Finance Committee on May 26th, 2020

[Stuart Kendrick]

Yes. Any time you pay more dollars for fuel and tax, absolutely, that hurts, and there's the effect of customers who have the ability to have cars as well.

[The Chair, Liberal, Wayne Easter]

We'll have to end that round there, Todd.

We'll go to Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Mr. Chair.

I'm going to start questions with Ms. Paleczny. If there's time remaining, I'll go to Mr. D'Angelo.

Ms. Paleczny, Kelly, thank you very much for taking the time to be here today. I know it's a very busy time back in London, but I have to tell you that your insight here is particularly helpful for the committee to understand not just London's position but the position of mid-sized cities at this time. Transit is important not just for large communities like Toronto, Vancouver and Montreal, but also for London and other medium-sized communities.

I know there are a number of challenges facing the LTC right now, but what would you say is the biggest challenge? How much, exactly, are you asking for in terms of assistance? If I could make it more specific, how much would you need to deal with that challenge?

[Kelly Paleczny]

I'll start with the last question first.

Up until the end of June, we're projecting a $7.2-million shortfall. That's a combination of $9.4 million in lost revenue and $2.2 million in savings associated with personnel, given that we're providing less service, and savings in fuel, given that the price of fuel is lower than we budgeted. There are new costs associated with bus cleaning, PPE and those types of things. The net is $7.2 million that we're looking at to the end of June.

We haven't really projected anything further, but essentially, that will continue to extrapolate throughout the year as we continue with this status quo.

I—

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very—

[Kelly Paleczny]

Go ahead.

[Peter Fragiskatos, Liberal, London North Centre, ON]

No, no, go ahead. You were about to say something else.

[Kelly Paleczny]

No, I just forgot what the first part of your question was.

[Peter Fragiskatos, Liberal, London North Centre, ON]

No, that's fine. It was a two-parter. The first part was the biggest challenge.

I know you're facing a number of challenges, but what is really at the top of the list when it comes to concerns right now at the LTC?

[Kelly Paleczny]

I would say continuing to provide a service that we know is vital to our community and doing so in a manner that is safe for our operators and our riders. We're struggling with that. We know that the demand out there right now is close to exceeding our ability to respond to it. We would like to put more service out, but obviously that's a struggle when we're looking at the shortfalls we're dealing with.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Okay. Thank you.

You mentioned in your presentation, Kelly, the range of Londoners, the range of citizens who use our transit system. You talked about patients on their way to hospital. You talked about workers. You talked about students and shoppers. The list is very, very long.

I wonder if you could zero in on the types of commuters who are in a vulnerable position and who rely on transit as their only means of transportation. I'm thinking about seniors. I'm thinking about individuals who are physically disabled. Do you have any numbers on those on hand, by chance? Even more to the point, how critical is the transit system for folks in that position?

[Kelly Paleczny]

I can't say I have exact numbers. I can tell you that our specialized service continues to do approximately 200 trips a day. A large portion of those would be transporting people to and from dialysis treatments or other medical appointments for obviously critical, life-saving treatments. Seniors, obviously, continue to rely on our service, but what we've heard over this period is that there are a number of front-line workers as well.

Every time we've even hinted at a service reduction or a service change of any sort, my phone immediately begins ringing from the coordinators of the local hospital, saying, “Are my employees still going to be able to get to and from work on transit? Is there anything you can do to work with us?” Certainly we've done what we can. We've modified some timings on routes to make sure that staff who are ending a shift time at 11:00 are able to catch that last bus and things like that.

We've also continued to provide weekday-level service out to our industrial areas. We know there are a number of employees who work in those areas who rely on transit every day.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

You mentioned that you're actively involved at the provincial level with OPTA and with CUTA. Could you speak from the perspective of medium-sized communities? Are you hearing the same sorts of challenges across the country when it comes to the problems faced by transit systems right now?

I will assume that the answer is yes, but perhaps you could add some details. I think it's really important to hear the perspective of medium-sized communities like those.

[Kelly Paleczny]

Absolutely. They have the same or similar issues, depending on the community and the various demographics within the community. There are very similar issues facing all of the transit systems. In terms of the province, and then obviously the country as well, transit systems have been meeting regularly, sharing best practices and looking for ways to navigate our way out of this.

Through talking with colleagues, I know that virtually every system in the country is looking for a way to get back to front-door boarding and to begin collecting fares again. We realize that the mode we're operating in right now is not sustainable, but we have to find a way that's safe for our operators and our passengers.

[The Chair, Liberal, Wayne Easter]

This is your last question, Peter.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Thank you very much, Ms. Paleczny. There are many reasons that the LTC has done so well in recent years, but your leadership has been absolutely critical.

Mr. D'Angelo, you said you're looking for a federal response here. I do agree that the federal government ought to be involved in offering a response to help transit systems, but are you engaging the provincial governments? I hope you are.

[Marco D'Angelo]

Yes, we are engaging provincial governments. We also recognize that transit systems in other countries, such as Britain and the U.S., have received national government support. The U.S. delivered a package for transit during the first week of the shutdown. Congress is debating a second package. Britain rescued London's underground system two weeks ago. Brazil and Hong Kong have also indicated that transit is part of their pandemic relief package, so yes, we are calling on—

[Peter Fragiskatos, Liberal, London North Centre, ON]

With respect, Mr. D'Angelo, Britain is a unitary state, as you know. The central government always plays the lead role there. In the United States, the states are helping as well. It's not just Washington.

I appreciate the work of CUTA on this. Please continue to advocate. Transit is a fundamental service, as we have heard.

Thank you.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there.

We'll go to Mr. Ste-Marie, followed by Mr. Julian.

Go ahead, Gabriel.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I would like to acknowledge all the witnesses and thank them for their presentations.

My first questions are for Mr. Lefebvre, president of Groupe Autocar Jeannois and president of the Fédération des transporteurs par autobus.

Mr. Lefebvre, the picture you painted of your industry is truly alarming and worrisome. In your opinion, how can we remedy the significant lack of cash flow and considerable loss of revenue for carriers providing charter and tourist transportation services?

[Stéphane Lefebvre]

Thank you for the question, Mr. Ste-Marie.

Currently, not many programs help our industry. Provincially, there are loan programs and training assistance programs but no direct support for our industry. We are not covered by any existing Quebec program, from the ministry of tourism, the ministry of transportation or the ministry of the economy and innovation.

Of course, our industry is very much tied to the tourism industry. Group travel contributes to Quebec's economy and the country's economy, and it allows foreigners to invest in our region.

We are looking at possible support measures. Financial assistance will be required for the recovery. We do not yet have any information that will apply to the buses, but there will be a limited capacity in terms of passenger numbers and measures to be observed. A bus that is not filled to its maximum capacity incurs costs, which we cannot pass on to our customers. We must remain competitive. We compete with many organizations around the world that provide the same services we do. We will certainly need help to overcome this challenge.

In addition, we have incurred losses and we are making zero income. If the crisis persists beyond 2020, and even into 2021, many businesses will find it difficult to meet all their financial commitments. Fixed costs also continue to add up.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

You say that few, if any, of the federal government measures and programs currently in place apply to your industry. Is that correct?

[Stéphane Lefebvre]

The federal measures, including the wage subsidy, have allowed us to maintain the basic structure of our organizations. I am talking about the companies that are eligible.

It has not permitted us to retain our drivers, as the current period has just been extended. We did not have that information in the beginning.

We had a huge cash shortfall and no cash inflow, so we were unable to sustain salaries for all employees in our businesses. As a result, this measure did not help us retain our workforce.

Another measure has been put in place in the form of a loan. We already have financing structures in place, as I mentioned at the outset. Some eligible companies have been able to receive $40,000.

This amount is clearly not sufficient to make up for the lack of cash flow, which is significant for each vehicle. Offering only a return of capital on vehicles worth between $600,000 and $700,000 each is definitely not enough.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

If I understand you correctly, it is going to take more targeted measures.

I was struck by what you just said, that is, if the wage subsidy program had been announced for a longer period of time from the outset, you would have been able to keep your drivers. Maybe that is a message to send to the government; if they are already planning to extend the program, they should announce it right away, because it has a real impact on business.

As your company has very high fixed costs, it needs support as well. However, the support should not be just the equivalent of loans at market interest rates.

Did I understand you correctly?

[Stéphane Lefebvre]

Indeed you did.

Our financial structure is already fully loaded. Adding loans just to meet immediate cash flow needs therefore makes the structure more cumbersome. There is really a way to support what has been lost, and it would also help us keep our infrastructure in place. However, for the recovery, it will be important to see what can be done to allow travellers to continue to travel across the country and to develop mass tourism, which is economically essential for Canada and Quebec.