International Trade Committee on April 26th, 2018

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you.

Thank you to the presenters. My questions start with Mr. Phil Cancilla.

The way I see it, as Tracey raised, there is the issue of human rights in some of the countries. If we sign agreements like this, does it help to improve human rights situations in Colombia, for example, where there is a lot mining activity happening?

[Phil Cancilla]

Canada's position on human rights is well known all around the world, and any way we can sway people on the proper way of treating each other goes a long way. When you're doing business with people.... The way we do business, and why people want to do business with Canadians, is that we're friends first and sellers and customers second. That's why we are so successful around the world, especially in the mining industry, which is a small but big industry. Everyone knows a Canadian company around the world. If you have a product that you're selling everywhere, that product will be known, and if it's a Canadian product, they want to talk to you and you become friends. You know their families.

I think we can sway people's minds when we're closer to them in business.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you.

My next question is for Mr. Lourenco.

You said there is not enough volume to Uruguay and Paraguay. How do you determine that? I have seen over the past.... I have to commend you, just like my colleagues on the other side commended having flights, for example, to Delhi, flights from Vancouver to Delhi and Toronto to Delhi.

[Fittipauld Lourenco]

Thank you.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

This is perfect, but you were too late the way I see it—

[Fittipauld Lourenco]

Into Delhi...?

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Yes, into Delhi, because the way I see it, in British Columbia, British Airways and your partner Lufthansa were the leaders, and even now when you go there, I don't think you have direct flights every day from Vancouver, even though there is still a demand. I just want to know why Air Canada is that far behind.

[Fittipauld Lourenco]

With respect to Delhi, Air Canada was operating to Delhi a long time ago. That flight unfortunately proved not to be feasible at that time. It was cancelled and I'm talking about years and years ago.

Air Canada is in a position now where a decision to enter into a market requires a number of things to be right. First of all, you need the right aircraft. The market conditions need to be right. You have to have the right types of passengers willing to purchase your fare at your operational requirement, your profit levels. That happened when we started purchasing the 787 Dreamliner. That aircraft provided us with the fuel efficiency and the savings necessary to do those long commissions in markets that are very price-sensitive.

With respect to Uruguay and Paraguay, we actually do carry quite a few passengers whose final destination is those countries. On their own, either through São Paulo or Santiago, and then onwards on another partner or other aircraft, we do carry a lot of those passengers to those countries.

Right now, however, there's not a sufficient amount of volume to dedicate an aircraft to cities in those countries, but as I said earlier, we do see passenger volumes increasing to those countries. Again, this is why these agreements are critical to that. When you foster that kind of growth in business and trade, travel and tourism follows naturally and that's where we would see the opportunity.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

To a certain extent I would not agree with you on that particular issue. I can only talk about the routes that I have travelled on with Air Canada, even though we are all frequent flyers with Air Canada.

I'll take a particular example of flying to Delhi. The final destination of 95% of your passengers is Punjab.

[Fittipauld Lourenco]

Yes.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Amritsar is an airport. It comes before Delhi.

Why would you not consider going to Amritsar over Delhi?

[The Chair, Liberal, Mark Eyking]

We're almost out of time. It's going to have to be a short answer.

[Fittipauld Lourenco]

It's a good question. Okay, I can make that short.

I think it's baby steps. We're in Delhi. We've fostered that market. That market's doing well. Then we're into Mumbai. Then we'll look at other destinations if the market can withstand that.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you.

[The Chair, Liberal, Mark Eyking]

We have time for one more MP.

Mr. Allison, you have the floor.

[Dean Allison, Conservative, Niagara West, ON]

I had no idea how tough it was to be Air Canada.

[Voices]

Oh, oh!

[Dean Allison, Conservative, Niagara West, ON]

I'm lobbying for a Niagara flight, but I don't know if there's an airport that's big enough to deal with it.

Mr. Hall, from some of the other witnesses we've had, they're saying that Mercosur is probably not a priority. We obviously have the regulatory co-operation council with the U.S., which is obviously a program we continue to work on, knocking down these trade irritants. I hear from farmers saying that even with CETA, we have some non-tariff stuff we have to figure out.

I hear your CFIA.... It always seems like they're protecting us from the world versus the other way around. They're protecting us to make sure that all the stuff we get out in terms of timeline, in terms of what they're doing, obviously in terms of resources....

I guess what I'm hearing you say is that maybe we should be shoring up some of the things we're doing right now, because we have a lot of great agreements around the world. We hit most of the world in terms of markets. Am I hearing you say that maybe we should spend a little more time shoring up or working out the irritants that we presently have?

[Michael Hall]

It's a big issue that the day-to-day trade issues that happen between Canada and other countries that we're involved with aren't being addressed on the level that needs to be done. Whether that precludes you from moving on in FTAs in other countries...but I do think that if we're going to be a seriously exporting nation, then we need to put the resources toward that to make sure it happens.

And we are. That's what we do: we export.

[Dean Allison, Conservative, Niagara West, ON]

We've certainly heard from witnesses previously that it's challenging enough to deal with these countries themselves—and you alluded to that—let alone trying to trade as a bloc.

Mr. Cancilla, just talk about some of the frustrations you have had to deal with, because I know Argentina has a whole different set of rules around the mining sector and profits that can flow or not flow out of the country. How does that affect you?

[Phil Cancilla]

It holds up a lot of business. The banking systems don't work very well, between ours and the country's we're trying to get to. There's always new taxation that you haven't heard about. All these things come up after you've made a deal, so it's coming off your bottom line. You think actually the project's going to have a profit margin of this, and then when you're finally there, you're down here somewhere else.

Streamlining up there, making sure that everybody's on the same page on the way we're going to do business will make it a lot easier when business actually happens.

[Dean Allison, Conservative, Niagara West, ON]

Good. Like I said, I think we agree with our friends across the way that trade deals are important, but I think we always need to be re-looking in terms of how to reduce irritants.

You guys have now worked on a couple of routes. How's it been? I mean, obviously, a trade deal would help facilitate more bodies and people, which would always be good for Air Canada as it relates to the routes, but how is the negotiation? Have you experienced the same kinds of challenges that some of these guys are talking about? Has it been difficult? You obviously have to do this around the world. This is not your first rodeo. What are you thoughts on the complexity or the ease of doing business in those countries?

[Fittipauld Lourenco]

Air transportation agreements are negotiated by Transport Canada outside of trade agreements. We have had some issues. There was a case in Venezuela. We stopped our service to Venezuela due to safety concerns for our crew and our aircraft. Aside from that extreme example, in Colombia we have an issue where there is a fee for scheduled carriers operating in Colombia. Air Canada is scheduled carrier versus, for example, Air Transat, which operates charters.

We are working out an issue with them, but I would encourage the committee to also put some time to it, if you can find the time, because we are charged a fee per passenger that Air Transat doesn't face, simply because they're considered a charter and we're a scheduled carrier. We have to have dedicated staff in Colombia as a scheduled carrier, and that hits our bottom line. Our competitors don't face that. That's not a knock against Air Transat. That's just a rule that exists in Colombia that we have to deal with and that we're trying to change through diplomatic channels.

[Dean Allison, Conservative, Niagara West, ON]

Perfect. That's good.

[The Chair, Liberal, Mark Eyking]

That wraps up our time.

Thank you, gentlemen, for coming. It's going to take us a while before we finish this report. We're also going to be potentially travelling to South America in the fall. We'll be wrapping up this report in the fall. You guys are welcome to have a copy of it, and we'll get back to you.

Thank you for coming. It was a really good dialogue and good presentations.

Colleagues, we're going to suspend for one or two minutes. Then we're going to go in camera to do some business for five minutes, and then we're hoping to get back on track for our next group of witnesses.

[Proceedings continue in camera]

[Public proceedings resume]