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.

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

I have just one more question. I want to go back to some of the observations I made around phase two. I cannot get away from that knowing what brought about the Emerson panel report was the fact that we expedited a statutory review. That statutory review takes place every 10 years.

If we're believing that phase two is going to happen anytime between now and 10 years from now, I'm interested to see how that's going to happen. It doesn't mean that you have to wait 10 years, but there's no requirement to do it. In fact, we've had witnesses recommend that we put back provisions in the bill that require a review of the changes that have been made because that's missing in Bill C-49.

What measures should have been put in this Bill C-49 to address the concerns you've raised about the costs that our air travellers incur, and do you see prices going down under any circumstances in Bill C-49 as it is?

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

Thank you, Madam Chair.

I would like to talk to Mr. McKenna for a few minutes.

You made some recommendations for future regulations, which are unfortunately not included in Bill C-49. I hope the Canadian Transportation Agency has heard you and that we can resume this discussion one day.

You also mentioned foreign ownership. In your opinion, there is no evidence that increasing foreign ownership would lead to the creation of low-cost airlines or to price cuts by current airlines.

I was surprised when you said that there is no reciprocity. I would ask you to elaborate on what you mean by that. Are you saying that we should have included such agreements in free trade accords, such as the one with the European Union? Is it on a case-by-case basis such that, for instance, a British investor could not invest in a Canadian company unless Canadian investors could also invest in Great Britain?

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I have one final, quick question.

Are you in favour of the status quo or do you think Bill C-49 will improve the customer experience?

[Douglas Lavin]

Our experience in Australia, China, and other places, is lower ticket prices, lower delays, and lower cancellations by this approach.

If I can have just one minute I think it's important to recognize here that Canadians have passenger rights now. First of all, Canada is a signatory to the Montreal Convention, which put a maximum in terms of how much they are compensated for lost baggage and for cancellations. You already have those.

Secondly, the CTA—as Mr. McKenna mentioned—has their process. More than 95% of those complaints are resolved between the airline and the passenger. It is 95%. I think this transparency we're talking about in Bill C-49, absent the fees, would make the most sense.

[Douglas Lavin]

I guess I'm hesitant to second guess whether Bill C-49 could accommodate that. I think that's more your business than mine. All I can say is that the rents in particular have been a concern of the airline industry. For any airline that flies here, rents have been a significant barrier to, for example, Toronto or Vancouver becoming the global hubs that they would like to be. If you look at it, they've collected $58 billion so far and expect to collect $12 billion more in the future. We just find that is not competitive with the rest of the world. We are hopeful that, if you could accommodate that, certainly on the passenger rights side—I've stated our position quite clearly—I anticipate that we will work closely.

We have great respect for CTA and Transport Canada and hope that whatever they come up with post-Bill C-49 is reasonable. But the number one priority of the airlines and the passengers is the high cost of travelling in Canada.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, Madam Chair.

My first question is for Mr. Lavin.

In your opening remarks, you said you hope airport fees will be reduced. That is important to you. You said that the minister has not included this in the first phase of Bill C-49. It is unfortunate that this bill does not go far enough.

Do you think measures could be included in this bill to reduce airport fees while also respecting the passenger bill of rights and passengers' wish for a better travel experience?

[Sean Fraser, Liberal, Central Nova, NS]

Okay. That's helpful.

Just bouncing around here, a number of the other witnesses discussed the importance of ensuring that the fines only pertain to what's within the airline's control. I think the minister this morning was fairly clear that this was his intention as well. Is there something in the language of the proposed Bill C-49 that has you concerned that this will not be the case?

Mr. Lavin, go ahead.

[Douglas Lavin]

Thank you for that question.

In terms of privatization—and I know that's not the subject of Bill C-49, but I know it's being considered—we are strongly concerned about privatization. There are easier ways to deal with rent than privatization. The government has collected so much rent that it is way beyond the price of the land that was turned over.

We have a significant concern with privatization because airports have a significant market power that they can abuse as part of any privatization. If privatization is pursued, we would need to see very strict regulation to ensure that they don't overcharge airlines for projects on which we have no ability to provide them some direction. We'd need an independent organization to appeal on those issues. No, we are opposed to it in the United States, and we're strongly opposed to it here.

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

Thank you.

I would open up my next question to any of the witnesses to answer. In your view, does Bill C-49 have the potential to increase or decrease the cost of air travel in Canada?

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

Thank you very much, Madam Chair.

I want to thank our witnesses for joining us today. I appreciate your testimony and look forward to all the questions and answers that we are going to hear over the next hour.

My first question will be for you, Mr. Lavin.

I think back to your opening remarks, and you referenced some of the key recommendations that were made by the Emerson panel in the CTA review to review and reduce some of the taxes in this industry. Then you went on to note that Minister Garneau had promised a reduction, and that Bill C-49 fails to address any of these costs. You also then went on to state that you were looking forward to phase two and being able to support the minister then in terms of when these things will come.

I want to clarify, is it your understanding that we'll be going through this process once again looking at Bill C-49 and then including some of the those changes? Am I hearing from you that we're going to be here again in a year or two?

[John McKenna, President and Chief Executive Officer, Air Transport Association of Canada]

Good afternoon.

My name is John McKenna. I'm the president of the Air Transport Association of Canada.

ATAC has represented Canada's commercial air transport industry since 1934. We have approximately 190 members engaged in commercial aviation, operating in every region of Canada.

We welcome this opportunity to present our comments on Bill C-49 as it addresses important issues of commercial aviation in Canada. Passenger rights, foreign ownership, joint ventures, CATSA, and the CTA have been subjects of debate for some time.

My comments, however, will address only the major themes of the bill as the applicability of the proposed measures will be determined only by the company regulations to ensue. These regulations, which will be developed by the Canadian Transportation Agency, are probably one year away.

As for foreign ownership of Canadian airlines, the minister claimed, in his November 3, 2016, speech before the Chamber of Commerce of Metropolitan Montreal, that increased foreign ownership “will lead to more options for Canadians, and allow the creation of new, ultra-low cost airlines in Canada”.

The presence of more airlines usually offers greater choice to travellers, but we have yet to hear convincing arguments supporting the claim that foreign investments will pave the way to ultra-low-cost carriers.

Contrary to what the government claims, increasing foreign ownership of airlines will not lead to the creation of ultra-low-cost airlines in Canada.

Lower operating costs to airlines, not the source of capital, are the key to lower costs to the travelling public. Only when the government decides to support, rather than bleed, the air transport industry will ultra-low-cost carriers stand a chance in Canada.

Increased foreign ownership of airlines can also lead to an increase in the export of profits generated in Canada to foreign interests rather than reinvestment in our industry.

This being said, we don't oppose the government's intention to allow foreign ownership of up to 49%. However, we ask that this proposed change be accompanied by reciprocity with our foreign partners. In other words, if we allow foreign investors to own a 49% stake in our airlines, we would expect to have the same privilege in their country.

I would be curious to know if our government has entered into discussions with our major trading partners on reciprocity in terms of increased foreign ownership of airlines.

Passenger rights is a popular theme in Canada, and the government wants to ensure that passengers are protected by law. Some of the measures the minister is keen to address include compensation standards for passengers for delays and denied boarding due to factors within the carrier's control, and lost or damaged baggage. The minister also wants clear standards allowing for children to be seated with parents at no extra charge, and for the transportation of musical instruments.

We appreciate that the government wants to help the travelling public navigate through simpler rules and have easier access to support in unfortunate circumstances where those standards are not being met.

Please bear in mind that over 140 million people travelled by air in Canada in 2016. The number of complaints filed each year at the CTA was well under 500. The reason I raise this is to give a perspective regarding the size of the problem. Of course some complaints remain at the airline level, but even then the vast majority of travellers have a good passenger experience.

We believe three major principles have to be incorporated in the passenger rights legislation.

A key principle of the bill is that the go-no go decision must remain with the pilot. The threat of severe, even unreasonable, financial repercussions should not be allowed to influence the pilot's decision.

Second, the compensation paid out to aggrieved passengers should be in line with the economic realities of travel in Canada. Unreasonable monetary compensation out of proportion to the magnitude of the carriers' revenue on any given flight could only result in a deterioration of our enviable air transport system, perhaps even including reduced service on some routes.

For example, air passenger rights in Europe are generous to the point that a passenger could receive compensation for a delayed flight which by far exceeds the price paid for the ticket.

Such practices can only lead to increased costs to airlines and to all passengers.

Shared responsibility is another major principle. You can't hold an airline accountable for events beyond its control, the minister has stated. Some of the measures we are looking at include compensation standards for passengers denied boarding due to factors within the carrier's control. We need a clear definition of what falls under a carrier's control.

While it may be a carrier's decision to cancel or delay a flight, the reason for doing so may be well beyond the carrier's control. Weather, ground delays as a result of de-icing pad congestion, snow clearance, congestion of the airport of destination, and air traffic control all affect an airline's decision. Also, some delays are safety related.

The safety of passengers is the utmost preoccupation of pilots and airlines. Safety-related delays should not result in penalties for the airlines. How such delays are managed by the airlines is what the law should address.

An additional principle is that a one-size-fits-all policy is so widespread at Transport Canada that Transport Canada's policy just can't apply here. You can't impose southern compensation standards as applied to Canada's largest airports to northern and remote airports.

Ease of compliance with the law, administration of complaints, and user-friendliness for passengers all depend on the complexity of the regulations which will accompany the proposed changes in the law.

We only ask that the government work collaboratively with stakeholders in the drafting of new regulations attached to the bill. Only then will the minister's objective of improving the passenger experience be met.

Thank you.

[Allistair Elliott]

Good afternoon. Thank you very much for the opportunity to appear.

We are pleased to be able to have a discussion with the members of the committee.

My name is Allistair Elliott. I'm the international representative for Canada for the American Federation of Musicians for the United States and Canada. As a professional musician over the last 40 years, I've travelled most of the world performing music. My performing career has been paralleled with my work for the Canadian Federation of Musicians, initially as an executive board member, then as president of the Calgary Musicians' Association, Local 547, of the AFM, since 1999, and now as an international representative for Canada.

I'm joined today by oboist, teacher, and my friend, Francine Schutzman, who played in the National Arts Centre Orchestra for 38 years. She's the past-president of the Organization of Canadian Symphony Musicians, and currently the president of the Musicians Association of Ottawa-Gatineau, Local 180, of the AFM.

We are here today to enthusiastically applaud the Honourable Marc Garneau and Transport Canada for the inclusion of musical instruments as part of passenger rights in Bill C-49, an act to amend the Canada Transportation Act.

The Canadian Federation of Musicians is the Canadian national office of the American Federation of Musicians of the United States and Canada. We are comprised of 200 local offices across North America, collectively representing a membership of approximately 80,000 professional musicians, 17,000 of whom live and work in Canada. We've been representing the interests of musicians for 121 years.

As the distinctly Canadian division of AFM and under the federal Status of the Artist Act recognition, the CFM negotiates fair agreements and working conditions covering all musical services within Canada. Our goal is to pursue harmonization with the United States' FAA Modernization and Reform Act of 2012, regarding the carriage of musical instruments on commercial air carriers. We have included our original submission to the Canada Transportation Act review in January 2015.

I just want to thank the Honourable Lisa Raitt—I know she was in this morning and she's not in this afternoon, but her colleagues can pass it on—for encouraging us to enter that submission a few years ago.

Following extensive advocacy to all the key stakeholders, we were very pleased to be included in the discussions on passenger rights and are looking forward to working together to develop regulations once royal assent has been received.

We would also like to thank Air Canada for leading the way as an airline and working closely with the CFM to provide better service to musicians. This summer, at the 4th International Orchestra Conference in Montreal, Air Canada was presented with the Federation of International Musicians Airline of Choice award for 2017.

We thank Air Canada and offer our congratulations.

Musicians travel for business with oddly shaped briefcases. Players of smaller instruments generally have no issues with stowing their instruments on board. The problems arise with larger instruments. Cellos are the ones that have the most problems. Many instruments are made of wood, fragile, and affected greatly by temperature, which in itself, can damage an instrument beyond repair. Instruments belonging to professional musicians are often old and very expensive. Cellists flying with their instruments typically purchase a second seat for that instrument, but are nevertheless sometimes told they may not take the instrument on board. That equals lost job opportunities, lost work, and lost income. Some of you may be familiar with a song called United Breaks Guitars. This song was generated by an incident in which a guitarist, Dave Carroll, was forced to check his instrument, which arrived at its destination in pieces.

We applaud the steps that have already been taken to ease the problems of musicians travelling with instruments and we thank CATSA for working with us directly on some initiatives. There's still much work to be done. What we need is a well-advertised, industry-wide policy, so that musicians may plan accordingly for business travel with the tools of their trade and the confidence they will make the job interview or performance on time and without incident.

I'd like to conclude with comments made recently by one of our more high-profile member musicians, Dr. Buffy Sainte-Marie, on the floor of the Senate of Canada, when she was given special recognition for her contribution to Canadian music. During her remarks, she asked that the government help connect the dots so that musicians could travel with their instruments. She cited an example where she was charged overage fees of $1,376 for an underweight guitar and a suitcase.

Musicians have long had difficulties transporting the tools of their trade, which are often very expensive and irreplaceable. On behalf of all musicians across Canada, we thank you for this inclusion, we applaud your efforts, and we look forward to working closely with you to develop regulations that will be effective for everyone.

Thank you.

[Glenn Priestley, Executive Director, Northern Air Transport Association]

Thank you, Madam Chair.

To the committee, thank you for having the Northern Air Transport Association here. My name is Glenn Priestley and I am proud to be the executive director of NATA.

Our membership is representative of all aspects of northern and remote air operations. Our operators are committed to the highest possible standards and co-operating with all government agencies to achieve this standard with rules and recommended practices that make sense and support the Canadian aviation industry.

I would like to take the opportunity to thank the committee and staff for including NATA, including northern and remote operations across Canada on these important discussions on the legislation contained in Bill C-49. Too often, aviation policy is formed with a focus on southern Canadian air services. There has been a genuine effort by this government and various committees like TRAN to understand the unique issues associated with northern and remote aviation and we thank you for that.

Bill C-49 is a large bill that has three sections that concern the Canadian aviation industry. For this briefing we'll be focusing on the passenger bill of rights legislation from the perspective of the northern travel experience. We'll be looking to ATAC as our senior association. We'll be looking at all of the aspects, but I'd like to focus on the passenger bill of rights, if I may.

The management of passenger safety and the overall cost of the travelling experience is a complex and daily issue for northern operators. Long-term commitment to isolated communities with initial and ongoing investment in newer aircraft and facilities creates a special bond between the air carrier and customer. The relationship is more like a partnership, and a unique aspect of all northern operators is significant commercial partnerships with many first nation and Inuit governments. These relationships provide a recognition of the needs of communities and individuals.

Examples of this recognition would be the reserved seating section to community elders located in most northern airport waiting areas. Northern operators have had to find solutions to operational problems that simply do not exist in the south. Examples include long-range flight planning with limited information and support, creating the need for contingency planning to ensure the safety of the travelling public.

This committee had a substantial focus in its June 7, 2017, report on aviation safety in Canada regarding the lack of northern aviation infrastructure needed to improve the travel experience and improve overall system safety and service reliability. The northern focus concluded with the following recommendation, “That Transport Canada develop a plan and timeline to address the specific operating conditions and infrastructure needs of airlines serving Northern Canada and small airports.”

Referring to the Canada Transportation Act amendment to include passenger rights legislation, the Northern Air Transport Association is very concerned with the generalities and the wording, and the increase in regulatory authority that these amendments and others will provide to the Canadian Transportation Agency.

To be clear, NATA agrees that fare-paying passengers have rights. However, there are concerns that because of problems that have been manifested in southern Canada and internationally, northern air carriers are going to be burdened with one-size-fits-all. NATA members are currently very engaged on flawed regulations that were developed this way regarding flight and duty time rules for flight crew.

Here is our summary.

NATA agrees that the travel experience should be as transparent as possible with expectations clearly stated.

NATA does not agree with any minimum standard of compensation in the regulations, as there are simply too many variables.

NATA does agree with the procedures that provide passengers with essential notice for any unscheduled occurrence that causes delay.

NATA agrees every air carrier continue to maintain some form of operation control manual for these and other procedures associated with carriers of passengers and their carry-on-board items as well as checked baggage.

NATA is concerned with the blanket amendment that empowers the minister to give the CTA extra-regulatory authority without consultation.

In summary, the Northern Air Transport Association has an excellent service record with its passenger management, challenging flight environments, and difficult locations. Northern operators pride themselves on a tradition of providing hot meals, for instance, on many flights included in the price of the ticket. Northern operators are invested in the community in a different way than southern operators, which is easy to explain.

NATA agrees passengers have rights. Our operator members have been respecting all their customers for a long time with recognition for special needs and unique cultures. NATA is proud to be an original member of the CTA's accessibility committee, an important forum that provides guidance to our members on how to make a good system better in the movement of all passengers.

Any passenger bill of right needs to recognize existing industry efforts regarding passenger safety. We encourage a new air carrier-centred conflict resolution model to be developed to replace the current CTA model that inhibits consumers' participation.

Thank you.

[Douglas Lavin, Vice-President, Members and External Relations, North America, International Air Transport Association]

Madam Chairwoman and honourable members, I appreciate the opportunity to appear before this committee as it considers Bill C-49.

My name is Doug Lavin, and I am the vice-president for member and external relations for North America for the International Air Transport Association, or IATA.

IATA is a Canadian corporation created by a special act of the Canadian Parliament, representing the interests of 275 airlines in more than 117 countries around the world, including Air Canada, Air Transat, Cargojet, and WestJet. As such, IATA has a significant interest in the proceedings of this committee on Bill C-49.

I have submitted my written comments on Bill C-49 for your consideration in advance of today's hearing, but I'd like to take my time this afternoon to highlight several points included in that submission.

First, it is important to note that a key recommendation of the 2016 Canada Transportation Act review was to reduce the high level of government taxes and fees on Canadian air transportation because of their significant negative impact on both airlines and passengers. Specifically, the CTA review recommended a phasing out of airport rent, a reform of the user-pay policy to prevent the government from collecting taxes in excess of its investment in services and infrastructure, and a reduction in the air traveller security charge.

In announcing the government's transportation policy, Minister Garneau promised a reduction of what he characterized as a “litany of fees and charges” on air travel. In fact, this morning he mentioned that he had travelled the country in preparation for Bill C-49, and the number one issue he heard about was the high cost of air travel.

IATA was therefore disappointed that Bill C-49 fails to address any of these cost issues—no call for a reduction in rent, taxes, or fees.

To be fair, Minister Garneau has promised to address these cost issues in phase two of the government's vision for the future of Canadian transportation. We look forward to supporting Minister Garneau and his team in this second phase.

I believe my airline and trade association colleagues who have testified before you yesterday and this afternoon are better equipped than I am to address the issues of airline ownership, joint ventures, and CATSA cost recovery set forth in Bill C-49. I'd like to focus my remarks on Bill C-49's call for the Canadian Transportation Agency and Transport Canada to develop enhanced air passenger protection regulations.

IATA is currently working with approximately 70 governments that have either implemented or are considering implementing air passenger rights regulations. As you would expect, some governments have done a better job than others in this regard. We have seen two primary approaches to these passenger rights regimes.

The first approach is that government steps in and dictates how airlines should treat their passengers. This model is best seen in the approach taken by the United States and the European Union, where regulations impose stiff fines if airlines do not meet government-imposed requirements as to how passengers should be treated in the case of delay, cancellation, or lost baggage.

For the most part, these fines are punitive in nature, as they go beyond the cost of the delay or cancellation to the air passenger. We see a number of challenges to this approach.

First, it is difficult to define in regulatory terms exactly how to treat passengers in any given circumstance. Each irregular operation presents a different set of facts that are difficult to anticipate, much less to regulate. In Europe, for example, the courts stepped in to interpret the intent of the European passenger rights regulations, which more often than not resulted in contradictory interpretations and confusion on the part of airlines and passengers alike.

Second, the most well-intentioned government regulators can sometimes do more harm than good when attempting to protect passenger interests. For example, in the United States the rule against lengthy tarmac delays has resulted in increased flight cancellations, which often prove to be more inconvenient to passengers than the tarmac delay itself.

In 1987, Canada deregulated the commercial airline industry based on the belief that the free market, rather than government regulation, would produce better results for airline passengers. There is little evidence to suggest that this assumption was incorrect then or now. We know that rare tarmac delays or lost luggage occasionally cause inconvenience for air passengers. However, the answer is not always government second-guessing airlines when the competitive market, and more recently social media, already provides them with all the incentives they need to treat their customers as well as possible.

While Europe and the U.S. passenger rights approach have been copied by some governments, other countries have taken a second approach that I believe this committee and Canadian regulators should consider.

Under this approach, governments do not impose strict passenger rights rules with accompanied fines or penalties. Instead, they put measures in place to ensure that air passengers are fully aware of their rights before they purchase their ticket, leaving it up to passengers to decide what level of service they're willing to pay for.

Australia is a good example of this approach. In addition to adopting a broad consumer rights law covering all industries, the government has worked with the airlines to develop customer charters that outline each passenger's service commitments and complete handling procedures. China and Singapore have also chosen this focus on transparency rather than imposing punitive measures, and have seen positive results in terms of on-time performance, lower cancellations, and lower airfares

It is interesting to note that last year, the Canadian Transportation Agency took a step in that direction when it requested and received voluntary commitments by Canadian carriers to publish their tariffs and contracts of carriage in clear language on their respective websites.

Bill C-49 seeks to combine both approaches to this passenger rights issue. On the one hand, it requires airlines to make terms and conditions of carriage readily available to passengers in clear and concise language. IATA supports this transparency. Bill C-49 goes on to direct CTA and Transport Canada to develop regulations with minimum standards and compensation for passengers during irregular operations. IATA has significant concerns regarding this approach, particularly if the fines are prescriptive in nature.

If Bill C-49 remains as is and CTA and Transport Canada follow the U.S. and EU approach, we urge these regulators to follow several principles to promote clear and fair regulation. These include guarding against unintended consequences and including provisions to fix them when they arise, as well as ensuring that the benefits outweigh the costs of regulation. Compensation should be equivalent to the cost of lost time and property to passengers and not be punitive. We need to ensure that any customer service requirements apply to all parts of the air transportation ecosystem rather than just airlines, and that fines are only imposed on actions within the airline's control. Finally, passenger rights rules should not be extraterritorial in nature.

Thank you for your consideration. I look forward to answering your questions.

[The Chair, Liberal, Judy Sgro]

I am calling our meeting back to order, our study of Bill C-49.

Apologies that we're a few minutes behind schedule, but welcome to all of you who are here.

If you would like to start by introducing yourselves, we will start with Mr. Lavin.

You have 10 minutes for your comments.