International Trade Committee on Feb. 2nd, 2015

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

No, that's about it.

[The Chair, Conservative, Randy Hoback]

That's about it? You still have two minutes left in your questioning.

Does somebody from the NDP want to...?

[Don Davies, NDP, Vancouver Kingsway, BC]

Yes.

[The Chair, Conservative, Randy Hoback]

You have a minute and a half.

[Don Davies, NDP, Vancouver Kingsway, BC]

In terms of the metrics, I guess the purpose of open skies agreements is to increase competition, as you've said, and also to lower the costs for consumers. Has that happened?

[Marc Rioux]

Again, when we negotiate these agreements, we put in place a framework within which carriers make their own decisions. We don't have control over which services will be launched or, obviously, how much the fares will be, but our hope is that carriers will make use of the rights we have negotiated so that choice for consumers will increase. If there is more choice, our hope is that competition will do its thing, and we will see a positive effect on airfares.

[Don Davies, NDP, Vancouver Kingsway, BC]

I understand the theory, and I understand the hope. What I'm asking for is data and results. Maybe you don't know, but if these agreements have been in place for a significant amount of time, is anybody in government measuring to determine whether this policy—because it's a government policy that has purported goals—is actually achieving those goals or not?

I know we hope the costs will come down, but my question is if you know whether or not they are.

[Marc Rioux]

The answer is yes. The policy has achieved these objectives, and we would be glad to share numbers with the committee.

[The Chair, Conservative, Randy Hoback]

I'm afraid I'm going to have to move to Mr. Shory. The NDP's time is up.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair.

Thank you, witnesses, for taking the time to come and share your knowledge with the committee members today.

I'll start with a quick question, following on that of my colleague Mr. Gill, on air rights and air services.

If an airline does not use the air service right for, say, 10 or 15 years or whatever time, does it relinquish that right? Is there any provision like that in the standard ATA or the ATAs you negotiate?

[Bruce Christie]

No, the right continues to exist until we sit down with the other government to renegotiate the air transport agreement. I don't know if there are any examples of us lowering the number of frequencies, for example, in an existing air agreement. We normally build on them, but we have some air agreements that are quite old.

An example would be our agreement with India. Our airlines have substantial rights to fly in, but at present neither the foreign carriers nor any of the Canadian carriers are exercising those rights. Although as you may have heard, Air Canada made an announcement recently that they are relaunching their Toronto-Delhi flight. But the rights continue to exist until the agreement is amended.

[Devinder Shory, Conservative, Calgary Northeast, AB]

It seems like you read my mind. That was my focus.

Another thing I noted is that DFATD differentiates between an open-skies type of agreement and an expanded agreement. What's the difference between these two?

[Bruce Christie]

As I mentioned earlier, an open skies agreement has very few restrictions at all in terms of the rights that foreign and domestic airlines can take advantage of in each other's market. For example, for our open-skies type of agreement with the United States, there's no limit. There are no restrictions on the number of frequencies that Canadian carriers can use to fly into the U.S. market. Those are based on their own commercial decisions, and likewise for the U.S. carriers coming to Canada.

An expanded agreement takes more of a piecemeal approach in which we start at the ground floor and test the market to determine what the market can bear in terms of passenger traffic. As we do our analysis and determine that the market can be expanded because there is interest in additional frequencies, then we would renegotiate the agreement to add frequencies and destinations.

So we add rights on a kind of augmented basis, but we use a gradual approach.

[Devinder Shory, Conservative, Calgary Northeast, AB]

We know our government has a really aggressive trade agenda, and we strongly believe trade creates jobs and boosts our economy here for Canadians and, of course, for Canadian businesses.

ATAs are part of the GMAP, and we think it is to promote the interests of Canadian consumers as well as our trade and tourism. Has the increased competition in the Canadian market as a result of ATAs had any negative impact on employment, and on wages and benefits in the Canadian air transport sector?

[Bruce Christie]

We haven't done that type of analysis. I'm not aware of any.

[Devinder Shory, Conservative, Calgary Northeast, AB]

In your presentation you mentioned the provisions and ideas for more convenient and diverse travel options for lawyers, engineers, and consultants who need to travel abroad to provide their services. What exactly does it mean; could you elaborate on how it works?

[Bruce Christie]

I was referring to the GMAP. As you know, the current global market action plan not only identifies 50 priority markets for Canadian businesses, but also identifies certain sectors and certain professions that we're trying to advance opportunities for. So for air transport in our department, we have different agreements that we use to leverage, and I guess we would see them as different pillars to advance our trade and investment objectives. We have free trade agreements, science and technology agreements, investment protection agreements, and air transport agreements.

So under the GMAP we're expanding opportunities, not just in certain markets but for certain Canadian sectors and professions. We're looking at having ATAs that support that expanded business that we're looking for. An example is the Canada-Korea Free Trade Agreement, which is now in force, and we just recently brought into force an open-skies type of agreement with Korea to ensure that those opportunities from the expanded trade and investment will have the air links to support those job opportunities.

[The Chair, Conservative, Randy Hoback]

I'll have to cut you off there.

Ms. Liu.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thanks for your testimony.

I'd like to follow up on a question that was asked earlier. You named a few countries with which we don't have ATAs—Brunei, Kazakhstan, I think, and a few others—whose markets were too small to be of significant interest to Canada. On the website, Foreign Affairs says that Canada tries to conclude open-sky ATAs, but only when it's in the general interest of Canada. So in what other situations would an ATA not be in the general interest of Canada besides the fact that the market would be too small?

[Bruce Christie]

I guess one example would be if we didn't feel there was sufficient interest on behalf of Canadian passengers to travel to that market. Another example would be if we felt that a foreign carrier was asking for an open-skies type of agreement with Canada with unlimited rights to fly into this market, but we didn't feel that the bilateral passenger traffic between that country and Canada warranted that type of agreement and it could lead to undue competition for Canadian carriers and some of the routes they have established, not just in Canada but in other countries as well.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

We also know that the 2009 budget authorized foreign entities to acquire up to 49% of Canadian air transit companies. Do you have any information on what percentage of Canadian air transit companies have been acquired so far?

[Bruce Christie]

It's 25%.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

That's 25% since 2009?

[Marc Rioux]

You're referring to the foreign ownership limit for Canadian carriers?

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Yes, the foreign ownership limit. But what percentage of Canadian companies has been acquired since 2009? Have you been measuring that?