Industry Committee on March 11th, 2021

[Brian Masse, NDP, Windsor West, ON]

I highlight that because of the pandemic and the effects on those groups.

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Masse.

We will now turn the floor over to MP Baldinelli.

You have the floor for five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Thank you to all the witnesses for being with us today. Thank you for your comments.

First of all, I would like to thank Airbus Helicopters for deciding to locate in our riding. They have been there since 1984, and I thank them for that. I also had the opportunity to tour the facility this past summer with Mr. Charette, and I was quite impressed.

Mr. Charette, as we look to sustain post-pandemic growth, what in terms of needs are required from the federal government? When we met, we talked about issues with regard to training and retention, about offering jobs in those new technologies and working with local higher educational institutions to recruit into that high-skilled sector as well as the kind of R and D that is required to go into the future. You also mentioned procurement opportunities. I see the great success that you have municipally and with provincial government agencies with your helicopters. What more can be done from a federal perspective on procurement opportunities for Airbus Helicopters?

[Dwayne Charette]

Thank you for the question. There are several topics there. I tried to write them down to make sure that I address them all.

On the federal procurement process, I think I touched on that during my remarks. We talked about an unbiased and fair bid procedure based on the platform, taking out any of the political landscape and really picking the best platform to meet the mission for the end use. Traditionally, I would say, the procurement process in Canada is quite long. I know of a couple of campaigns that have been ongoing in Canada. We've been talking about them for a number of years. I see my colleagues in the U.S., when something in a campaign arises, talk about it. There's quite a large campaign; it goes to tender and it's awarded before we even have basically, I would say, the draft requirements released here. This is something that's seen as a long, arduous process. We certainly believe in due diligence, but I think this is something that could be looked at from the speed of the procurement process.

As for training and people, definitely I believe there's a disconnect today, when we see what's being offered by way of post-secondary education. We are an aerospace company. We talk about having advanced manufacturing process controls. This is something that I'm not sure is being addressed by the educational institutions.

We have needs. I'll just highlight composites as an example. Traditionally, when people thought of aerospace, they would look at a sheet metal technician. Today, with composites, what we look at are engineered, high-performing materials. You need people who understand how they work and how to work with them.

One disadvantage that I find we have today, because we compete globally, is that we take on the responsibility to train many of the people we have working for us, for the simple fact that the skill set is not one that's offered out there and which they're able to acquire in the general educational framework that we have today.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

In terms of R and D, are there hindrances, things that preclude you from accessing the needed R and D supports and funds that may be out there?

[Dwayne Charette]

Certainly at the group level, a fair amount of R and D goes on, with the zero emissions that we're working on, the environment, and Blue Edge blades. These are all things that are done, I would say, at the group level.

The R and D that we struggle with comes into play when we look at the process improvements and the manufacturability of the product. There really are, I would say, very few, if any, programs that really make sense for us. Again, we find ourselves in a position in which we're investing significantly to develop the employees through on-the-job training. Again, there's also a learning curve involved.

These would be my key points: certainly some sort of funding program that could help us or, If it's not available in the public domain, some way to offset the cost to Airbus to train these people.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you for your time.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Van Bynen.

You have the floor for five minutes.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you, Madam Chair.

This pandemic is an unprecedented and major disrupter that foreshadows a new normal for the airline industry, the aerospace industry and indeed the world economy. We've heard a lot of discussion about what's needed for the survival of the industry and for a safe restart.

I note also, though, that the Globe and Mail has published an article that says that Canada's aviation industry needs a total overhaul, not just a bailout.

My questions are for WestJet and Airbus.

In your long-term planning, what is the new normal that you see for the airline industry? What do you see as critical elements that are needed to respond to these changes?

I'll start with WestJet.

[Andy Gibbons]

I think the first thing to note is that the definition of long term in our sector has fundamentally changed. I think all of our forecasting and other issues have really changed. We're developing an investment schedule month per month now, whereas we used to do it twice a year. Everything has changed.

I don't know the article you're referring to, but I can talk about some of the critical issues you're touching on.

I'm going to leave out the safe restart, Mr. Van Bynen, because we've talked a lot about that, but there are two things. First would be the prioritization of domestic travel and the second would be a more appropriate arrivals testing regime for international traffic.

The other issue that I think you're getting to is the cost of travel. In Canada, the cost of travel has been a major achievement of WestJet. In 2019, I believe that fares had been stagnant for about two decades, and we were saying in 2019 that Canadians had never been more affordably connected to each other and to the world. If you consider 2019 to be a very high mark for affordability, accessibility and for communities gaining access, the policies that supported that were okay in good times, but they won't work in bad times.

There was the example just yesterday of the president of Southwest Airlines making an announcement that they were going to be investing in Bellingham, Washington. He cited government taxes and fees as the reason Southwest was investing in Bellingham, Washington. He didn't say WestJet's planes suck. He didn't say Swoop can't compete. We can compete globally. What he cited was government policy.

We need to be really careful about the cost of travel. The government has not supported Nav Canada or airports. Both of these key partners have had to increase their fees. That hurts Canadian travellers, so I would highlight that issue.

As it relates to aerospace, Abbotsford wants to keep developing their aerospace hub, and a key and vibrant airport with commercial aviation services is a key factor for that. You've heard that today from Philippe, Jerry and others, so it's all interrelated, but the fact that the president of an American airline is citing government policy as the basis for his investment decision is troubling. Frankly, I don't think we'd accept that if it were steel, aluminum or an agricultural product. We simply wouldn't. Those are Canadian jobs being exported across the border.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

I understand in part what the challenges are, but my question is, to what end? What does the industry look like going forward?

[Andy Gibbons]

I think in the short term, when we come out of this during the summer, a lot of communities are going to be surprised that their service levels are not what they were prior to COVID. There are a lot of people in our country who, I don't want to say, take for granted the level of investment they've had, but we were in a very good place prior to COVID, and aviation services and investment is not like the dial on your radio. It's at a three today, but once we're out of COVID, hey, we're at a nine again. It's not like that. It takes a lot of time. It took decades to build up this infrastructure.

I think in the short term you're going to have minimal service to start, and that's going to be correlated to government policy. What government does and does not do is going to be a key ingredient here as to the extent we can recover.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you.

I'd like to hear from Airbus as well.

[Philippe Balducchi]

I see the red card, so I will be very fast.

[The Chair, Liberal, Sherry Romanado]

Be very, very quick.

[Philippe Balducchi]

For me, there are two main things. Competitiveness we need to see increased, because we will see a lot of competitive pressure coming from all across the world again, and that's going to be one key element. The second one is obviously the sustainability of travel and the carbon footprint. The green portion and green investment would be extremely important.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We will now start our third round of questions.

Our first round goes to MP Kusie.

Welcome to INDU. You have the floor for five minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

It's very lovely to see you, MP Romanado. Thank you very much for the kind, warm welcome.

I'd also like to take a moment to thank my shadow minister for jobs and industry, the MP for Carleton, or as I like to say, the shadow minister for “are we going to be okay”.

I'd also like to take a moment to recognize my colleague, Nate Erskine-Smith. I am looking forward to being on the panel with him tomorrow evening with the Runnymede Society.

Nate, I'm going to warn you, I'll be eating meat tomorrow, so the brain is going to be turned on. Watch out for that.

It's certainly good to be here.

Here we are, one year later after the pandemic has begun. Unfortunately, as I have talked about repeatedly both in the House and at transport committee, there is no plan for the air sector. It's unbelievable that we're here a year later and there is still nothing, despite repetitive calls from the industry on all fronts to have a plan. As I've said over and over again within the House and committee, the industry has invested significantly in the effort to maintain their industry and prevent its demise through their implementation of pilots, rapid testing, testing on arrival and testing on departure, but here we are.

Mr. Gibbons, I wish you could go into when we could expect this plan. I tell you, I've been let down so many times. In Reuters in December, and the Globe and Mail two weeks ago.... I am waiting and waiting and the word I keep hearing is “imminent”.

Is there anything you can say at all in terms of when we could possibly see this plan?

[Andy Gibbons]

No, I can't, unfortunately.

I would say there are two different categories here, MP Kusie. The first is the formal negotiations, for which we're under an NDA. If you're referring to the safe restart plan, that is separate, I think, from—

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I'm glad you mentioned it because that was my next question.

Yes, I do have in front of me the document that was submitted by the National Airlines Council of Canada, the Canadian Airports Council, the Aerospace Industries Association of Canada—it's good to see some of their representatives here today—the Atlantic Canada Airports Association, as well as the Air Transport Association of Canada.

You're correct. On the second point, which is that the federal government work with industry to establish an aviation restart strategy in place by April 30—you even gave a specific date—where is government with that? What do you need them to do in an effort to have them implement this, please?

[Andy Gibbons]

We need them to bring to life the Prime Minister's commitments from January 29.

The Prime Minister made two very encouraging commitments and I want to thank him for those commitments. He stated that the Government of Canada will review the relationship between testing and quarantine. He indicated that the government is committed to the safe restart of travel and tourism.

The reason the letter you cite states April 30 is that is the date we agreed to suspend our sun flying until. It's based on our understanding that the current hotel policy is a temporary policy. It is a temporary policy to deter travel and it is a temporary policy to curb the spread of variants. We understand that, but while we are frozen, now is the time to work on that plan.

I don't speak for the government, obviously, but I hope they will continue speaking to their commitment. I hope they're committed to fulfilling that commitment. There is some really positive indication of this so far from Minister Alghabra and others in the government.

The important thing to note here, MP Kusie, is that this is not just about airlines. It's our entire travel and tourism sector. There are hoteliers and others who are waiting right now to know whether or not they should be hiring staff for the summer.

We do need lead time and we do need urgency. We'll just continue to plug at it and work with our labour partners, hoteliers and tourism operators as best we can.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

That's an excellent response, Mr. Gibbons. Thank you so much.

You're right. The McMaster pilot showed very clearly that 1% were arriving with the virus, 0.7% were caught in that first test and 0.3% on the second test. Less than 0.1% were attributed to people potentially breaking quarantine, although we don't like to talk about that too much.

You mentioned market share loss leakage to the United States. I am very focused on what I call the three Bs: Bellingham, Burlington and Buffalo. I'm very glad you mentioned that.

I'm sure that your other colleagues who are on this call today feel the same hope, which is that the government will come through, and disappointment.

I remember very clearly the powerful October—

[The Chair, Liberal, Sherry Romanado]

MP Kusie, my apologies, but you're out of time. Perhaps you can pick that up in another round.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Our next round of questions goes to MP Jowhari.

You have the floor for five minutes.