Industry Committee on March 11th, 2021

[The Chair, Liberal, Sherry Romanado]

Good morning everyone.

I now call this meeting to order.

Welcome to meeting 22 of the House of Commons Standing Committee on Industry, Science and Technology.

Today's meeting is taking place in hybrid format pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website.

Please be aware that the webcast will only show the person speaking rather than the entirety of the committee. To ensure an orderly meeting, I'd like to outline a few rules to follow.

Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. At the bottom of your screen, please select “floor”, “English” or “French”. Also, please speak very slowly and do not speak over each other; otherwise, the interpreters cannot do their important work. Before speaking, please wait until I recognize you by name. All comments by members and witnesses should be addressed through the chair. When you are not speaking, your microphone should be on mute.

As is my normal practice, I will hold up a yellow card when you have 30 seconds remaining in your intervention, and a red card when your time for speaking has expired. We have a lot of witnesses today. Please respect the time so that I don't have to cut you off.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on November 5, 2020, the committee is meeting today to continue its study on the development and support of the aerospace industry.

I'd like to welcome our witnesses.

From Airbus Canada, we have Philippe Balducchi, chief executive officer, as well as Pierre Cardin, senior vice-president, head of public affairs.

From Airbus Helicopters Canada, we have Mr. Dwayne Charette, president and chief operating officer.

From STELIA Aerospace St-Laurent, we have Hugo Brouillard, chief of operations and operations officer.

From Telesat, we have Daniel Goldberg, president and CEO; and Stephen Hampton, manager, government affairs and public policy.

From Unifor, we have Mr. Jerry Dias, national president; Mr. Renaud Gagné, director, Unifor Quebec; and Kaylie Tiessen, national representative, research department.

From WestJet Airlines, we have Mr. Andy Gibbons, director, government relations and regulatory affairs.

Each witness will present for five minutes, followed by a round of questions.

We will start with Airbus Canada.

Mr. Balducchi, you have the floor for five minutes.

[Philippe Balducchi, Chief Executive Officer, Airbus Canada]

Madam Chair and members of the committee, good morning.

I am very pleased to be here today, on behalf of Airbus Canada. You'll be hearing from colleagues of mine later.

My remarks will focus on the A220 program and related operations.

I'm going to start with a bit of background on Airbus.

Airbus has a 35-year-plus history in Canada in helicopter manufacturing. Today, we are the fourth-largest employer in Canada's aerospace sector, with some 4,000 employees. Our operations cover the A220 program, STELIA Aerospace's aerostructure activities and the work of Airbus Helicopters, in Fort Erie.

Airbus's presence has grown significantly since we launched the A220 program, the former C Series. Today, we own 75% of the program, which is based in Mirabel and employs some 2,500 people at two assembly sites—one in Mirabel and one in Mobile, Alabama, to serve the American market after the U.S. imposed tariffs.

The A220 program has received approximately 630 orders to date, 300 since July 2018, when Airbus launched the program, and over 140 aircraft have been delivered on four continents.

Even though the in-service fleet has performed remarkably well since the pandemic began, attesting to the high quality of the aircraft, the A220 program has been severely affected by the COVID-19 pandemic.

If you look at the employment, you see that when you go back to July 2018 there were about 2,000 employees in Mirabel on the program. We were, pre-COVID, about 2,800 employees and ramping up to get to 3,000 people. We had to run that down, actually, and now, today, we have 2,500 people.

We were producing four aircraft per month before COVID hit us and were preparing to ramp up to five aircraft per month at Mirabel. We are now producing three aircraft per month at Mirabel, and we expect to slowly ramp back up in 2021.

We delivered 48 aircraft in 2019, all from Mirabel. In 2020, 32 aircraft were delivered from Mirabel and six from Mobile, Alabama. This means that basically we can say that for the A220 program, the crisis has put us back roughly two years, with a significant impact as well on the commercial momentum.

How can Canada help the industry beyond just Airbus Canada? The first thing is that Canada needs to support the airlines. The airlines are the pillar of the industry. It all starts with the airlines, and for one year they have been at the forefront of the crisis. With the border restrictions preventing all international traffic from coming back up, today they are at about 20% of the 2019 levels on international travel. Airlines are suffering tremendously in terms of cash, operations, head counts and massive layoffs.

Other countries are supporting their airlines, and Canadian airlines are at risk of being disadvantaged compared to international airlines trying to fly back to Canada, which would have benefited from government aid.

The second thing is to support, obviously, the overall aerospace industry. It is important to understand that aerospace is a global industry that competes and partners across the world. It goes from a few large OEMs to some very large tier one suppliers, and then down to a myriad of tier two, tier three and tier four suppliers which can be small and fragile. The investments are very heavy and the lead times are very long.

If you look specifically at Canada, you see the aerospace sector is the third exporting sector in Canada. About 70% to 80% of the aerospace production in Canada is exported. As for the countries to which aerospace is exported by Canada, the U.S.A. is number one, and Germany and France are numbers two and three. You then find, for instance, Latvia as the fourth and Egypt as the sixth. Basically it's companies to which the A220 is delivered.

What you need to do to help is to ensure, first, that exportation remains available through EDC, and that EDC remains active in supporting the aerospace sector. The next is to provide urgent and short-term relief to our industry. Postpone some of the reimbursement of repayable loans granted to industry across various federal programs. Implement government guarantees to give oxygen to the more fragile companies. Set up development and consolidation funds.

We also need to have a more comprehensive strategy that is looking beyond the very short-term and urgent support to longer-term issues to support the R and D, to support the projects that are already ongoing to help enhance the competitiveness of the product—

[The Chair, Liberal, Sherry Romanado]

Mr. Balducchi, if you would please conclude, as you're over your time.

[Philippe Balducchi]

Already? I will conclude.

[The Chair, Liberal, Sherry Romanado]

Yes, unfortunately. Thank you.

[Philippe Balducchi]

It goes fast.

In conclusion, aerospace is one of the sectors impacted most by the crisis. Everywhere in the world there are specific measures that are complementing general measures in order to support this strategic industry. It's a global, high-technology industry and the lack of specific support to Canadian aerospace today is very visible, very surprising, and is sending a signal. I'm not sure what signal was intended to be sent to the rest of the industry overall.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Next we will go to Airbus Helicopters.

Mr. Charette, you have the floor for five minutes.

[Dwayne Charette, President and Chief Operating Officer, Airbus Helicopters Canada]

Thank you, Madam Chair, for the opportunity to be here today to discuss the development and support of the aerospace sector.

Airbus Helicopters has been a proud member of Canada's aerospace sector since 1984. Today, Airbus is a leading supplier of helicopters in Canada, supporting a fleet of more than 760 helicopters flown by 220 operators throughout Canada.

Our headquarters and main manufacturing facility is in Fort Erie, Ontario. We also have an eastern sales office located in Montreal and a western Canada sales support office in British Columbia, with a 24-7 customer support network and a team of technical representatives supporting our customers throughout the country.

As my colleague Philippe mentioned, Airbus Helicopters Canada is part of Airbus's robust industrial footprint in Canada, which covers commercial aircraft, defence and space, as well as other Airbus companies, such as NavBlue and Stelia, which you'll be hearing from during this meeting.

Airbus Helicopters is the world's number one helicopter manufacturer. It's a global leader in providing the most efficient civil and military helicopter solutions to our customers who serve, protect, save lives and safely carry passengers in highly demanding environments.

Safety really is at the core of all Airbus activities and everything we do, from design, engineering and production to maintenance, training and our partnerships.

Airbus Helicopters' activities in Canada are focused in five primary areas: aircraft sales and delivery, composite manufacturing, repair and overhaul, supplemental-type certificates and option development. I'd like to take an opportunity to highlight two of these areas.

Our Fort Erie facility is a centre of excellence for engineering and composite manufacturing. We are a sole-source supplier of eight different platform types flying globally. Airbus Helicopters Canada produces composite components for a variety of our leading models internationally, sold in more than 100 markets. It's fair to say that if you've seen an Airbus helicopter flying anywhere in the world, it will have parts that were manufactured in Canada at our Fort Erie facility.

We also have a repair and overhaul department, which is a centre of excellence for single engine dynamic components. This department provides overhaul and repair services to Airbus helicopter operators worldwide for the light single engine product range. Today more than 50% of our workforce in Fort Erie is working on products that we export.

As an essential business in the Niagara region, our doors have remained open throughout COVID to support our customers' life-saving missions, as well as the global supply chain for Airbus.

I have only five minutes, so I'm going to jump through this before I get the card.

Notable para-public organizations that fly Airbus helicopters include the Nova Scotia Department of Natural Resources, Ontario Ministry of Natural Resources and Forestry, and STARS air ambulance, which provides air ambulance services in Alberta, Saskatchewan and Manitoba. Also, seven of eight police forces that operate airborne law enforcement units in Canada fly Airbus helicopters. They include the Royal Canadian Mounted Police, Ontario Provincial Police and Calgary Police Service, just to name a few. On the commercial side, we have a number of key operators that fly in western and eastern Canada, as well here in Niagara, in our backyard.

Helicopter operators in Canada have been deeply affected by the double whammy of the COVID-19 pandemic and the severe slowdown in the resources sector. In 2020, many of our operators experienced the worst year in their history. A number have already gone bankrupt or pulled out of the sector entirely. Therefore, as this committee considers means of supporting the aerospace sector through the recovery and beyond, I would encourage you to think broadly and remember that the aerospace sector includes helicopters.

When it comes to government procurement, it is critical that those serving in uniform are equipped with the best tools and technologies available to perform their essential life-saving missions protecting Canadians. We fully support strategies aimed at leveraging defence procurement to produce economic benefits for Canada, which is precisely what the industrial and technological benefits policy value proposition—

[The Chair, Liberal, Sherry Romanado]

Mr. Charette, you keep cutting out. I'm going to pause the clock for one moment.

[Dwayne Charette]

—is designed to do.

Accelerating fleet renewal programs [Technical difficulty—Editor] in the medium term. However, with two helicopter OEMs in Canada, it's important to ensure that tenders remain a competitive process where the winners are chosen based on the merits of their offerings and not due to political interference.

Fair and open competition drives innovation and investment, and I can tell you that nothing undermines the desire of large multinationals to invest in a country more than when competitions for government procurement are seen to be unfair, biased or designed to favour one company over another.

As I mentioned previously, 50% of our workforce is focused on producing products—

[The Chair, Liberal, Sherry Romanado]

Mr. Charette, my apologies; I hate to cut you off. Could you wrap up, please?

[Dwayne Charette]

Absolutely.

Finally, my colleague mentioned that we are investing heavily in R and D to put aerospace towards cleaner, more sustainable flight. Canada has a real opportunity to partner with us on innovative projects that will reduce the environmental impact of both rotary-wing and fixed-wing air travel. We strongly encourage Canada to capitalize on that opportunity and to become a leader in that space.

Thank you very much for the opportunity to address the committee.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Charette.

We will now go to Stelia Aerospace.

Mr. Brouillard, you may go ahead. You have five minutes.

[Hugo Brouillard, Chief of Operations and Operations Officer, STELIA Aerospace St-Laurent]

Madam Chair, members of the committee and colleagues, good morning.

I am very glad to appear before you today representing Stelia Aerospace Canada. Thank you for inviting me and for taking an interest in Canada's aerospace industry, especially during these uncertain times, which will no doubt accelerate changes already under way around the world.

I'd like to start with an overview of Stelia Aerospace's organizational structure. We are a wholly owned subsidiary of the Airbus group. We supply metallic and composite aerostructures, as well as aircraft seating for pilots, and first class and business class passengers. We have the capacity to design, test, qualify, manufacture, equip and deliver completed aircraft sections and seat solutions directly in the last-stage assembly lines of our clients.

We employ some 7,000 people across 14 sites around the world, including nine manufacturing subsidiaries. Three of those nine subsidiaries employ a thousand people in Canada: first, Stelia North America, specializing in composite structures, employs 460 people in Lunenburg, Nova Scotia, and Blainville, Quebec; second, Stelia Aerospace Canada, specializing in aerostructure assembly, employs 180 people in Mirabel; and third, Stelia Aerospace St-Laurent, newly established in February 2020 and specializing in the assembly of A220 cockpits and rear fuselage sections, employs 360 people. We are transitioning to a new plant being built in Mirabel and slated for launch at the beginning of the third quarter of 2021.

Employees performing these direct jobs in Canada earn an average of $70,000 yearly. In addition, we contribute to more than 150 indirect jobs at our Canadian suppliers.

Owing to the global COVID-19 pandemic, our clients had no other choice but to postpone their orders after their clients—airlines and business jet clients— cancelled and delayed deliveries.

Our order volume and five-year forecasts have dropped drastically, more than 30% to date. Order cancellations and postponed deliveries have forced us to adapt very quickly, given that we had already invested in building a plant and acquiring cutting-edge technology to the tune of $61 million over three years. We are now in survival mode.

There is no doubt that had we had a clearer read on events, we would have done things completely differently.

The vast majority of revenues generated by Canada's aerospace industry flow from the demand for new aircraft from airlines and business jet clients. Orders are then placed with aircraft manufacturers, who, in turn, are our clients.

For that reason, we hope to count on three pillars of immediate support for the recovery. The first is strong demand for the construction of new-generation aircraft, along with direct and immediate assistance for buyers—in other words, airlines—and contract givers—aircraft manufacturers and original equipment manufacturers. This would ensure the short- and medium-term benefits were felt across the industry. This is a global strategy, one Canada should take part in to keep its own aerospace industry. The second pillar is direct support for financial obligations that we had previously incurred, that is, significant investments that were made before our revenues dropped by more than 30%. The third and final pillar is programming support to help us face the growing competition from emerging countries that boast low labour costs and low tax rates, as well as industrialized countries that invest heavily in concrete projects offering tax breaks.

Canada has long had a strong aerospace hub, bolstered by its aircraft, engine and simulator manufacturers, and in turn, their networks of local suppliers.

Given that the marketplace is more competitive than ever, I want to end by sharing some personal experience.

I was fortunate enough to have the opportunity to set up and run a number of aerostructure plants in emerging markets. These good-quality jobs are highly prized by countries such as Mexico, Tunisia, Turkey, the Kingdom of Morocco and several Asian nations, all of which invest heavily in growing their aerospace sectors. China decided to take it a step further and develop its own market of original equipment manufacturers.

Stelia chose Canada, first, because of its proximity to the client and, second, because of its aerospace expertise. Those conditions now exist in the countries I just mentioned, countries that are investing heavily in the aerospace sector and enhancing their own capacity.

We are at a turning point. It will be hard to make up the lost ground, but all is not lost. The government needs to create the conditions to protect what we have, while making our marketplace more attractive, competitive and productive.

Madam Chair, members of the committee, thank you for your consideration and your time.

[The Chair, Liberal, Sherry Romanado]

Thank you, Mr. Brouillard.

That was exactly five minutes.

Our next presentation is by Telesat.

You have the floor for five minutes.

[Daniel Goldberg, President and Chief Executive Officer, Telesat]

Thank you, Madam Chair, and thank you for the invitation to participate today.

Telesat is one of the world’s largest and most innovative satellite operators, operating for over 50 years from our headquarters here in Ottawa. As a proud Canadian company, we play a central role in Canada’s connectivity infrastructure.

This hearing comes at a critical time for the aerospace sector, including the commercial space industry. Like many sectors around the world, ours is facing significant disruption and change. While the COVID-19 pandemic has hurt our business, the larger disruption we’re facing stems from changes in technology and the hyper competitive global market that we compete in.

Telesat identified these changes early and we're used to competing. As a result, we began innovating and investing heavily to reorient the company to become a world leader in delivering broadband Internet connectivity, demand for which is exploding globally.

In this regard, last month we officially unveiled the most ambitious and innovative project in our long history: an investment of six and a half billion dollars in a state-of-the-art low-earth orbit, or LEO, satellite constellation known as Telesat Lightspeed.

Lightspeed will deliver significant economic and social benefits to Canada, including supporting fast, affordable, reliable and secure broadband connectivity and 5G services throughout the entire country, the criticality of which the pandemic has strongly underscored. Lightspeed also delivers huge capital investment and high-quality, high-paid jobs in the Canadian aerospace sector, which comes at a time when investment and preserving and creating jobs have never been more important.

Three weeks ago, we announced with Premier Legault a $1.6-billion investment by Telesat into the Quebec aerospace ecosystem, creating over 600 new high-skilled, high-paying jobs across the province while maintaining another 650 jobs at MDA’s Montreal facility. As part of this investment, a significant percentage of the Lightspeed constellation will be manufactured in Quebec. We're also establishing extensive technical operations in the province.

Lightspeed is the largest space program ever conceived in Canada. It’s exactly what Canada and the Canadian aerospace sector need. The new space economy is one of the fastest-growing industries in the world, with the global space industry estimated to nearly triple to over a trillion dollars U.S. a year over the next two decades. Next generation satellite connectivity, like Lightspeed, is responsible for the majority of this growth.

We’re not the only ones who see this massive opportunity. Telesat competes in one of the most competitive and dynamic industries in the world. Our competitors are among some of the largest, most innovative companies on the planet, and they’re working hand in glove with their governments in this fast-growing, highly strategic market. These governments—the U.S., the EU, China, Russia and India—recognize the significant benefits of the new space economy, from job creation to intellectual property creation, and are investing billions of dollars each year to help their domestic companies compete. The Government of Quebec also recognizes the strong growth potential in space, and we’re pleased that they’re investing $400 million in our Lightspeed constellation and supporting other space initiatives with roots in the province as well.

I’m pleased also with the endorsement we’ve received from the federal government, particularly our partnership to use Lightspeed to help bridge the digital divide in Canada, but I’d be remiss if I didn’t raise again with this committee the importance of something that we discussed when I appeared before you last November to discuss rural broadband connectivity, namely, the pending proceeding at ISED to repurpose for 5G use certain spectrum that Telesat presently uses across Canada to provide a whole range of vital services.

As we discussed when I spoke with you last November, the U.S. Federal Communications Commission paid our much larger competitors approximately $16 billion to clear this same spectrum in the United States for 5G—spectrum they just auctioned to AT&T and others in the highest-grossing spectrum auction in history. Our competitors are using these funds to invest against us.

We made a proposal to ISED to clear this same spectrum and reinvest all the proceeds into our Lightspeed constellation and to safely transition all those important existing services.

Listen. We're in a very competitive environment. We're innovating. We're investing. If we're successful, we are going to be the largest satellite operator in the world, and we're just looking for the government to make the right decisions.

Thank you, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next presentation is by Unifor.

I invite Mr. Dias to take the floor for five minutes.

[Jerry Dias, National President, Unifor]

Thank you for the invitation to provide input into this important study on development and support for Canada's aerospace industry.

With me today is Renaud Gagné, Unifor Quebec director.

As you are well aware, the aerospace industry is incredibly important to the economic success of our country. There is no question that the aerospace industry is in trouble. Unifor has consistently monitored the state of the aerospace industry in Canada throughout the pandemic. In general, the industry fared better than others in the early stages of the pandemic; however, it has become obvious that the worst is yet to come.

When the pandemic began, approximately 40% of our members in the aerospace sector were laid off due to emergency orders and the desire to keep workers and the public safe. Many of our members went back to work, but 8% of those layoffs were not rescinded. Since our last calculations, even more layoffs have been announced. All of the layoff announcements are devastating.

One that stands out for me is the announcement that De Havilland Aircraft will stop producing the iconic Dash 8 aircraft at the Downsview, Ontario, plant, a move that affects nearly 700 of our members. I'm on a leave of absence from that plant. I am a De Havilland Aircraft employee. I'm clock number 28091, just for the record.

The current build schedule shows end of production in May of this year. Prior to the pandemic, De Havilland's order book was healthy, and research and development were in full swing. Around the world, thousands of aircraft were grounded, and the order book at the company quite literally emptied. Regional routes are predicted to be the first to recover. This is the Dash 8's market. We know demand will return, and we need to make sure production capacity will be there when it does.

To mitigate layoffs, our members at Boeing are utilizing the EI work-sharing program right now. This is a great short-term and medium-term solution, but they need to know that commercial aerospace work is coming back. Bombardier recently announced layoffs as well—a hundred at the facilities in Toronto and 700 in Quebec.

Renaud will go into further details about the situation in Quebec, but I wanted to drive home the point about layoffs here. Pratt & Whitney has laid off hundreds of workers. The list goes on and on.

The aerospace industry is a leading technology creator and invests extensively in research and development. That investment bleeds into other industries and sustains an entire ecosystem of good jobs and economic growth across the country. Letting the aerospace industry wither is simply not an option because of the risk that would pose to the future economic stability and growth we need.

Canada must continue to foster and develop a strong aerospace industry that will make our country a global leader in advanced manufacturing. To do this, we will need to keep our highly trained aerospace workers connected to their jobs, even while on layoff, by enhancing and extending the Canadian emergency wage subsidy.

We need an industry-focused support package, with access to liquidity for critical aerospace companies, to navigate through the pandemic.

We need governments that buy Canadian and promote Canadian-made aerospace products in both the local and export markets.

We need the federal government to create a multi-stakeholder aerospace industry council, to develop a comprehensive industrial strategy that ensures good, stable and well-paid employment opportunities, a strong and resilient domestic supply chain, thriving commercial and defence sectors and multi-stakeholder engagement.

Thank you for your time and attention. I will now pass things over to my colleague, Renaud Gagné, to provide you with further details on Quebec.

[Renaud Gagné, Director, Unifor Québec, Unifor]

Thank you, Mr. Dias.

Good morning.

I would like to begin by applauding the Bloc Québécois for proposing this study and the committee members for turning their attention to such an important issue.

I know this has been said by several witnesses, but it bears repeating: the government should spare no effort to ensure the aerospace sector in Quebec and Canada survives and thrives. Looking beyond the crisis, the government must foster an environment that allows the industry to remain a leader, especially in Quebec, where the resources to build an aircraft can be sourced within a 30-kilometre radius.

Mr. Dias talked about the many layoffs, 900 of which are in Montreal, at Bombardier, Pratt & Whitney, CAE and CMC. We are talking about a sector that employs 60,000 people in Quebec. As you well know, as long as aircraft remain grounded, things will keep getting worse.

We did an analysis in Quebec, with the help of our locals, and three findings emerged. Aircraft and engine maintenance contracts, military contracts and innovative products such as CAE's ventilators are largely responsible for keeping people employed. That evidence should guide us as we look for solutions. For example, we could safeguard our procurement contracts by awarding maintenance contracts for government, military and emergency aircraft to Canadian companies; that would be a fundamental step.

Another crucial area in need of attention is research and development. The people at CAE were the first to design ventilators certified by Canadian authorities. They were able to manufacture them in record time and are now producing Pyure-brand air purifiers, which are incredibly effective at sanitizing the air and surfaces in buildings and eliminating pathogens in schools, airplanes and trains.

[The Chair, Liberal, Sherry Romanado]

Mr. Gagné, you're out of time.

Do you mind wrapping up your presentation?

[Renaud Gagné]

Yes.

[The Chair, Liberal, Sherry Romanado]

Thank you.

[Renaud Gagné]

For those reasons, it is essential that the government make the necessary investments, and put in place the tools and programs to adequately support the industry in Quebec and Canada. Countries around the world are already doing it.

[The Chair, Liberal, Sherry Romanado]

Thank you, Mr. Gagné.

Next we have Mr. Gibbons from WestJet.

You have the floor for five minutes.

[Andy Gibbons, Director, Government Relations and Regulatory Affairs, WestJet Airlines Ltd.]

Thank you very much, Madam Chair. I really appreciate the opportunity to speak with you and committee members today and contribute to your very important study.

Over the last 25 years, WestJet's investments have fundamentally improved commercial aviation in Canada and have been an essential and key contributor to Canada's aerospace sector.

Through WestJet, 300 million Canadians have been given more democratic access to lower fares in 39 domestic markets, resulting in over $4 billion in trickle-down impacts that support suppliers, provide wages to our employees and economic activity in our cities and tourism sectors.

This crisis has had a profound impact on our entire industry, affecting over 600,000 jobs in travel and tourism and over 250,000 in aerospace, the industry we are here to speak about.

All of the witnesses today have one shared goal: an innovative, connected and prosperous Canada. Together we face an unprecedented challenge and one that will need decisive leadership. Our competitor countries have already developed plans to protect their aerospace and aviation industries and jobs. We need the same commitment here in Canada, and your study will help us forge a path forward.

In ISED's restart, recover, and reimagine prosperity expert panel, they identified air travel as the industry sector hardest hit by COVID-19 and amongst the sectors needing tailored assistance to preserve jobs and business.

Jim Quick, president of Aerospace Industries Association of Canada, noted that a safe restart plan for air travel is essential to the vitality of the aerospace sector. He said:

Airlines drive demand for the manufacturing output that makes up 69% of Canada’s aerospace and defence activity. They are also significant buyers of the maintenance, repair and overhaul (MRO) services that make up the remaining 31% of our sector’s business. Without question, our industry needs planes in the skies, and support for the airlines needs to include support for the industry that keeps those planes in the skies.

We could not agree more.

In that industry council report, it communicated the aerospace sector's vital importance to Canada, which included over $31 billion in revenues and its value chain of over $20 billion in contributions to the GDP with 160,000 direct jobs tied to the Canadian economy.

Its operations are well dispersed across Canada and are a strategic pillar of our knowledge and manufacturing economy. Of these firms, 93% are exporters, and 70% of the aerospace manufacturing firms co-operate with academic partners supporting our research ecosystem.

Our role at WestJet is as a key supporter and investor. In 2019, our investments totalled $2.7 billion with our suppliers and netted $5.4 billion in economic output, with 25,000 jobs associated with running our business.

For committee members, here are some examples of key partnerships of ours from coast to coast: StandardAero, $32 million in 2019; Boeing Canada, $24 million in 2019; KF Aerospace, the largest private sector employer in Kelowna, $32 million in 2019; and GE Aviation, who is also a major partner. Sadly, these expenditures and investments have taken a dramatic decline as a result of COVID.

The COVID-19 crisis and the drop in demand for air travel has had a critical and enormous impact. Our industry is reporting losses in revenue of over 40%, and 95% of our companies are reporting various levels of shutdowns.

It's not just the jobs. These companies are central to the community and cultural fabric of Canada. They invest in R and D and anchor vital aerospace hubs. A recent survey WestJet conducted of our key suppliers showed that 94% of these companies invest in key community priorities like indigenous rights, environmental organizations and local charities.

We continue to work collaboratively with our partners to plan for Canada's economic recovery. At WestJet we are not seeking policies that strictly support our bottom line. We are seeking a recovery framework that will lower the cost of travel for Canadian families, ensure our workers have appropriate wage supports, introduce green credits to continue to green our fleet, and ensure that Canada has a competitive global airline based in the west.

There are two main priorities we recommend this committee include in its report.

The first is that, given global uncertainty, we believe Canada must prioritize domestic travel and negotiate a transparent and clear policy with provincial governments. This could be based on COVID levels or based on the percentage of Canadians vaccinated. We believe this should be a priority item. We also believe that Canadians should see their country safely this summer.

The second is to transition the Alberta pilot project on arrivals testing and include funding for testing in the upcoming federal budget. The relationship between testing and quarantine requirements must evolve, and we note and appreciate the Prime Minister's commitment to work on this.

To conclude, we thank our employees who have suffered so much, but we continue to serve Canadians. Everyone in our company continues to fight for you. Our approach to this crisis has been rooted in our commitment to serve Canadians and conduct ourselves in a transparent manner with all levels of government. We will continue to be a collaborative partner with all of you as we work towards a safe and responsible recovery.

Thank you.