International Trade Committee on Feb. 4th, 2015

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you.

Don Davies also alluded to MRO—maintenance, repair, and overhaul—but when the Air Transport Association of Canada were here, they also alluded to the possibility of flight training, and especially to export opportunities.

Kelowna Flightcraft is my largest private employer in Kelowna. What are the potential opportunities for the aviation industry to export Canadian flight training, from your perspective, at YVR and across Canada?

[Gerry Bruno]

I think Canada is a leader in aviation and the export opportunities are there, but private sector firms such as Kelowna Flightcraft have to get out there and market their services. We do it ourselves through our joint venture subsidiary Vantage, through which we manage airports across Canada and around the world. We export our expertise that way.

I think the opportunities are there, and having worked closely with the department of international trade and development, I will say that they have been very helpful in that process as well.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I have time for just one more question.

Right now we have air transport agreements with112 countries. I've been an MP for just over nine years and frequently travel through YVR, which has been a construction zone for about the last decade.

Could you elaborate a little to the committee on how the Vancouver airport has grown, and whether or not this blue sky policy has contributed to that growth?

[Gerry Bruno]

Well, it has. I remember the old days. I was with YVR in the early nineties, when we didn't have an open skies agreement with the U.S. Our traffic was very limited; our international traffic was a fraction of what it is today. There has been a lot of progress on air policy, but we believe it still has further to go. We would like to see more open-air bilaterals with China, with Taiwan, and other markets to help accelerate that growth.

We're concerned. There is a window of opportunity, and the longer we delay, the more we see other jurisdictions—the Middle East, Turkey, and other markets—take more and more of that international market share. But we're in the game. We're doing everything we can to be competitive, and we just need a little help on the government policy side.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

All right. We'll continue to work together. Thank you very much for all your continued work and great efforts.

[The Chair, Conservative, Randy Hoback]

Ms. Freeland, you have five minutes.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

Thank you, Mr. Chairman.

I want to start by seconding the line of questioning from Mr. Davies. I thought that pinpointing those countries that need the visa for being in the airport would be some useful work that this committee could do, which we could highlight. If you gentlemen help us out, I think this is something we could do that is really concrete.

I'd like to start with Mr. Taylor. I'm glad you quoted that WEF report, because I wanted to ask you about it. It is striking that we rank number one in air transit infrastructure but rank 136 out of 140 when it comes to ticket taxes and airport charges. What can we do about that?

[Rob Taylor]

We've just finalized our submission to the Canada Transportation Act review. Canada is in the unique situation that we are the only country—and this is not my expertise—among, I believe, the G-20 that has a cost recovery model and fully imposes all operational and security costs into the cost of an aviation ticket. In the United States, airports are under a model like our old one, in which there is a subsidy as well as other federal programs that pick up the costs of security and other things.

We've taken an approach with the CTA review of looking at roles and responsibilities in terms of what the responsibilities of the travelling public are and what ones are in the national realm. We believe that national security is not necessarily the sole responsibility of the travelling public and that we possibly should be looking at a shifting of that tax burden to see where we can find some room within those prices to make ourselves more competitive, with the overall objective of bringing new, lower-cost carriers into Canada and letting market forces prevail.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

Do you have some sort of an estimate, a ballpark, of how much of a shift you'd like to see? What would make us competitive, say, with the U.S.? What would make Mr. Bruno competitive with Seattle?

[Rob Taylor]

I can shift some of that to Gerry, who probably has the specifics, but for us it's about a 30% shift in the price of a ticket.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

Mr. Bruno.

[Gerry Bruno]

We've looked at that and I agree with what Mr. Taylor was saying. You look at security and the air transport security charge in Canada, where 100% of aviation security is funded by that charge. In the United States, only one-third of it is funded by a charge to passengers and airlines, and two-thirds is borne by government. They recognize it's a national security issue; it's not just an aviation security issue.

But I think 30% is the gap that we have between Canada and the U.S. Even if we could cut that in half, it would make a huge difference. We've made similar submissions to the CTA review to deal with government fees and taxes.

One simple thing that would help a lot would be if the funds that are collected from aviation were reinvested in aviation. This is what happens in the United States. They have an air transportation tax, for example, but it goes to fund an airport development fund. Airports requiring infrastructure can apply for capital under that fund. That allows them to keep their fees and charges lower, which is one of the reasons that a lot of the airports in the U.S. have lower costs than Canadian airports. Our airports pay rent to the federal government, but we don't get anything in return for that. In the U.S., they don't pay any rent and they have access to capital. It's quite a different model.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

Do I have time for one more question, Mr. Chairman?

[The Chair, Conservative, Randy Hoback]

Be very quick.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

It's Wednesday afternoon, but you guys have actually been very radical in talking about the desirability of a Schengen visa arrangement in North America. How realistic do you think that is? Have you been talking to some counterparties about it? What impact would it have on your industry?

Maybe Mr. Taylor first and then Mr. Bruno.

[Rob Taylor]

We've spoken to the Departments of Commerce and Homeland Security in the United States about these issues. When it comes right down to it, we are so small that it would be easier for Canada to recognize U.S. visas than going the other way around. About 14% of those Chinese flights that are arrivals into Canada are actually coming via the Unites States already.

[The Chair, Conservative, Randy Hoback]

Mr. Bruno, you have 10 seconds.

[Gerry Bruno]

We put it into the beyond the border 2.0 submission. We've put it into the CTA review. Is it something that's doable in the short term? I hope so, but it's going to take a lot of work on both sides to get there. The more people that are behind it, the sooner we can get there.

[The Chair, Conservative, Randy Hoback]

Thank you, colleagues.

I would like to thank the witnesses for being here this afternoon. I do apologize for the votes. We could have had more questions for you, I'm sure. In light of the fact that it's already past 5:30, I'm going to move that this meeting be adjourned.

The meeting is adjourned.