, given the potential business from Air Canada, which should be able to choose from among those services on the basis of best Canadian value.

As well, the establishment of a centre of excellence for aircraft maintenance would reinforce Montreal's role as a world-class aeronautical hub, bolstered also by the Montreal-based headquarters of the United Nations International Civil Aviation Organization; the presence of the International Air Transport Association; the aviation and aeronautical programs at McGill and Concordia, to name but two; and industry stalwarts such as Pratt & Whitney, CAE, Bombardier, Air Canada, and others.

The centres of excellence are good for Quebec and Manitoba, and for Canada, raising the profile of local expertise and thus generating positive attention and more investment in our nation's skilled trades and knowledge-based economy—and it all begins with co-operation and collaboration by all of the parties, who were formerly in dispute but are now working together toward a common purpose. I ask that members offer the same level of support.

It is my pleasure to speak to the bill, to support it, and to ask all members to do the same as the government moves to support the competitiveness of the Canadian airline industry in the 21st century.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Madam Speaker, we know the bill would cost Canadian jobs. The member talked about 150 new jobs in Manitoba, but she did not mention the 400 jobs that were lost as a result of Air Canada failing to comply with its obligations under the act.

The member talked about a condition that is holding Air Canada back, allegedly, a condition that does not apply to other companies. However, at the time of privatization, not one but four conditions were put upon Air Canada, one being that Air Canada abide by the Official Languages Act.

Does the member think that Air Canada should still have to abide by the Official Languages Act, since that does not apply to other companies, and why pick on this one out of four conditions that in fact would lead to job losses in Canada?

[Leona Alleslev, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Madam Speaker, I clearly reject the assumption that we know it would lead to job losses in Canada.

We have a very viable Canadian aircraft maintenance and repair and overhaul capability, and we have for many years, but the airlines are focused upon delivering air service, to moving people from places across the country. Their core business is not aircraft manufacturing. What this bill would allow them to do is to purchase and procure services from companies whose core business is aircraft maintenance.

We are very fortunate to have extensive capability in Canada and now we even have the potential of increased service in centres of excellence, which would ensure that our airline industry, the commercial carriers, can focus upon their business of carrying people and the aircraft maintenance organizations can focus upon maintaining aircraft.

That is why this part of the amendment of the Air Canada Act is focused upon that specifically.

[Sheila Malcolmson, NDP, Nanaimo—Ladysmith, BC]

Madam Speaker, to the New Democrats, the government's proposal on Air Canada maintenance looks as though it would protect corporate interests and not workers' interests. The government's proposal sanctions Air Canada's violation of its commitments to workers. It was a promise of the Air Canada privatization that jobs would be protected from outsourcing to foreign markets.

Through you, Madam Speaker, I ask, with Industry Canada pointing to staggering export of aerospace jobs to Asia- Pacific countries, how will the government keep jobs here at home in Canada?

[Leona Alleslev, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Madam Speaker, again, this government is committed to the vibrancy of the aerospace industry in Canada, and hence is ensuring that there would still be a commitment of Air Canada to have its maintenance provided in Canada—not by Air Canada, the company itself, but rather by service providers who excel and specialize in the business of aircraft maintenance, repair, and overhaul.

This would be merely a redistribution. Rather than Air Canada's being the primary one delivering the service, it would purchase those services from other entities. That is why this would be great for Canada and for the aerospace industry and would allow Air Canada to become more competitive on the world stage.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Speaker, I want to follow along in a similar vein to the questions that my colleague asked.

If in fact the parliamentary secretary is suggesting that the reason for the amendment to Bill C-10 and is about modernizing the Air Canada Public Participation Act, I wonder if the member can then explain why this amendment to the act is so narrowly focused and does not contemplate measures to support Air Canada that would not affect jobs in Canada.

[Leona Alleslev, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Madam Speaker, this amendment to the act is primarily focused on competitiveness around aircraft maintenance because that is the opportunity that has presented itself and has been of significant dispute as a result of the situation with Aveos. Therefore, this government is committed to ensuring that the aerospace industry as a whole is vibrant, and Air Canada as well.