Evidence of meeting #47 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 airports.
A recording is available from Parliament.
Liberal
The Vice-Chair Liberal Chrystia Freeland
I was teasing.
We'll time me strictly, and I'd like to start with a question for both Mr. Gibbons and Mr. Darch. We've heard in other testimony to the committee some concerns about CATSA, and some real concerns about how while there may be a bottleneck now, it could become more acute in the summer, and about how there are some funding issues.
I see you nodding, Mr. Gibbons. What are your thoughts about that?
Director, Government Relations, WestJet Airlines Ltd.
They are exactly the same as what you've heard from the other stakeholders. We had an opportunity to review the transcripts, and I think the issues are the same. I think there's general consensus around CATSA. The finer point I would put on it is with regard to the economic angle, which I've already stated. We have over five million Canadians who are travelling from border airports, and we'd like to repatriate those guests. CATSA lineups are one of the issues that contribute to that. They're not the sole reason, but in terms of aviation, all of these reasons add up to consumer choices, and that's one of them that we'd like to address.
I've already talked about the overall principles with CATSA, and the strict allocation. We're not convinced that it's strictly a funding issue, or that there's not enough money going to CATSA. We don't take sides in that discussion per se, but it's an issue that needs to be addressed. We've seen an increase in delays, and we've seen an increase in wait times for our guests, and we share the concerns regarding the upcoming season.
Director, Government Relations, WestJet Airlines Ltd.
What is the issue with CATSA?
Liberal
The Vice-Chair Liberal Chrystia Freeland
You said it's not this and it's not that. What's your concern and what could we as a committee try to do about it?
Director, Government Relations, WestJet Airlines Ltd.
I think we'd like to see published service standards. I think we'd like to see resources being directly allocated to screening, and some transparency around that. I think there are some other excellent recommendations from the airports. I understand they've tabled their CTA submission with you.
I think this is one of the issues in aviation that everyone agrees on, and I think it needs to be tackled. I didn't mention CATSA specifically in my remarks, because I think you've heard about it from every other stakeholder over the last two weeks. We would simply echo those recommendations and echo the concern.
Liberal
Director, Government Relations, WestJet Airlines Ltd.
It's simply that the airport authorities and CATSA themselves are stating that the lineups are going to be longer and that there will be efficiency issues. When the people who deliver the services are stating that those services are going to take longer to provide, an airline is right to be concerned. We also have the experience of last summer, when there was an increase in delays caused by screening.
Liberal
President, Consider Canada City Alliance
I won't comment specifically on CATSA or budget problems at CATSA. I will simply absolutely agree with Mr. Gibbons' comments that when it comes to a businessman facing long lineups, he may do it once. If you're really lucky, he'll do it twice. But he will never do it a third time. So certainly we are concerned about the time it takes to pass through our airports.
Liberal
The Vice-Chair Liberal Chrystia Freeland
Thank you.
Mr. Gibbons, you emphasized in your testimony that WestJet does its heavy maintenance in Canada. Can you talk a little bit about why you've made that decision, and whether economically it is making sense for you? Are there any government policies that could encourage other airlines to be doing the same?
Director, Government Relations, WestJet Airlines Ltd.
I won't touch the question about encouraging other airlines. Suffice it to say we've had 38 straight quarters of profit. It's one of the best-run airlines in the world, so our maintenance decisions make good business sense, and we expect to continue them.
The partnerships have been strong since day one. Being able to assist in building a business like Kelowna Flightcraft, which is absolutely world class, is a source of pride in our company. We brought maintenance services to Windsor, a region of the country that was experiencing job losses and high unemployment, so that's another region we're proud to support with our work. Then, of course, we have the Bombardier purchases.
The short answer is that we wouldn't do it if it didn't make good business sense, and it makes good business sense for us.
Liberal
The Vice-Chair Liberal Chrystia Freeland
I'm going to cut myself off there just short of five minutes. I think Mr. Cannan has some questions.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Thank you, Madam Chair.
That's a great segue. As the member of Parliament for Kelowna—Lake Country, I'm also very proud of Kelowna Flightcraft, the largest private employer in my riding. Mr. Rogers and Mr. Lapointe are two gentlemen who had a pickup truck and started working on some aircraft for Capozzi's and his Calona wine industry. It has taken off, and it's a great Canadian success story.
I appreciate the great partnership that WestJet provides in continuing the service, and not only for the Okanagan. YLW now is the tenth-busiest airport in Canada. We call YLW “Your Link to the World”. Those are their call letters as well. It's an economic generator not only for the Kelowna—Lake Country of the Okanagan, but for the whole southern interior, which has a catchment area of about 350,000 to 400,000. I appreciate the partnership.
Before I go to Mr. Gibbons, I wanted to start with our friend Mr. Darch down in Miami. I appreciate your sacrifice in going down there and doing what you have to do for the team. It's great. I'm interested in hearing a little more about the alliance, because obviously a rising tide lifts all boats. I understand that.
Does the Canadian team go down there in a pretty united position? It's a competitive market for airports as well. When you're representing Canada and representing airports, how do you differentiate? Do you have a plan of attack going in and a strategy going forward in presenting to these groups?
President, Consider Canada City Alliance
First of all, we're not representing airports. We're representing the economic development agencies for the region.
As for the primary thing we're trying to do, I think it's a very competitive world out there both for international trade and for foreign investment. We're against heavy competition. Competing against each other is not going to do very much for any of us. Trying to put across a common message for Canada is going to do an awful lot for us. It has taken a number of years for people to leave what we'll call their “local competitiveness” alone and to start understanding that we're not competing against our fellow members. We're competing against the Miamis of the world and the San Josés of the world, so we're going to be successful if we get a common message out there.
Also, when we look at sectors, we see that our cities actually don't compete against each other in an awful lot of cases. For example, Saskatoon is known for their plant and animal genomic research, and they're by far that centre for Canada. It's not necessarily that we're competing against each other when it comes down to an actual individual investment; what's critical is that we get across the idea that people will consider Canada and will come here and see how great we are. We believe that we have a great product to sell, but the trick is getting them here and not having competition between each of us, where nobody wins.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
That sounds fantastic. Leaving your parochialism at the border is very important, as you said, and the airports are part of the economic generators and part of the economic development, so I appreciate your initiative.
Mr. Gibbons, I'd like to follow up on a question that I asked Air Canada when they were here. It originated with the committee's initial presentation by the chief air negotiator at our standing committee as we were dealing with the interconnectivity strategy and the global markets action plan. What he said was that in a large number of cases, air carriers were not using the rights provided by the air traffic agreements.
My question to you would be, to what extent do you feel that WestJet and Canadian airlines are not using the air rights provided by the ATAs implemented by Canada? Are Canadian air carriers facing regulatory barriers that are preventing them from accessing the countries with which Canada has air transport agreements?
Director, Government Relations, WestJet Airlines Ltd.
We don't have any barriers to specific countries to report to this committee. I believe that's similar to the answer Derek gave you when he was here.
The first part of your question was about not using the rights. I'm not sure that there's much more to say than what was in my opening remarks, which is that there's a variety of factors for that. We don't have a specific country to report to, Mr. Cannan, to say, “We would, in this country, if you fix x...”. That's not the case with us. We're happy with the agreements that are in place. We're using them to the best of our ability. There's no regulatory barrier the government has in place today in a specific country that we need to see lifted. It's a very positive report card.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
I have one minute and thirty seconds left.
Of course, on the issue of Canadian product, while you're down there, Mr. Darch, you can remind them of how good Canadian wine is, and that we'd like to export that and have it on our airlines as well.
But the other issue is cabotage, the issue of foreign carriers coming in. We've talked about that, and our policy doesn't provide for that. Can you elaborate on the pros and cons of that policy?
Director, Government Relations, WestJet Airlines Ltd.
Our position on both cabotage and right of establishment is that until you fix the cost-competitiveness gap in Canada, you won't realize the benefits of those policies, even if you are an advocate for them. It truly is the most important thing to be fixed. We have ultra low-cost carriers servicing Canadians from border airports. The only reason they're doing that is because of the cost differential. Unless you fix the cost-structure issue and gap in Canada, we don't believe those policies would accrue the benefits that the proponents of them believe they would.
There's also the principle of reciprocity. If proponents of those policies would like foreign carriers to be able to do certain things in Canada, we should be provided the opportunity to do those things in the other country. So the principle of reciprocity is very critical and very important in aviation, as well as, as I've said, cost competitiveness, which is the focus of our submission to the Emerson report.
In Mr. Emerson's discussion paper, he did flag cost competitiveness as an issue, so that's something we're willing to follow up on with the committee. I know others have been tabling their submissions, but we're happy to provide a supplementary opinion on that.
That would be the the 30-second answer on cabotage.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
The big challenge too is that Canada is the second-largest country in the world, so geographically it provides a lot of challenges in keeping the cost competitiveness and connectivity.
Liberal
The Vice-Chair Liberal Chrystia Freeland
We're going to have to leave it there, Mr. Cannan. I'm sorry.
Thank you very much, Mr. Gibbons.
We have 10 minutes left to go, so I'm going to suggest that we give Monsieur Morin trois minutes.
Mr. Morin, you have the floor.
NDP
Marc-André Morin NDP Laurentides—Labelle, QC
Thank you, Madam Chair.
Mr. Gibbons, from what I understood during your presentation, your company's development and growth were largely based on providing services in smaller airports. Would it cause problems if smaller airports did not have good connectivity? Would that be the main problem with regard to air transportation's functionality in Canada?
Here is an anecdote on that subject. You and Mr. Darch may follow up with your own comments if you wish.
About 10 years ago, some friends were visiting me from Italy. They went to Quebec City and Niagara Falls. They still had some time and wanted to see the Rockies. We began to search online for flights, but in the end, we realized it would be less expensive for them to go back to Italy and fly from Rome to Calgary or Vancouver than to take a flight from Montreal.
Do you have any comments about that?
Director, Government Relations, WestJet Airlines Ltd.
There are a few areas in your question. First, I think you were talking about the importance of connecting smaller airports to larger airports, and by extension, smaller communities to larger communities. That's exactly the reason and purpose behind WestJet Encore.
When we announced the creation of that regional airline, which is a brand new airline in Canada, to be serviced by Canadian-made aircraft, the response in communities was tremendous. Dozens of communities lobbied us seeking service, outlining the virtues of their community and how important it is that they're connected. Places like Brandon, with the university there, be it for academic exchanges or their sports teams, now have commercial air service in that community, and it means everything.
In terms of the connectivity in Canada, that question is 147 or 148 years old. Our answer to that is creating the new regional airline.
The second part of your question was about fares and the difference between Montreal-Rome and Montreal-Calgary. I think fares fluctuate. On the regional side, we're certainly seeing a downward trend on fares. In any market that we've entered with Encore, we've seen downward pressure on fares, and an increase in passenger traffic, more than what we've put into the market. That's the difference with WestJet. We stimulate the market. It's not that we go in somewhere and we grab what we can from the other guy; we grow and stimulate the market.
On fares, I think that's a discussion to have. We're a big country. Flying to Calgary from Montreal is like flying from Montreal to Rome. There are a lot of factors that go into the construction of fares, and I'm happy to discuss those at any time with you.
Liberal
The Vice-Chair Liberal Chrystia Freeland
Okay, we're going to have to leave it there.
Merci, monsieur Morin.
Thank you very much, Mr. Gibbons and Mr. Darch.
Mr. Darch, I hope the video conferencing experience was great. I know you would have preferred to be here with us.
Thank you both very much for that excellent testimony.
We'll now suspend for a few minutes before our next exciting session.
The meeting is suspended.
Liberal
The Vice-Chair Liberal Chrystia Freeland
It's 4:30, so we'll resume our committee meeting.
We are going to have the pleasure of hearing from Mr. James Cherry of Aéroports de Montréal, and then Mr. Jerry Staples of the Halifax International Airport Authority.
Mr. Cherry, the floor is yours. You have ten minutes.