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]

Thank you very much, Madam Chair, and thank you to our witnesses for joining us here this evening. It's good to change our focus now and discuss Bill C-49 within the context of our aviation industry.

Similar to our earlier hearings, we do appreciate your being here to provide your comments to the committee and ensure that we have the information we need to reach our goal, which I think is a shared goal, of ensuring that Bill C-49 strikes the right balance in meeting the needs and concerns of both the airlines and the customers they serve. I'm going to dig in quickly to the questions I have, because I know that the five or six minutes I have goes by very quickly.

First, to Air Canada, regarding the cost of screening at airports, are you concerned that the proposals in Bill C-49 amount to what we could call an extra tax on the flying public?

[Professor Marina Pavlovic, Assistant Professor, University of Ottawa, Faculty of Law, As an Individual]

Good evening, Madam Chair, and committee members. I would like to acknowledge that we are on unceded Algonquin territory.

Thank you for the opportunity to present and to bring a research perspective to the discussion of Bill C-49, particularly to the section on an air passenger bill of rights, which is undoubtedly an issue of importance to Canadians.

I am an assistant professor at the common law section of the faculty of law at the University of Ottawa, and my area of expertise is consumer rights in the contemporary cross-border network digital economy. My work covers areas such as consumer protection, dispute resolution, and access to justice. I am also a consumer groups' appointed director at the board of the Commission for Complaints for Telecom-television Services, CCST, which is Canada's communications industry ombudsman. However, I appear in my personal capacity, representing my own views.

Most recently, my work has focused on the wireless code, a bill of rights for Canadian wireless consumers, as well as dispute resolution, including ombuds schemes for consumer complaints. It is my expertise in these broad areas of consumer protection, particularly with the wireless code, that I'm bringing to the table.

While the telecommunications and air travel industries are definitely very different, there are significant parallels when it comes to consumer rights and consumer redress. My comments will focus on clauses 17 to 19 of the bill, which deal with the proposed regime to establish an air passenger bill of rights.

I will focus my remarks around three topics: the need for this bill of rights, the passengers' rights or carriers' obligations in the bill, and redress mechanisms related to the rights in the bill.

As to the need for the bill of rights, the current regime of complicated tariffs and related individual carriers' contracts is overly complex and ineffective. Consumer rights regarding air travel are varied and fragmented. They depend on a number of factors, and it is difficult, if not impossible, for consumers to know ahead of time what rights they have and what the appropriate redress mechanisms are. Market forces alone cannot resolve this issue. Canadians need an air passenger bill of rights that will provide uniform, minimum rights for consumers, or conversely, set minimum obligations for the carriers.

Similar regimes for air passenger rights exist in other jurisdictions, and in Canada they exist in other industries as well. As I already mentioned, as an example, the wireless code sets a mandatory code of conduct for the wireless service providers, and a recently established television service provider code sets minimum rights for consumers with respect to television services.

A mandatory code that would apply to the industry as a whole is the appropriate way to set minimum consumer rights. It is to the benefit of consumers, and it is to the benefit of the industry. For consumers, it provides a clear set of rights that are found in a single place. A clear set of rights builds and enhances consumers' trust in the industry. It also promotes competition in the marketplace. It offers the carriers an opportunity to distinguish themselves from the competition by setting higher levels of customer service. The bill of rights is the floor; it is not the ceiling.

This brings me to my next point on the actual passenger rights or carrier obligations in the bill. Bill C-49, in effect, does not establish the bill of rights for consumers. Proposed subsection 86.11(1) would set the broad parameters of issues that the future bill of rights in the form of regulation must cover. It is the foundational step for the bill of rights to come. These parameters, the list of issues that the bill of rights should cover, are thorough but the list is not an exhaustive one. It provides for ministerial discretion, both in breadth and in coverage, as well as in the form of future regulations.

Passenger rights on the list are similar to the rights in other regimes and correspond generally to the most common types of complaints that are increasingly being reported by the media. However, there may be other kinds of disputes about which we have not yet heard. It is therefore imperative that the list stay as is or be expanded. Similarly, the committee should not decrease the list. By doing so, certain rights would be chipped away, creating a multi-tier system, which is what we have today. That also includes the geographical scope to cover claims that include flights to, from, and within Canada.

Proposed subsection 86.11(4) provides that the rights form part of the carriers' tariff, unless carriers offer more advantageous terms. The spirit of this provision is that the bill of rights would set the minimum standards, and that the carriers may adopt a suite of rights that goes beyond this.

My concern, however, is with the drafting, which leaves a lot of discretion and does not provide information on who will assess—and when, how, and how frequently—whether individual carriers' terms meet the obligations of the bill of rights, exceed them, or are actually below them. The wireless code uses wording that in my view is clearer and more precise and does not leave room for discretion. It is a mandatory code of conduct for providers of certain regulated services.

My view is that this provision ought to be redrafted to ensure that the rights under the bill are always included in the tariff, so as to avoid case-by-case assessment, as well as that consumers cannot waive those rights by contract.

You may have heard or will hear concerns about the form and process by which the bill of rights will come into existence, from a broad list of topics in Bill C-49 to a detailed set of rights. I believe the Canadian Transportation Agency is best placed to lead this. However, it is imperative that the process be open and inclusive and offer an opportunity to all stakeholders, including individual consumers and public interest organizations, to participate in creating the bill of rights. A similar process before the CRTC, the Canadian Radio-television and Telecommunications Commission, has been used for both the wireless code and the TV service code, and it has worked very well.

I also believe that regulations, rather than an act, provide a more appropriate mechanism for the bill of rights. I have, however, some concerns about the timelines and the feasibility of getting a broad list of topics into the actual bill of rights. It is subject to political will, and sometimes priorities shift. There have certainly been instances in which the legislation required a regulation of this type and there have been years if not decades without it. I'm not suggesting a specific timeline, but I invite committee members to consider the impact of any delays.

Lastly, I would like to briefly address consumer redress under the new regime.

A bill of rights and an effective redress mechanism are essential components of a robust consumer protection regime. A set of rights without an effective redress mechanism is ineffective, in the same way that a redress mechanism without a clear set of guiding principles leads to different outcomes and creates different rights.

Under the proposed regime, the CTA retains its role as dispute resolution provider for air passenger claims. It will not be able to do that effectively without a significant change of its processes and staffing. While this is not on the table before you right now, I also invite you to consider whether there are aspects of Bill C-49 that may actually relate to this.

I strongly believe that proposed section 67.3, which provides that only an affected person can file a complaint, is very limiting. There is a significant body of empirical research that it is consumers themselves who pursue claims, mainly because the value of the complaint does not justify the transaction costs. Actually, very commonly the transaction cost is much higher than the value of the complaint itself. However, there is also research in consumer literature that provides that it is important to allow other parties, such as public interest organizations, to have standing to file complaints, perhaps as a mechanism to challenge systemic problems. I strongly believe that proposed section 67.3 should be amended to allow third parties to file claims.

Concerning the collective aspects of consumer claims, there are complaints that will be highly fact-specific to a single consumer but that there are events that will affect a number of consumers, most commonly all of those who were in the affected aircraft. Proposed section 67.4 gives CTA discretion to apply the decision to all of those affected, but it is not clear whether there will be a specific mechanism to trigger it or whether they would do so on their own.

Finally, proposed subsection 86.11(3) provides what is a common provision in other jurisdictions and other dispute resolution schemes, that consumers cannot double dip and obtain compensation for the same events through different compensation schemes.

In its brief, Air Canada proposed that this provision be significantly limited. My strong view is that the provision as it stands is broad enough to allow CTA to craft a rule to avoid this. For example, CCTS, the Canadian communications ombudsman, has a rule along those lines in its procedural code.

I hope that these comments and recommendations will be useful to the committee. I would be pleased to provide to the members a policy brief summarizing my key points and recommendations and any relevant documentation that may help you navigate—no pun intended—these issues and understand them from not only the industry's perspective but from the perspective of consumers who are your constituents.

Thank you for this opportunity. I will be happy to answer any questions.

[Lucie Guillemette, Executive Vice-President and Chief Commercial Officer, Air Canada]

Good evening, Madam Chair.

Good evening, members of the committee.

My name is Lucie Guillemette and I am the executive vice-president and chief commercial officer at Air Canada.

I am joined by my colleagues David Rheault and Fitti Lourenco.

We are here today to speak about the modernization of the Canada Transportation Act, specifically the intent to improve the traveller experience.

Air Canada is Canada's largest airline. In 2016, Air Canada and its regional partners carried close to 45 million passengers, and operated on average 1,580 scheduled flights each day, offering direct service to more than 200 destinations on six continents.

Since 2009, Air Canada has grown by more than 50%, extending the reach of its global network and achieving its ambition to become a global champion.

We employ 30,000 people and 3,000 of our employees were hired in the last three years alone, providing a significant boost to job creation in this country.

Headquartered in Montreal, Air Canada operates four hubs: Pearson airport in Toronto, Vancouver airport, Trudeau airport in Montreal and Calgary airport. We open Canada to the world and provide travellers unparalleled international access.

We've launched new training programs for front-line staff, introduced on-board customer service management programs, improved and clarified our customer service plan, and created new policies for family seating, family check-in at airports, and the carriage of musical instruments. We have also pioneered flight passes and branded fares, offering more choice and flexibility to our customers, who can select the attributes and features that are most meaningful to them.

We recognize that valuable services and features for leisure vacationers vary significantly from those for business passengers, and we aim to meet the needs of all our customer segments, domestically and internationally.

The airline industry is extremely competitive, and we view service as an important differentiator. Financial stability and sustainability has allowed us to invest significantly to improve passengers' experience. For example, we have renewed our fleet and acquired modern aircraft, such as the Boeing 787 and the Bombardier C series. We've reconfigured our cabins, introduced a new premium economy cabin, and improved the inflight entertainment systems. We've invested in a new website and have developed new applications that simplify the passenger experience.

For all our efforts, we are very proud to have been recognized by Skytrax as the best in North America and to be the only international carrier in North America to receive a four-star ranking. I can assure you that we are committed to continuing our efforts to improve the experience of our passengers on the ground, in flight, and post-travel.

In the current regime, carriers have different standards and offer different compensation in a system based on complaints. Having a clear set of standards for all carriers would be appropriate, without, however, imposing an undue financial burden on carriers or limiting their ability to distinguish themselves through the customer service policies they offer.

Although Bill C-49 takes positive steps in laying the groundwork for the regulatory process, we have concerns, and I would like to address a few now.

Number one is simplifying the regime. The proposed regime would be applicable for flights to and from Canada. This creates complexity for carriers and confusion for passengers, since other regimes are applicable in other countries, which could provide for different rules, different exemptions, and different levels of compensation. For example, in a situation of denial of boarding on a flight departing from the United States to Canada, should we apply the Canadian or the U.S. regime? To simplify the regime and make it effective, we suggest that it be limited to flights departing from Canada, as the American regime is limited to flights departing the United States.

We also submit that in the case of code-share flights, the claim shall be made with the operating carrier, as in the European regime. These adjustments would simplify the regime for carriers and passengers, allow for the speedy and timely issuing of compensation, and avoid the risk of double compensation.

Second, on baggage liability, Air Canada agrees with the principle of harmonizing the rules of liability related to baggage. The bill should, however, acknowledge that passengers are already protected by the Montreal Convention, in the case of international travel, which provides clear and consistent rules that are applicable internationally. We therefore submit that the rules provided in the bill should be limited to domestic travel and harmonized with the rules of the Montreal Convention. This would also simplify the rules for carriers and avoid confusion for passengers.

Number three, apply one decision to all passengers on the same flight. In its current form, the bill could also allow for a generalized type of compensation, which would fail to consider the particular circumstances of each passenger. For example, if one passenger submits a claim and is compensated for a delayed flight, the same claimant compensation could potentially be applied to all passengers on that flight. The decision to extend compensation to other passengers should not be arbitrary, but should take into account each passenger's individual circumstance. A connecting passenger who arrives late on the first leg of the trip but catches the next flight is not ultimately delayed.

Number four is on future amendments. Future changes should be transparent and involve all stakeholders, including passengers and carriers. As it stands, Air Canada is concerned that the bill could give the Canadian Transportation Agency powers to create regulations outside of the specific situations provided in the bill. We ask that the committee clarify this language to specify that the regulatory power of the CTA is consistent with the scope of the bill.

Number five is joint ventures and foreign ownership. The amendments to how joint ventures are examined by the government are very positive. In our own experience and from other examples around the world, joint ventures are innovative ways for carriers to expand their networks, add new destinations for passengers, find efficiencies, and offer more pricing options for passengers. Joint ventures allow us to develop the Canadian aviation infrastructure by building international superhighways.

While giving the Minister of Transport the ability to consider joint ventures is excellent, as his department is best-equipped to understand the complexities of our industry, some of the amendments are not in line with best practices around the world. One example is the ability for the minister to review a new joint venture at the two-year mark from approval. The initial period of any joint venture is devoted to better co-operation between partners while the most important changes that pertain to network and fares take more time to implement. We propose that the term for review be lengthened and start from implementation versus approval of the joint venture.

The bill also suggests sanctions that are too punitive, given the commercial nature of JVs. Indeed, the sanction of imprisonment could dissuade a potential partner from even considering the possibility of a joint venture. These issues alone could be a significant barrier to make any use of the benefits of the bill. We ask that the committee consider the suggestions in our submission carefully on this issue.

With respect to foreign ownership, Air Canada is supportive. However, we ask that adjustments be made so that foreign investors cannot negatively influence Canadian carriers or circumvent the spirit of the bill. We also recommend changes that would allow for a ready implementation of the new ownership structure.

Finally, I would like to stress that we operate in a very complex environment. The collaboration and efficiencies of many other stakeholders are instrumental to the overall improvement of the traveller experience. These include airports, CATSA, CBSA, and Nav Canada.

Unfortunately, the airline is too often left to manage all of the negative consequences, but we do it because it is the right thing to do for our customers. While the bill would require carriers to provide the CTA and Transport Canada with data, I would submit that all other agencies and organizations required and involved in the transportation system should be equally accountable for their operations, and submit data in a public and transparent manner.

We also invite the government and the committee members to study the measures that could be implemented, so that all government-controlled agencies contribute to the improvement of the traveller's experience and support the growth of traffic by Canadian carriers. After all, we are powerful economic enablers. If the world indeed needs more Canada, we want to bring it to them.

I thank you for the opportunity to present our views. We look forward to your questions.

[Mike McNaney, Vice-President, Industry, Corporate and Airport Affairs, WestJet Airlines Ltd.]

Thank you Madam Chair and members of the committee for the invitation to speak with you this evening.

My name is Mike McNaney and I am vice-president of Industry, Corporate and Airport Affairs at WestJet. Also with me this evening is my colleague, Lorne Mackenzie, senior manager, Regulatory Affairs.

On behalf of over 12,000 WestJetters, we are pleased to participate in your deliberations with respect to Bill C-49 and the critical role that companies such as WestJet play in connecting the economies and people of Canada to each other and the rest of the world.

Our investments and growth over the last 21-plus years have led to downward pressure on airfares, market stimulation, and incredible job creation in many sectors of the economy, including aerospace, tourism, and regional economic development.

Our success in a very tough, low-margin industry is a testament to our frontline employees who strive every day to provide our guests with quality service.

Our award-winning culture of care and guest service is a source of tremendous pride. It is not just what we do; it is who we are, and it influences our approach and our respect for the obligation we have to ensure our social and economic licence is strong.

In addition to various awards over the years, this year we were very pleased to be recognized by TripAdvisor as the best airline in Canada and a Travellers' Choice Award winner for mid-sized and low-cost airlines in North America. As members know, this award is based on authentic reviews by the travelling public.

Before providing you with an overview of our views on the legislation, I want to provide a broader context of WestJet operations today.

WestJet is in the midst of an extraordinary evolution from the carrier that launched in February 1996 with 200 employees, three aircraft, and five destinations, all in western Canada. In 2016, we carried over 20 million guests. Getting 20 million-plus guests where they need to be, safely and on time, is a logistical and operational challenge. Things will go wrong, and we do our best to get it right when they do.

We operate approximately 700-plus flights a day, carrying approximately 70,000 guests daily, with a WestJet plane departing approximately every two minutes. Our current fleet consists of 161 aircraft, including Bombardier Q400s, as well as narrow body and wide body aircraft from Boeing. This year we begin taking delivery of the newest version of the 737, the 737 MAX, and in 2019 we take delivery of our first 787 Dreamliner. With respect to the Toronto-manufactured Bombardier Q400, next year we will become the third-largest operator in the world of Q400s with the delivery of our 45th Q400 aircraft.

Based on our most recent economic impact study, utilizing our 2016 operating data, our investments and growth strategy in 2016 has supported over 153,000 jobs in Canada, a labour income in excess of $5.3 billion, over $12 billion of GDP expenditure activity, and an aggregate economic impact greater than $17.3 billion. These employment and economic benefits accrue throughout the country.

In terms of communicating with our guests, we are continuously working to find innovative ways to effectively meet their needs. In April 2016, we became the first Canadian carrier to move its social media team to a 24-7 operation, open 365 days a year. We took this step in recognition of the fact that more and more consumers utilize social media to communicate with companies in real time. Our social media response team now sits in our 24-7 operations control centre to respond to guest questions and concerns in the moment. We also still maintain the more traditional communication means of email and phone contact for guests who wish to reach out to us through those means.

The operations control centre, or OCC, is responsible for all facets of our daily operations: flight schedule, crew scheduling, maintenance, responding to weather, operational delays, and guest services. The composition of this team includes experts from all areas of our business. To say this service has been well received would be an understatement. How our guests interact with us on service issues and questions is now 57% through social media, 34% through email, and 9% through telephone.

In the last year, we have also made the following enhancements, in co-operation with the Canadian Transportation Agency. We developed and posted on our website a plain-language, searchable summary of the provisions of our tariffs related to events most likely to be of concern to travellers, such as denied boarding, flight delays, and misplaced baggage. We placed a full page article on our inflight magazine describing our customer service department and how our guests can get information on their rights should something go wrong. We added a link to every electronic itinerary to make our guests aware of their rights and where to go for additional information.

That brings me to the aspects of Bill C-49 dealing with passenger protection. WestJet supports these provisions and the broad framework the bill sets out to create.

I do want to note for the committee that WestJet currently has enforceable penalties for many of the areas in which the legislation calls for enhanced regulation. These include lost or damaged baggage, delays and cancellations, and tarmac delays. Our obligations are outlined in our tariff, which is accessible online and is used by both us and the CTA to resolve complaints.

Bill C-49 will bring uniform standards to all of these issues, and we are supportive of that action.

Within the context of rights and obligations, I would like to encourage the committee to more broadly examine the role of our partners in the travel supply chain. This would include airports, air traffic control, border services, immigration, aviation security, as well as Transport Canada. Our performance is scrutinized by Parliament and the public, and rightly so. However, all these organizations should have the same performance reporting requirements, as well as overall accountability for the services they provide.

You will no doubt have seen media reports over the past several weeks concerning breakdowns of airport baggage systems, understaffing at air traffic control centres, CATSA funding shortfalls, and delays in processing security clearances for aviation employees. How will all these elements of the supply chain, all of which are critical for operations and all of which are completely outside the control of an airline, fit into the new regime established by Bill C-49, as far as accountability is concerned?

Concerning joint ventures, WestJet supports in principle the Government of Canada's approach to airline joint ventures. Airline partnerships are a critical component of our business model. WestJet does not belong to an international alliance. What we do have is 45-plus code-share and interline partners who are all offering greater choice and flexibility for Canadians. These partnerships, coupled with our domestic and international networks, are bringing tourists to all parts of Canada and providing the international connectivity our economy needs.

While we support the JV policy initiative, we have questions that we are discussing with Transport Canada as we seek further clarification on certain points.

With respect to foreign ownership, the foreign ownership provisions outlined in Bill C-49 are ostensibly already in effect, with exemptions granted to two potential ULCCs. Our policy preference with respect to foreign ownership is that any change in the limit should be on a reciprocal basis, particularly with respect to the United States. The government has opted for a unilateral approach, and obviously we respect the government's decision.

Within the context of this unilateral policy change, we believe it is critical to ensure that Canada maintain a strong “control in fact” test. This is a test administered by the Canadian Transportation Agency to ensure that new carriers are controlled and run by Canadians. We believe that Canadian carriers should make their network decisions in Canada for the benefit of Canadian communities, the travelling public, and workers.

I would also like to remind members that we have recently announced the creation of our own ULCC. This was done without foreign investment or any proposed policy change. The objective is straightforward: to provide Canadians with more choice for their travel dollar. We are engaged with both the CTA and Transport Canada on the necessary regulatory approvals to commence service in mid-2018.

With respect to the CATSA provisions that will allow small airports to purchase CATSA services and large airports to top up services, we consider these measures to be stopgaps.

Delays caused by factors such as passenger screening are becoming more and more frequent in our operation. It is a disturbing trend. From a policy perspective we have been frustrated for several years by the government's unwillingness to fully allocate funds collected from the ATSC and tie these funds directly to screening services, the services our guests are paying for when they pay the air transport security charge.

The provisions in Bill C-49 are a stopgap measure that will allow the industry to spend more money to provide services that we believe the ATSC should be covering. We have recommended comprehensive reforms to the funding model and governance of CATSA. We urge this committee to recommend that all money collected from the ATSC be allocated to screening services at Canada's airports.

Before concluding, I want to briefly comment on another aspect of commercial aviation that is certainly of interest to consumers and Parliament. You may have seen the news from StatsCan last month that base air fares in Canada, domestic and international, were on average down 5.4% in 2016 as compared with 2015.

At WestJet, our average fare in 2016 was $162, down $13 from 2015. Our average fare in the first six months of this year was $158, a further drop from the first six months of last year. To provide perspective on these numbers, our average profit per guest in the first six months of this year was $8.34. I provide these figures to give context when discussions turn to the concept of financial penalties.

In conclusion, WestJet recognizes that Bill C-49 has the potential to benefit the aviation industry and Canadian consumers. We look forward to participating in upcoming sessions with the committee in order to improve the overall travel experience for Canadians.

[The Chair, Liberal, Judy Sgro]

I'll call back to order the meeting on our study of Bill C-49. We welcome representatives from Air Canada and WestJet Airlines, as well as an assistant professor from the University of Ottawa.

Mr. McNaney, would you like to start off?

[James Given]

It's still a cabotage run, and under the definitions of cabotage that are there, that's cabotage. That's considered cabotage, because you're moving something between two Canadian ports.

This has to be perfectly clear. That shipowner still has the ability to move that. All he has to do is apply for a waiver, which he'll get if no Canadian shipowner wants to move that particular container.

If you look at all of these years where it's been done by rail and truck, why all of a sudden is it open? Under CETA, it was open for certain reasons, and I believed the reasons that I was told. There were compromises made. It was a negotiation. That's what was done. However, to open it more, to liberalize it more under Bill C-49, is opening the gate to any flag, to any rogue owner, and anything that they want to do.

Concessions were made in a trade negotiation. We all understand that. Concessions are made every day. How they got to that concession...like I said, it was explained to me and I accepted it. Now it's a conscious choice of whether we open it up to more cabotage. We're not in a negotiation with anyone but ourselves right now on what we're going to do with cabotage.

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

In the circumstances of this bill, C-49, what we're talking about moving is empty, not loaded, containers. If I—

[Martin Fournier]

Yes, most empty containers are moved by train, not by ship. The problem with Bill C-49 is that it is widening the crack that was opened with the economic agreement with Europe. Even before that agreement, we had discussions and we were asked what we thought about the possibility of allowing empty containers to be shipped on foreign vessels. We said no to that. It was all forgotten, then the question came up again with CETA. Then there was the agreement on shipping empty containers, on bulk shipping, on loaded containers between Montreal and Halifax, and on dredging. Now there is talk about the shipping of empty containers being open to everyone. In some ports, questions have been asked about the fact that it is just between Montreal and Halifax and why it is not possible for other ports, like Quebec City and Sept-Îles. In addition, other countries are asking why shipping empty containers would not be open to them as well, now that it is open to the Europeans.

As you can see, the crack is being opened, one change at a time. That's exactly what is happening. That is what we were afraid of at the outset when the issue of transporting empty containers was raised for the first time.

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

Earlier today we heard that most empty shipping containers are moved from port to port by train or truck and not by sea. Would you confirm that? If this is the case, how does Bill C-49 impact Canadian seafarers' jobs?

[Martin Fournier]

There was no consultation on Bill C-49.

As we mentioned, there were consultations about the economic agreement with Europe from the time when it was signed. Before it was signed, there was no national consultation with industry. We know that international companies were consulted, but not the industry in Canada. So we can say that there was not really any consultation in that respect.

Once the agreement was signed, a working group met for almost two years. Almost everyone involved took part. Certain things that we asked for on a number of occasions appeared in Bill C-30. However, the main request was to establish this single body, and that was completely forgotten.

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

Bill C-49.

[James Given]

Are you talking about CETA or Bill C-49?

[James Given]

I am going to try to give you an answer without giving you an answer.

I've had many meetings. Everyone of course knows my concerns when it comes to cabotage, and Bill C-30, and CETA, and Bill C-49, and China and whoever the hell else we have on the list, but when it comes to consultation, this is part of the consultation process.

[James Given]

We've proven that they don't follow the same regulations when they're in Canada. There are two issues at play. The ship gets a coasting trade waiver. That covers the ship. The crew then apply for work visas through the temporary foreign worker program.

There are two separate issues. When we look at Bill C-30, as with Bill C-49, nothing is changing when it comes to the provisions under the immigration act for that crew. The problem is that the crew members are never told what their wages are supposed to be. They're never told what their rights are when they're working in Canada, because under the TFW program, for all intents and purposes, they're Canadians. They're never told any of this, and they're paid their regular wage, which is $2.50 or $1.90. They're paid that until someone catches them. Also, there's no enforcement. No enforcement officer goes down unless they get a call. If you're a foreign crew member and you don't know that, or you're too afraid to call because of repercussions, you're not going to make that call.

We've had some very good discussions with the ESDC over the last little while where we're going to change some of that process. However, ESDC was also very clear with us that it doesn't chase a shipping company around the world to try to collect our tax, because they should be paying taxes while they're in Canada. The taxation issue on a foreign ship is a big one, along with crew costs.

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

Thank you, Madam Chair.

My thanks to each one of you for being here.

I confess that I do not have a lot of questions on the basic content of your testimony, because I share your position. However, I do have some questions on the industry, so that I can understand it better.

I would like to explore the issue of the Canada Infrastructure Bank that Mr. Badawey was talking about. It seems to be well-received, since it is seen as a source of funding. However, the information we have at the moment indicates that port projects to be funded by the Canada Infrastructure Bank would be for $100 million and more.

In the port in the city I represent, Trois-Rivières, projects of $100 million and more are very rare. Perhaps the port of Vancouver has some that go over $100 million, but the Canada Infrastructure Bank is of no use with projects with a budget lower than that.

Is this not another case of what looked great the night before does not look at all good in the morning, as seems to be the case with Bill C-49? Or do you have projects that are worth that much?