Bill C-49 (Historical)

Transportation Modernization Act

An Act to amend the Canada Transportation Act and other Acts respecting transportation and to make related and consequential amendments to other Acts

This enactment amends the Canada Transportation Act in respect of air transportation and railway transportation.
With respect to air transportation, it amends the Canada Transportation Act to require the Canadian Transportation Agency to make regulations establishing a new air passenger rights regime and to authorize the Governor in Council to make regulations requiring air carriers and other persons providing services in relation to air transportation to report on different aspects of their performance with respect to passenger experience or quality of service. It amends the definition of Canadian in that Act in order to raise the threshold of voting interests in an air carrier that may be owned and controlled by non-Canadians while retaining its Canadian status, while also establishing specific limits related to such interests. It also amends that Act to create a new process for the review and authorization of arrangements involving two or more transportation undertakings providing air services to take into account considerations respecting competition and broader considerations respecting public interest.
With respect to railway transportation, it amends the Act to, among other things,
(a) provide that the Canadian Transportation Agency will offer information and informal dispute resolution services;
(b) expand the Governor in Council’s powers to make regulations requiring major railway companies to provide to the Minister of Transport and the Agency information relating to rates, service and performance;
(c) repeal provisions of the Act dealing with insolvent railway companies in order to allow the laws of general application respecting bankruptcy and insolvency to apply to those companies;
(d) clarify the factors that must be applied in determining whether railway companies are fulfilling their service obligations;
(e) shorten the period within which a level of service complaint is to be adjudicated by the Agency;
(f) enable shippers to obtain terms in their contracts dealing with amounts to be paid in relation to a failure to comply with conditions related to railway companies’ service obligations;
(g) require the Agency to set the interswitching rate annually;
(h) create a new remedy for shippers who have access to the lines of only one railway company at the point of origin or destination of the movement of traffic in circumstances where interswitching is not available;
(i) change the process for the transfer and discontinuance of railway lines to, among other things, require railway companies to make certain information available to the Minister and the public and establish a remedy for non-compliance with the process;
(j) change provisions respecting the maximum revenue entitlement for the movement of Western grain and require certain railway companies to provide to the Minister and the public information respecting the movement of grain; and
(k) change provisions respecting the final offer arbitration process by, among other things, increasing the maximum amount for the summary process to $2 million and by making a decision of an arbitrator applicable for a period requested by the shipper of up to two years.
It amends the CN Commercialization Act to increase the maximum proportion of voting shares of the Canadian National Railway Company that can be held by any one person to 25%.
It amends the Railway Safety Act to prohibit a railway company from operating railway equipment and a local railway company from operating railway equipment on a railway unless the equipment is fitted with the prescribed recording instruments and the company, in the prescribed manner and circumstances, records the prescribed information using those instruments, collects the information that it records and preserves the information that it collects. This enactment also specifies the circumstances in which the prescribed information that is recorded can be used and communicated by companies, the Minister of Transport and railway safety inspectors.
It amends the Canadian Transportation Accident Investigation and Safety Board Act to allow the use or communication of an on-board recording, as defined in subsection 28(1) of that Act, if that use or communication is expressly authorized under the Aeronautics Act, the National Energy Board Act, the Railway Safety Act or the Canada Shipping Act, 2001.
It amends the Canadian Air Transport Security Authority Act to authorize the Canadian Air Transport Security Authority to enter into agreements for the delivery of screening services on a cost-recovery basis.
It amends the Coasting Trade Act to enable repositioning of empty containers by ships registered in any register. These amendments are conditional on Bill C-30, introduced in the 1st session of the 42nd Parliament and entitled the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act, receiving royal assent and sections 91 to 94 of that Act coming into force.
It amends the Canada Marine Act to permit port authorities and their wholly-owned subsidiaries to receive loans and loan guarantees from the Canada Infrastructure Bank. These amendments are conditional on Bill C-44, introduced in the 1st session of the 42nd Parliament and entitled the Budget Implementation Act, 2017, No. 1, receiving royal assent.
Finally, it makes related and consequential amendments to the Bankruptcy and Insolvency Act, the Competition Act, the Companies’ Creditors Arrangement Act, the Air Canada Public Participation Act, the Budget Implementation Act, 2009 and the Fair Rail for Grain Farmers Act.

[Robert Aubin, NDP, Trois-Rivières, QC]

Mr. Bussières, at the beginning of your remarks, you said that Bill C-49 is silent on the matter of airport governance measures. Is that what you were alluding to?

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

Let me fire off a series of quick questions.

As I understand your comments, it is not your responsibility; it should be coordinated by the airport. At the beginning of your remarks, you said that Bill C-49 contains no airport governance measures. Is that what you were alluding to?

[Vance Badawey, Liberal, Niagara Centre, ON]

Let's work toward that future to ensure that strategic planning objectives and the actions that are attached to them, we can move forward on, including Bill C-49.

[George Petsikas]

In 2010, as head of the National Airlines Council of Canada, we coordinated with our member airlines the filing of tariff commitments in our tariffs, which are contractually binding. Unfortunately, this is one thing that we've messed up in terms of the public debate because we say there's nothing in Canada to protect the consumer of air travel, but that's incorrect. The largest airlines in this country, represented by the NACC, over 75% of the market, benefit from contractually enforceable tariff provisions regarding overbooking and procedures to be followed in that respect, including calling on volunteers, compensation to be offered, etc. Management of cancellations and delays with respect to duty of care, with respect to refunding of fares in the event that the delay exceeds a certain number of hours, that's in there. There are commitments with respect to baggage delivery. We already have a very clear framework on baggage compensation internationally.

In Bill C-49, I realize that we're trying to establish a clear framework for domestic compensation. We have no problem with that. However, my point is that these provisions have been in place since 2010. They're not widely reported, unfortunately, but what we're saying, for the record here, is that they are there and they provide very real rights for our customers and our consumers. As such, I have always said that we have a basis to work with and, if the minister and the government now wants to codify what we've already had in place since 2010, at least the four major airlines, then I'm there. We can do that. However, it was wrong to say that there was nothing to protect airline consumers in this country compared with the U.S., Europe, etc. That is wrong.

[Massimo Bergamini]

I'm not sure I have a simple answer to that question. Let me just say that there's no doubt that, from 1994 to today, with the devolution of the airports to local, not-for-profit authorities, we've seen massive user-funded investments that have given us enviable infrastructure. That's the good news.

The bad news is that the governance system and the policy framework have not kept up. This is fundamentally what we're talking about here. As this committee and this government embark on a quest to improve the air traveller experience, it really is important to look at the entire picture, all of the players and all of the elements that are at play that involve whether a passenger movement is successful or turns into a nightmare.

With respect to user-pay—and all we have to do is look at other modes of transport that are heavily subsidized—there's a modal equity debate that we should be having. I can tell you one thing: if we embraced the Emerson report recommendations, reversed some of these historical policies, turned some of that money that is currently being collected by governments and/or through users, and put it back into the system, I think we'd have a much healthier, much more competitive, and much stronger air transportation system. I would even argue that it would be a lot easier to find solutions to some of the issues that we are trying to address through regulation and Bill C-49.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

Now I would like to talk to the CAA representative.

When I first saw your association's name on the witness list, I thought about my CAA card. I was wondering what the connection was between your association and our study, until I remembered that you are one of the biggest travel agents.

You said that Bill C-49 could be an obstacle for the air passenger bill of rights if there were not an efficient transition from the principles in the bill to specific regulations. We will see what happens in the coming months.

If I am not mistaken, you also said that some things are missing in the bill of rights or in the focus it is being given. As I see it, when we analyze a bill, it is just as important to analyze what may have been forgotten as what it contains. Could you tell me what is missing in these major principles that will form the basis of the future bill of rights?

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Madam Chair.

Welcome to you all, and thank you for joining us.

My first questions also go to the officials from Air Transat. Perhaps they had not finished their answer. My question is along the same lines.

In the United States, there is an immunization process for certain companies. I do not know whether Bill C-49 mentions harmonization, but perhaps you could list for us, in as clear and simple language as possible, what are the points of convergence and divergence from the immunization process that Bill C-49 is trying to establish.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

I'm going to just jump in with having heard you say that you need a plan, because I'm short on time.

I can recognize that's not the norm. I used to take Air Transat to England when I was studying there, all the time.

Because of situations like that, we have introduced amendments in Bill C-49. I'd like to know how Air Transat is going to move with regard to the implementation of Bill C-49.

[Massimo Bergamini]

With respect to consultations, yes, on Bill C-49 but also on the industry cost structure. We've had discussions with the government, and not only with the current government but with previous governments. This has been a long-standing issue, of course.

The basic problem is not so much with a willingness and a general commitment on the part of Minister Garneau. Minister Garneau has told us, as I believe he has indicated to this committee, that he is looking at a phased approach. We note, however, that in November, when he unveiled his vision 2030 plan, the minister indicated that he was working towards a set of regulated performance standards for CATSA.

I can tell you that on budget day we were waiting very impatiently for the budget to be tabled so we could see what changes were actually introduced with respect to performance standards, which is a key element of the solution. Of course, performance standards without funding are meaningless. As you can imagine, we were disappointed. The budget was silent in that area.

The issue is not so much that there hasn't been consultation or there haven't been commitments. The issue is that there are competing political priorities that require the allocation of scarce dollars by this government and by all governments.

This is really fundamentally what we're saying: if you go with this as your first step, you run the risk of people saying, “Check, done, and we can move on to something else.” We believe it is fundamentally important to look at the complexity of the system and take an ecosystem or holistic approach to dealing with it, and that requires funding.

Thank you.

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

Thanks very much, Madam Chair.

I want to thank all of you for joining us today. I'll get right to my questions, since six minutes goes by pretty quickly.

We know that Bill C-49 is the result of consultations in response to the Emerson panel's review of the Canada Transportation Act, which was expedited by the previous government back in 2014. As was referred to by many of our witnesses, while they appreciate some of the things in Bill C-49, it misses the mark in many ways.

One of the things that I would like to pick up on would be the measures you've just identified that were in the Emerson report but are missing here. I would ask you to comment further on that. Were you consulted during the time when this bill was being contemplated? Were there measures you recommended to Minister Garneau to be included in Bill C-49?

[Massimo Bergamini, President and Chief Executive Officer, National Airlines Council of Canada]

Good afternoon, Madam Chair, members of the committee.

My name is Massimo Bergamini, and I am President and CEO of the National Airlines Council of Canada.

I want to thank you for the opportunity to appear today to provide my organization's perspective on Bill C-49.

But before I begin, allow me to say a few words about our organization and industry.

The National Airlines Council of Canada was created in 2008 by Canada's four largest airlines—Air Canada, Air Transat, Westjet and Jazz Aviation—to advocate for policies, regulations and legislation that foster a safe and competitive air transportation system.

Collectively, our members carry over 92% of Canada's domestic air traffic, and 65% of its international air traffic. They employ over 50,000 Canadians directly, and contribute to an additional 400,000-plus jobs in related sectors such as aerospace and tourism. According to the Conference Board of Canada, in 2012 our industry contributed almost $35 billion to Canada's GDP. Those are significant statistics that speak to the role that a strong, competitive aviation industry plays in ensuring Canada's economic prosperity.

More to the point of our discussion, commercial aviation has become the only practical way for millions of Canadians to travel to be with family, for work, or simply to explore our vast country, and travel they do. According to Statistics Canada, the total number of passengers emplaned and deplaned in Canada increased by some 30% between 2008 and 2016. There's no doubt that the era of elite jet-setters is long past.

Our members alone were involved in over 71 million passenger movements last year. As people now book flights as readily as they drive cars, air travel is becoming the domain of the middle class, not the 1%. For Canadians, flying is now part of daily life. It's the lifeblood of an open, diverse, and geographically dispersed society.

In our country the freedom to travel is considered a given. Air transport has become an essential link between people and communities. To quote the Emerson report:

Not only does air travel provide access and labour mobility to urban, rural, and remote locations in Canada, but airports and air carriers act as economic engines for communities and for the country as a whole....

This is why a competitive commercial air industry is so important. That is why this bill is so important, and that is why getting it right is also so important.

Unfortunately, we think the government's approach falls somewhat short of that mark.

The Emerson report recognized the complex interconnections that make up the travel experience and that contribute to our industry's global competitiveness. It proposed a three-pronged approach to addressing the major components of a competitive airline industry: cost, access, and the user experience. Bill C-49 addresses only one, the user experience.

For the government to lead with Bill C-49, absent economic measures to address the public cost structure issue, from our perspective, risks creating further economic imbalances that may eventually hurt those the bill is meant to protect.

To be clear, while we find that some aspects of the bill require clarification—you will find our recommendations in the technical annex to my remarks—we do not take issue with the bill or in any way oppose its adoption.

We are, however, concerned that the government's approach amounts to putting the cart before the horse.

Putting in place an economic penalty system as the framework for dealing with service issues, without addressing public cost structure at the same time, runs the risk of negatively affecting the industry and, ultimately, passengers.

As Mr. Lavin of IATA pointed out earlier, the international experience on this matter is instructive and should be noted.

As I said at the time of the bill’s tabling last May:

Our organization and members share and support Minister Garneau's commitment to ensuring that all air passengers have the best air travel experience possible and look forward to working with him and with the Canadian Transportation Agency to this end.

However, we also recognize that the air travel experience doesn't start with check-in and end with baggage pickup, and it doesn’t happen in an economic or systems vacuum.

There are a lot of moving parts in getting a passenger to destination. It involves the coordinated efforts of hundreds of dedicated people working in airlines, airports, air traffic control, air security, and border services. Every trip takes place within a complex web of systems, regulations, and costs. Each piece contributes to the outcome, and each must be considered when trying to improve service to passengers. There is no doubt that, sometimes in this complex system, capacity is stretched by unforeseen circumstances, mistakes are made, flights are delayed, luggage is lost, and connections are missed.

In 2016, there were some 2,800 passenger complaints made to the Canadian Transportation Agency, or about eight per day. Of these, 560 were either withdrawn or were outside of the agency’s mandate. Of the remaining complaints, 97% were resolved through facilitation. That is to say, the airline was informed of the complaint and reached a mutually satisfactory agreement with the guest without further agency involvement. Less than 1% went to adjudication.

Far be it from me to minimize the significance of these complaints, or the inconvenience that passengers experienced, but it is important to place those numbers in the context of a system that moves over 350,000 passengers per day, every day.

Clarifying and codifying the rights of passengers, as Bill C-49 does, is a positive measure, and it will lead to more certainty in the marketplace. Of that, there is no doubt. We are disappointed, however, that this measure was not introduced in conjunction with concrete steps to address the uncompetitive public cost structure faced by our industry or the systems bottlenecks caused by underfunding of air security and border screening.

The Emerson report recognized how mounting fees and charges, as well as delays in security screening, affect travellers and the efficiency of the industry. It recommended phasing out airport rents, reforming the user-pay policy for air transport, and putting in place regulated performance standards for security screening. Unfortunately, absent any provisions in the government’s five-year fiscal framework for additional spending in this area, Bill C-49 alone will do nothing to address the cost pressures on our airline industry or the systems bottlenecks outside of its control.

September is when the leaves start changing in Ottawa and when Parliament resumes sitting. It is also when budget deliberations get under way in earnest within government. It is our hope that when your committee has completed its study of this bill and is ready to return it to the House, you include a recommendation that the government begin taking immediate steps to implement the competitiveness provisions of the Emerson report in next year’s federal fiscal framework. Implementing the Emerson report recommendations on the air industry’s public cost structure as well as on eliminating passenger screening bottlenecks in parallel with the provisions of Bill C-49 would be a true game-changer for airlines, airports, travellers, and ultimately the country.

Thank you.

[Jeff Walker, Chief Strategy Officer, National Office, Canadian Automobile Association]

Thank you very much.

My name is Jeff Walker and I am the chief strategy officer at the Canadian Automobile Association, or CAA as most people know us.

Thank you very much for having us here today. We're looking forward to speaking today on Bill C-49, specifically as it relates to air passenger rights.

I'm going to begin my remarks by providing a little bit of background on our role in air passenger rights issues. As many of you probably know, CAA has been around for over 100 years. We were founded in 1913 and our major mandate at the beginning was road and driver safety, as an advocate for the consumer and the consumer interests around roads and driving. Today we have 6.2 million members from coast to coast and we offer a wide range of services that go far beyond that.

In fact, CAA is Canada's largest leisure travel provider and we have a large network of 137 stores across the country and online that provide services to members. We remain a not-for-profit, member-driven organization that is at its heart an advocate for the Canadian traveller.

Our agents at CAA work with air passengers every day and we understand this business very well. This allows us to take a strong and informed position in favour of air passenger rights while at the same time recognizing that the consumer interest is best served by healthy, competing airlines.

The passenger protection regime we have in Canada has been untouched for many years, leading to a widening discrepancy between how U.S. and European air travellers are treated on one side, and how Canadians are treated on the other. It's time we do better when it comes to protecting Canadian air travellers.

We do a lot of polling, a lot of member research. The work we've done in talking to members and non-members alike has found that over 90%—in fact, 91%—of Canadians agree that it's time Canada had its own national airline consumer code. We welcome and support Bill C-49 as it contains many of the improvements that we have been calling for over the last several years, and we believe it's going to be better for the travelling public. At the same time, the bill will only take us partway to where we need to be. The bill leaves the all-important details on treatment and compensation—for example, when and how much—to a future regulatory process, and we urge this committee to pay close attention to that process. A good-sounding bill will end up not meeting expectations if the end result is a coffee coupon and compensation for being bumped somewhere someday. We all have to work to make sure that doesn't happen.

Bill C-49 addresses some important areas such as covering all airlines, both domestic and foreign, as well as all passengers, non-Canadian or Canadian, to avoid situations where there is an unlevel playing field. It sets out minimum standards of treatment and compensation for key categories such as delays, cancellations, overbooking, and lost bags. It addresses the seating of families with children at no extra fee. It provides the CTA's ability to collect and monitor airline performance data as it relates to passenger handling, and it gives the agency the ability to extend decisions to other passengers on the same flight who are affected by the same incident.

However, the bill relies on a complaint from a passenger in order to trigger any action. We agree with Scott Streiner, who is the CEO of the CTA, and David Emerson, both of whom said in testimony earlier this week that the regime would be more effective if the agency could initiate its own investigations when it deems necessary and make industry-wide rulings on minimum treatment rather than restricting its findings to passengers on one specific flight.

It's worth noting that the CTA was able to initiate hearings in the Air Transat situation a few weeks ago only because it concerned an international flight. It just happened to fall into that space; otherwise, unfortunately it could not even have been dealt with in that context. The CTA wouldn't have had the authority, even under Bill C-49, to decide to hold a hearing into a similar situation if the flight occurred within Canada, nor will the CTA be able to examine any broader systemic issues that the CTA might note unless they come from a specific complainant. It might have to ask the minister for permission to investigate them.

Another matter worth noting is that in some circumstances, regulations are likely to set out clear rules, for instance, that for a delay of x hours within an airline's control, passengers might receive y in compensation. The current system would require a complaint from a passenger in order to initiate that payment. Airlines have this information though, and they know when they're offside, so why does this system have to wait for a complaint? Why not compensate proactively in these cases?

This is an important consideration in light of recent findings from the EU consumer association, which reports that only one in four EU flyers is getting the compensation they're due for lengthy delays because airlines are not required to proactively offer it. This would allow CTA to focus on more complex complaints.

The International Air Transport Association says 60 countries have some form of passenger rights legislation already in place. For too long Canada has relied on the airline's own policy, and a needlessly complex complaint process through the CTA. While the vast majority of air travel goes off without a hitch, a clear set of standards would benefit everyone from passengers to the industry, which will be able to compete on a level playing field.

However, as noted earlier, whether this new regime is effective will be dependent on the regulatory process. As a consumer watchdog, here are some of what CAA is looking for in this process.

First is clear, simple, and understandable terms and conditions that the average traveller can understand. Second is levels of compensation and minimum treatment that ensure travellers are well treated and that for the airlines, in the words of Parliamentary Secretary McCrimmon, “it's not worth your while…to treat people this way”. Third is proactive disclosure by airlines of a consumer's right to compensation and minimum treatment. Fourth is regular reviews to ensure that regulations and compensation levels remain appropriate, and finally, airline performance reporting with respect to the handling of passengers and luggage should be made public regularly. Sunshine is after all the best disinfectant.

We will be participating in the regulation-making process to be sure that consumer interests continue to be heard loud and clear. In order for Canadians to judge the new system a success, we need to make this right.

We urge this committee to stay engaged even beyond these hearings to make sure the eventual system is one that works well for all Canadian air passengers.

Thank you. I'd be pleased to take any questions.

[Neil Parry, Vice-President, Service Delivery, Canadian Air Transport Security Authority]

Thank you, and good afternoon, Madam Chair.

My name is Neil Parry. I am vice-president of service delivery at the Canadian Air Transport Security Authority, also known as CATSA. Thank you for the opportunity to speak with you today.

As many of you know, CATSA is an agent crown corporation, funded by parliamentary appropriations and accountable to Parliament through the Minister of Transport. CATSA is responsible for taking actions, either directly or through a screening contractor, for the effective and efficient screening of persons who access aircraft or restricted areas through screening points. Also, the property in their possession is controlled, as well as the belongings or baggage that they give to an air carrier for transportation.

CATSA, as the civil aviation security screening authority for Canada, is regulated by Transport Canada and is the designated national civil aviation security authority. CATSA is subject to domestic legislation, regulations, and procedures in the way that it conducts its business and screening. In this context, CATSA's mandate outlines four core responsibilities within the realm of aviation security: pre-board screening of passengers, screening of hold baggage or checked baggage, the screening of non-passengers, and the restricted area identity card program.

Given the nature of today's meeting examining Bill C-49, the transportation modernization act, my remarks will focus on the amendment associated with the Canadian Air Transport Security Authorization Act. Specifically, this relates to the cost recovery of security screening operations in airports across Canada.

Bill C-49 contains two changes to the CATSA act. These changes would formalize policy authority for cost recovery initiatives for designated airports that strive for expedited passenger screening and cost recovery for non-designated airports. These services would normally be beyond CATSA's mandate and would require authorization from the Minister of Transport.

Under the direction of Transport Canada, CATSA has undertaken two trials on cost recovery to date. In 2014, the Greater Toronto Airport Authority sought the approval of the Minister of Transport to purchase additional screening capacity directly from CATSA for pre-board screening operations. CATSA and the GTAA subsequently entered into an agreement, following authorization from the minister, that allowed us to effectively sell them additional screening hours. A similar trial agreement was entered into in June of this year, between CATSA and the Vancouver Airport Authority, for the same thing.

In 2015, Transport Canada amended regulations to allow non-designated airports to enter into cost recovery agreements with CATSA for the purpose of attracting new commercial routes and potentially enhancing economic development. These airports must meet the same requirements as a class 3 airport within Canada. To date, CATSA has entered into consultations and discussions with 12 non-designated airports and while the discussions have been productive, no agreements have been signed.

With those introductory remarks, I thank the committee. I would be happy to answer any questions related to the subject.

[Bernard Bussières, Vice President, Legal Affairs and Corporate Secretary, Transat A.T. Inc., Air Transat]

Thank you, Madam Chair and dear committee members.

My name is Bernard Bussières and I am the vice president of legal affairs at Transat. With me is George Petsikas, senior director, government and industry affairs.

Transat is honoured to be invited to appear before you today as part of your consideration of Bill C-49, Transportation Modernization Act.

Since we were founded in 1987, we have always worked diligently and proactively with government decision- makers, legislators, and regulatory officials in order to develop informed policy that supports growth in travel and tourism, which is an important industry in Canada. It is in this spirit that we appear before you today.

You should be in possession of our detailed corporate brief that we filed with the clerk earlier this month. We would like to use our few minutes this afternoon to offer some supplemental thoughts and reiterate some of our key points outlined therein, which we trust will add value to your deliberations.

To begin, we regard Bill C-49 as a first step in resolving certain challenges facing the airline industry, which is vitally important to Canada. Although the bill attempts to include some of the Emerson report recommendations, it does not address certain key aspects such as tax policy for the sector, cost competitiveness, the funding of air travel infrastructures, revision of the user-pay model, and airport governance.

We would ask the federal government to follow up on these aspects as soon as possible in order to thoroughly and comprehensively improve the policies that affect our industry and travellers alike.

With respect to the proposed airline consumer rights framework outlined in Bill C-49, Transat was one of the first industry stakeholders to publicly welcome this initiative after the tabling of the bill in Parliament. As we publicly stated at the time, we are fully prepared to work with government regulators and our industry colleagues to achieve a fair and balanced compensatory and duty-of-care framework that ultimately enhances the consumer experience.

We refer to our further caveats outlined in our brief, and reiterate support for the input that will be provided by our NACC colleague today.

Today we would like to focus on our main concerns about Bill C-49, specifically the provisions pertaining to air carrier joint ventures. At first glance, these provisions seem harmless, but they are not. I readily admit that they are obscure and complex. In our brief, we tried to explain in detail why they are in fact a long-term threat to healthy competition in our industry and to achieving a fair and reasonable balance between the public interest and the interest of airline customers.

We therefore invite the committee members to consider the following as they examine the amendments we are proposing to these provisions.

Transat is not attempting to be obstructionist with its approach in this case. There are indeed many reasons why airline joint ventures may result in more services, destinations, and other additional benefits for Canadian travellers, communities, and for the economy as a whole.

This, of course, is good, but we do not believe it should be achieved at any cost or risk to the consumer interest. Put simply, stated efforts by the government to rebalance the public versus consumer interest consideration in this case have resulted in the pendulum being shifted to the other extreme and to the ultimate detriment of fair competition.

The ubiquitous public interest standard, which is a common feature of legislation seeking to provide residual powers for ministerial authority to address a broad range of undefined matters and circumstances, is simply not sufficient as drafted here to justify the pre-empting of critical competition law oversight to these potentially anti-competitive agreements between competitors.

The conservation and coordination of critical functions such as route development, capacity deployment, fare-setting, etc., among JV partners should be considered as a de facto merger of these respective commercial entities. Existing law is sufficient to establish whether these types of agreements between competitors are in the public interest.

Indeed, we believe it is incumbent on those stakeholders who are advocating for joint-venture specific provisions to justify why they are in fact needed and why their commercial or corporate objectives are impossible to achieve without same.

It must always be remembered that past commissioners of competition have already expressed serious concerns regarding potential anti-competitive behaviour by airline joint ventures, especially in environments where they control high concentrations of market share. This is not just Transat waving the caution flag here.

Furthermore, and as indicated above, we recognize that there has often been a legislative and policy balance to be struck between the concepts of the public and/or national interest versus the narrower consumer interest that competition law primarily oversees. This balance has already been achieved in the transport sector through the merger provisions incorporated through the Canada Transportation Act, which were crafted at that time jointly by the commissioner of competition and the then Minister of Transport.

Therefore, instead of reinventing the wheel, we propose for greater clarity and consistency that these merger provisions be largely adopted for the review and approval of joint ventures. The process that we propose would be more transparent as the report of the commissioner of competition, and the decision to immunize a joint venture, would be made public.

It would provide a public rationale for the choices made by the Governor in Council, with input from all relevant departments, instead of granting the Minister of Transport sole responsibility for immunizing joint ventures in a decision that requires no publication.

This would result in a decision enforceable by both the commissioner of competition and the minister of Transport, who have different knowledge and responsibility with respect to the joint venture.

It would include a periodic review process to ensure that the consequences of the joint venture continue to justify immunity.

In closing, the need for a fair, transparent and public process regarding the immunization of airline joint ventures from competition is particularly important in the Canadian context, where the industry is dominated by one major carrier. We believe our proposal, which mirrors the current process for mergers in the transportation sector, meets these objectives.

Thank you for your kind attention and we look forward to answering your questions.

[Douglas Lavin]

I'm happy to answer. I don't see any circumstances whereby Bill C-49 by itself would reduce prices.

In terms of what we would have liked to see, again, the number one focus was costs. First of all, we're on record saying that we want an elimination of airport rent, but even a phase-out of airport rent would be useful. A reduction in the CATSA fee and more government investment in security would be good, as opposed to putting that on the backs of air travellers. We see a lot of evidence in the Emerson report talking about how CATSA could be reformulated to address the security lines issues and to change the one-size-fits-all.

There are all those different things, and those all impact on the competitiveness of the airline business in Canada. The minister said that ownership.... If you listen to his remarks and look at Bill C-49, the only thing he points to on reducing costs is ownership and control, which in theory would increase competition in the marketplace. Again, Mr. McKenna and I have both stated that we find that highly doubtful when the costs to doing business in Canada are so high. It is not ownership and control that are preventing airlines from coming in here and doing business.