International Trade Committee on Feb. 16th, 2015

[The Chair, Conservative, Randy Hoback]

Pursuant to Standing Order 108(2), we are continuing our study of the positive effects of the global markets action plan.

Today we have two witnesses, one by teleconference and one here in person.

We'll start off with Daniel-Robert Gooch, president of the Canadian Airports Council.

Daniel, the floor is yours.

[Daniel-Robert Gooch, President, Canadian Airports Council]

Ladies and gentlemen of the committee, thank you for the opportunity to address you today on the subject of Canada's international air bilaterals.

I understand you have already heard from Vancouver Airport Authority, which is one of our member airports. My comments will be presented on behalf of our broader membership, which includes 45 members operating more than 100 airports around the country, including all of Canada's major international gateways.

As we detailed in our recent submission to the Honourable David Emerson on the Canada Transportation Act review, which I will table with this committee to review as well, international air travel has been an area of strong growth for Canada's airports particularly over the last decade. Over the past few years it has surpassed U.S. transborder traffic as the second-biggest component of traffic in much of our country.

Airports represent trade-enabling infrastructure, and bilateral air agreements are the rules by which aviation is able to support Canada's free trade agenda in the outside world. Indeed the addition of just one new daily overseas route into a Canadian airport supports hundreds of direct jobs, with an even greater impact on the local economy through improved trade and business links.

Over the past decade we have seen the opening up of air access between Canada and many of our most important partners for trade and tourism. Landmark agreements with the United States and the European Union have punctuated this period, but there have also been new and improved agreements with other important markets like Brazil, South Korea, Turkey, Japan, and China. These agreements open significant opportunities for trade and tourism for Canada and the communities our members serve. This is why in our CTA review submission, the CAC has called for Canada to seek open skies agreements with Canada's free trade partners.

Our members compete with each other as well as with destinations in other countries for the air services of domestic and foreign air carriers that can develop when an agreement is opened up. As a result, specific views on this topic can vary significantly from community to community and on a case-by-case basis depending on the country we are dealing with.

Our members communicate their views directly with the federal government regarding priorities for new negotiations and specific air access issues to be tackled by Canada's negotiating team. Accordingly, it is often inappropriate for the CAC to weigh in on the merits of liberalization with individual markets. However, Canada's airports generally agree broadly on several points. First is that the blue sky policy serves as an effective policy framework for Canada to endorse the principle that liberalization of air regimes is generally very good for Canada. There has been some concern that sometimes the policy is not pursued in a manner consistent with the spirit of its intent, but in general Canada has done well with this policy.

Canada's airports represent the communities they serve. Airports are locally oriented non-share capital corporations with a business development mandate to support their communities and their communities' economies. This is why there is a long-standing request by the CAC that airports with a commercial stake in the outcome of talks be afforded observer status at these talks the same way Canadian carriers are. We were pleased to see this request partially granted last year when the CAC was notified that we would be able to send a single representative to future air bilateral negotiations. We have yet to participate at any talks as none have been scheduled since we were notified of the change in policy, but we are confident that over time this opportunity will be a positive addition to the discussions by providing a vehicle for community-level concerns and by improving transparency and accountability.

Nevertheless, each of our members has its own commercial interests at stake. We see this as an important first step towards individual airports eventually being able to directly observe talks with markets of particular commercial interest just as any Canadian carrier can do today.

Finally, while international air agreements are important to opening up trade and air travel between markets, they are not the only important factor. There remains, for example, significant opportunity for new services in many of the existing air service bilaterals we have today. There are areas of visa policy that are just as important, which is why we have been working with citizenship and immigration Minister Chris Alexander, for example, on expanding and improving the transit without visa program to expand Canada's share of connecting passengers who support new and existing international air routes. Canada has a tremendous opportunity to grow this market and to take advantage of big growth expected in markets like Asia to Latin America.

Other important competitive factors include the growing concern with wait times at security screening throughout the country, particularly at Canada's largest airports, and Canada's cost-competitiveness environment. These are both areas under direct control of the federal government and are equally important to address if Canada is to take full advantage of significant opportunities for trade and tourism that can be afforded by growing international air travel to, from, and through Canada.

Ladies and gentlemen of the committee, being mindful of time, I will end my comments here. I look forward to any questions you may have.

Thank you.

[The Chair, Conservative, Randy Hoback]

Thank you, Mr. Gooch.

We'll move on to our next witness. Stephan Poirier is joining us by teleconference.

Stephan, the floor is yours.

[Stephan Poirier, Vice President and Chief Commercial Officer, Calgary International Airport]

Thank you, members of the committee. We're very grateful to be able to address the committee with our feedback and our perspective from Calgary.

The first thing I'd like to say is that I echo Mr. Gooch's comment regarding the blue sky policy framework, which we believe has worked really well for Canada. As you know, airports are economic enablers, but we do not fly. We rely on airlines to come and go as they bring people back and forth between the markets worldwide. We are open for business, and we enjoy having carriers from all over the world in order to inject a fair dose of fair pricing within the system.

Last year Calgary was able to retain its status of third-busiest airport in the country with 15.2 million passengers annually, which is more than Montreal but less than Vancouver and Toronto. For the last 10 years we have had an air access system in this country that has been extremely good for the needs and purposes that we pursue here at Calgary. We are more than fine with the existing system, and I want to emphasize that point. We do not seek to open markets anywhere else in the world at the present time.

Not knowing whether the members of the committee are really familiar with the air access files, I will take the time to say that the CTA, the Canadian Transportation Agency—and forgive me if I'm repeating what you already know—is responsible for charter permits and also for extra bilateral permissions that should be or should not be granted outside of the bilateral framework. We have had recourse to this agency on several occasions to provide air access to carriers that did not have air access.

A prime example of this involves a carrier from the Grand Duchy of Luxembourg, Cargolux, which is very important for the region. We are a strong exporter of oil and gas equipment, which does not fit in the belly of a passenger jet, so we needed some extra lift to be provided by special aircraft called 747 freighters. Since the Grand Duchy of Luxembourg did not have access to Canada, period, because of the non-existence of a bilateral agreement between the Grand Duchy of Luxembourg and Canada, we reached out, at the time, to the CTA to grant them permission. For the last 12 years they have been operating very successfully in and out of Calgary, with three frequencies a week, and it's working extremely well. So, from the point of view of Calgary, we are very happy with the current system and the current level of access by foreign carriers into our market.

We are a bit of an anomaly with a population base of only 1.2 million handling more than 15.2 million passengers annually. Our concern is with more sustainability in the long run. We do not want to go down in terms of traffic. We want to continue to provide great access, by far the best access per capita in the country. Also, we're very focused on sustainability.

Again to echo Mr. Gooch's comments, our current focus is more on facilitations for sixth freedom traffic rights. Very quickly let me explain what that does for us. In 2010, we were able to convince Air Canada to have a non-stop Calgary-to-Tokyo flight. Air Canada currently is trying to expand the reach to bring people from Las Vegas, New York, and all over the United States via Calgary to go to Tokyo. In order for this to be possible, we need to build extremely expensive infrastructure. We are therefore building a new $2-billion terminal, which will be equipped with state-of-the-art passenger connection corridors that will allow the smooth flow of passengers to connect on such a flight.

However, we are suffering from very long lineups at CBSA and Canada Customs, and unacceptable wait times at security carried out by CATSA. These two agencies are under the control of the federal government, and we would like to work with the federal government to facilitate and speed up the process while not changing any levels of security that have been established by the federal government.

Our focus is really to facilitate the growth of existing carriers, especially Canadian carriers, as both WestJet and Air Canada produce a lot more jobs when they put a non-stop flight in place than a foreign carrier would do.

In closing, and mindful of time, I would just say that although the current bilateral agreement with China is extremely liberal and permissive, the big challenge for Calgary and Montreal has been to find landing slot times at Beijing Capital International Airport. Doing so is almost impossible. This appears to have been resolved for the short term; however, that's happened only after five years of extreme lobbying and having to give up on Air Canada getting access to Beijing Capital International simply because it's impossible for them to get good landing slots there, even though the bilateral is very permissive. It looks as though we're going to have to go with Chinese carriers, which was a second choice, in terms of ensuring the sustainability of the air transport system at Calgary.

I will leave those comments with the committee. Facilitation is extremely important to us in terms of speeding up and easing the connection process at any of the major hubs in Canada.

That's the end of my comments.

[The Chair, Conservative, Randy Hoback]

Thank you, Mr. Poirier.

Colleagues and witnesses, for your information, we will probably have bells in the next five minutes. We do have enough time for each party to have one question of a maximum of two minutes. That will at least give everybody a chance to ask witnesses one question.

Mr. Davies, I'll start with you.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Chair, may I ask each witness a quick question and stay within the two minutes?

[The Chair, Conservative, Randy Hoback]

Yes, just don't push the two minutes. I'll be firm with the two minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay. Thank you, Mr. Chair.

Thank you, witnesses.

Mr. Gooch, in your remarks you said, if I have it right, that liberalization is generally good, and you pointed out that there are some concerns when it's not done in the spirit of the initiative. I'm wondering if you could elaborate for about one minute on that and tell us what you mean and what your concerns are.

[Daniel-Robert Gooch]

I think it's fair to say that most of our members generally believe that liberalization has been a good thing when you look at open skies agreements. For example, the United States has concluded quite a few around the world. Generally, they have opened up air services and benefited carriers from both sides. Certainly, we've seen Canadian carriers benefit quite a bit from the Canada-U.S. liberalization that took place in the nineties and then a couple of years ago.

There are a few markets around the world that are controversial, and there is no consensus among our membership. For example, in some of the Middle Eastern markets we have some service from some of the Middle Eastern countries, but when you get into some specific countries, some of our members would perhaps like to see greater air access. Others actually think the current situation is pretty good.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Mr. Poirier, quickly, you mentioned the significant problem of lineups in security. I'm wondering if you have any suggestions for the committee. What would you do to try to address that problem if you could?

[Stephan Poirier]

I think it's related to two things, but in the interest of time, I would just say this. We are spending $200 million to put in a very elaborate system of corridors to ease the flow of connecting traffic, while CATSA, in the spirit of saving a few dollars on staffing, will not staff appropriately. There are seven lines open and only four of them are staffed. A quick gain would be to add a little more staff where it really counts to get the passengers through quickly.

[The Chair, Conservative, Randy Hoback]

I'm going to stop you there. I apologize, Mr. Poirier, but we're really tight on time here.

Mr. Gill, I'll give you two minutes.

[Parm Gill, Conservative, Brampton—Springdale, ON]

Thank you, Mr. Chair, and let me quickly thank both of our witnesses for appearing today.

As a percentage, our trade by air is still relatively low. What suggestion do you have to further expand it? Maybe both of you could jump in.

[Stephan Poirier]

In terms of tonnage it is low, but in terms of value it is not. It represents close to 40% of the value by air but less than 1% in terms of tonnage. It's very difficult to ship inexpensive goods in a very expensive mode of transport, so the only way to grow this is to grow the economy.

[Daniel-Robert Gooch]

I don't know that I could add much to what my colleague in Calgary indicated.

Certainly, air cargo is a more expensive way of shipping, so we see higher value goods go by air. We've seen a fair bit of growth; particularly as Canadian carriers have grown their international routes, that has come with added cargo capacity. The aircraft that we have in the fleet today can carry more cargo than in the past. You grow the economy and grow trade between Canada and other markets of the world, and high-value air freight will follow.

[Parm Gill, Conservative, Brampton—Springdale, ON]

Thank you.

[The Chair, Conservative, Randy Hoback]

Ms. Freeland.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

Mr. Chair, could I follow the fine example of Mr. Davies and ask two really short questions?

[The Chair, Conservative, Randy Hoback]

That's no problem, but just two minutes, though.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

Okay, thanks.

Starting with Mr. Gooch, thank you very much for your excellent presentation.

We heard from Mr. Poirier about China being a very important market. What impact does the lack of a U.S.-style, reciprocal, 10-year visa arrangement have? Is that something which we're seeing limiting the amount of tourism and business travel between Canada and China?

[Daniel-Robert Gooch]

Certainly, we understand that visa-related issues are one of the biggest concerns that China has. That's what I'm hearing from our members. We have a tremendous opportunity to grow traffic between China and Canada by taking advantage of that growth in air travel between China and other parts of the world.

I know that one of my colleagues who appeared here last week, Gerry Bruno, would have spoken to you about transit without visa, which is a way for travellers who are going from China to the United States currently—we're hoping to expand it to other parts of the world—can actually transit through Canada without having to have a visa. Perhaps this seems counterintuitive to growing trade between Canada and China because I'm talking about people who are going someplace else, but what we see is that actually growing the transit traffic can make or break international routes. As my colleague in Calgary was speaking about, the route between Japan and China, they want to grow traffic from the United States and other countries by connecting over it.

We're looking to transit without visa as one way to really boost the air routes that we can have between China and Canada by flowing traffic not just destined for Canada but for other countries as well.

[Stephan Poirier]

I would like to add one thing quickly as well.

From an airport perspective we do a lot of field trips in China, and the number one complaint is the time that it takes to get a Canadian visa for tourism. They would not know whether the visa was granted three days before the departure of the flight. These things can be taken care of and line up in a way that the process is more expedited. It would certainly not harm tourism the way it does—

[The Chair, Conservative, Randy Hoback]

We are going to have to stop it right there. The bells are ringing. I do apologize, witnesses.

I feel that we've shafted you in some way because we didn't get a full chance to do a proper exploration, but we do have to go and vote.

Colleagues, I'm going to suspend at this point in time. I encourage you to get back as soon as possible so we can continue with the next round of witnesses that we have.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

Will we see these witnesses again?

[The Chair, Conservative, Randy Hoback]

No, we won't.