Evidence of meeting #45 for International Trade in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was access.
A recording is available from Parliament.
President, Sunwing Airlines
—and we have 15,000 employees internationally as well.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Fantastic.
Looking at the currency exchange, one of the things you might want to consider is having a charter from here to the Okanagan. I was in Kelowna yesterday. On the weekend, it was 15 degrees above zero. I was drinking some great Canadian wine. It's an opportunity to segue into my favourite topic of having Canadian liquids on the flights. I'm sure you let your passengers enjoy some Canadian beverages. I know Air Canada is working on that as well. I appreciate that.
One of the things the committee is doing is trying to look at the 112 air transport agreements we have in place. The government has limited services and resources so we're trying to maximize those resources to help Canadian businesses to expand market. From your perspective sitting in our chair here, do you find that with the resources allocated right now in the GMAP it's moving in the right direction? If not, which direction would you reallocate those funds to?
The second question is with regard to tourism and visas. It's about approved destination status—I guess it's more for Air Canada—and whether that has helped the connection with Asia and Canada.
We'll start with those two questions first.
Vice President, Corporate Strategy, Industry and Government Affairs, Air Canada
Absolutely, I'll take a crack at the two questions. I was thinking of you, Mr. Cannan, when I flew out to Vancouver recently and there was some B.C. wine served on board. I was glad to see that.
To answer the two questions, first, in terms of the global markets action plan, I think what Air Canada sees is the work of the air trade negotiator, and we really do appreciate the work that Transport Canada and the Department of Foreign Affairs, Trade and Development put into that. I don't think we see anything on the resourcing side, and certainly, they're very responsive to us. In terms of the part that we see of the global markets action plan, we're very satisfied.
In terms of approved destination status, we have seen massive increases in the number of Chinese-origin tourists and business people coming to Canada. It's one of the areas that we seek in terms of growth of bilateral access and access to airports and things of that nature. China is one of our number one targets, so we're looking for some growth in that area. I think part of that really is attributable to the approved destination status announcement.
President, Sunwing Airlines
I have to agree with Mr. Vanstone. We've been very happy with the direction of the bilateral air discussions through the blue sky policy. The markets we've been focused on have all been addressed over the last few years, so we're comfortable that we have access now in the Caribbean and Mexico that's commensurate with our needs. All of our major requirements have been met.
Conservative
President, Sunwing Airlines
No, we have 21 hotel properties. We fly to over 35 destinations in the Caribbean, Mexico, and the U.S.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
What's your number one destination right now for Canadians?
President, Sunwing Airlines
The number one destination is Cuba. As I mentioned, we're the largest airline in the world into Cuba.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
With Cuba and the United States opening discussions, do you see opportunities, or is it going to be additional competition?
President, Sunwing Airlines
I think it will change the landscape quite dramatically in Cuba. Because we've had access and the Canadian government has had open access with Cuba forever, it has helped us set up and establish there.
As I mentioned, we have 11 hotel properties that we manage on the island, and if we could take U.S. consumers into Cuba into our 11 hotel properties, we believe we would benefit from that.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Mr. Vanstone, we had the chief air negotiator here on February 2, and he said that in a large number of cases, air carriers are not using the rights provided by the ATAs.
I was wondering what government could do to help airlines take advantage of those ATAs.
February 16th, 2015 / 5:05 p.m.
Vice President, Corporate Strategy, Industry and Government Affairs, Air Canada
To the extent that we've consulted with the negotiator and asked for access...and access can be many things. It can be code share access, which is obviously the way that we initially build routes into places like north and west Africa—that's what we're focused on right now, code share ability to start growing that route via other ports—or it can be direct access.
We find that they're usually pretty good at getting us the access we need in exchange for whatever they need to trade. They try to work ahead, so they're always asking you what you're going to need in the future. I think they have some growth built into each of the agreements in areas that are important to us.
The statistic that says not all of the access in the air transport agreements is being used really speaks to the fact that we aren't bumping up against the limits that are set out in these agreements, that we are forward thinking, that we are trying to plan ahead and ensure Air Canada and others have the room they need to grow. I think that's a very good thing if there is room, because it means there is the ability to start the service when it's commercial viable.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Mr. Williams, I don't know if you have any other specific issues. We've heard about the issues with CBSA. I know that Minister Raitt and her department are looking at some of those, working on streamlining with airport authorities across Canada, looking at efficiencies.
I don't know if there's anything else, from a government perspective, that you'd like to see move forward.
President, Sunwing Airlines
One of the things is that Sunwing flies out of 35 different airports in Canada with international service, and at quite a few of the airports there are no border services available. We have to inconvenience the passengers by operating a one-stop flight rather than a direct service out of the airports. An example is Sudbury, where there's no border service. We fly passengers through Ottawa, clear customs in Ottawa, and then take them on to Sudbury.
We have numerous airports where that is an issue for us, and getting access—
Conservative
Liberal
Chrystia Freeland Liberal Toronto Centre, ON
Thank you, Mr. Vanstone, Mr. Williams, and Mr. Waugh for coming to speak with us today.
I should inform the committee that I actually work for Mr. Vanstone. He's my constituent in Toronto Centre.
I want to start by asking Mr. Vanstone and Mr. Williams a macro question.
I'd like to hear from you on the two big things we're seeing in the macro environment and what impact the falling Canadian dollar and the falling price of oil are having on your businesses.
Mr. Vanstone, I know that Air Canada in its latest earnings report spoke about the hit it took in the last quarter of the fiscal year because of the Canadian dollar. I imagine that the low price of oil is helping you on the upside.
To help form a picture of where the Canadian economy is, I'd love to hear from both of you about the impact of these two things.
President, Sunwing Airlines
It's a very good question and thanks for asking it. Obviously, it's a very multi-faceted issue that we deal with as well.
From the Canadian dollar perspective, over half of the expenses of Sunwing Travel Group are in U.S. dollars, so the falling dollar hurts our business quite dramatically. We've definitely seen some lower profit numbers as a result of the drop in the Canadian dollar. We are also starting to see in western Canada a slight fall-off in traffic. It's too early to suggest that it's a direct result of the falling oil prices, but we're starting to have some concerns about flights in western Canada as a result of potential traffic falling off. The oil price being lower helps our business, but if we're getting lower revenues because traffic is dropping, then it's not necessarily a good thing for us, or not completely a good thing for us.
Liberal
Chrystia Freeland Liberal Toronto Centre, ON
I have a quick follow-up question.
Do you have any sense right now of how it's netting out? Is it more upside or more downside?
President, Sunwing Airlines
For us, the combination of the two has been a negative. From the airline perspective alone it would be a positive, but if you include our hotel businesses, it's actually hurting our business.
Vice President, Corporate Strategy, Industry and Government Affairs, Air Canada
I think our assessment would be similar in our results call.
We have a fair amount of U.S. revenue from American customers who buy tickets on Air Canada to fly to Canada, so that's a natural hedge in U.S. dollars. Still, the vast majority of our dollars are in Canadian dollars.
A lot of our cost, whether it's fuel.... The drop in fuel costs is helpful to the bottom line at Air Canada, but obviously we buy fuel in U.S. dollars, so it's a mixed bag there. All of our airplane lease costs and a lot of our hotel costs for Air Canada Vacations in southern properties are all in U.S. dollars.
We would see the net effect of oil and the foreign exchange issues of late as being net negative, although we're doing everything we can to try to manage that.
Liberal
Chrystia Freeland Liberal Toronto Centre, ON
Mr. Vanstone, are you experiencing the same fall-off in business particularly in western Canada that Mr. Williams spoke about?
Vice President, Corporate Strategy, Industry and Government Affairs, Air Canada
No.
We were asked that question during our recent quarterly and annual results calls, and we haven't seen any softness in the demand in western Canada. We're watching that very closely and hope that there won't be. Hopefully, it's just the nice weather in western Canada that's resulted in Mr. Williams' soft market in the short term.
