Thank you very much.
Mr. Chairman and honourable members, good afternoon. Thank you for inviting me here this afternoon to speak with you on the matter of Bill C-11.
Let me first take a few moments to familiarize you with our organization. The Air Transport Association of Canada was founded in Ottawa in 1934 as the national voice of Canada's fledgling aerospace and aviation industry. ATAC today is composed of a membership of over 200 companies of all sizes that collectively account for over 95% of commercial aviation revenues in Canada. We would like to address this committee, however, from the passenger's perspective, for it is the passenger's interests that ought to be at the heart of everything we do.
In Bill C-11 we see a bill that ostensibly deals with many issues related to passengers' concerns: air travel complaints, reviewing mergers and acquisitions, airfare advertising, and the use of airline data and passenger information. The sad reality, however, is that none of these measures actually address any of the real issues of concern to our passengers. You know yourselves what those are. You travel by air more than most Canadians. You know that what passengers want more than anything else from their air travel experience is safety, efficiency, and the right balance in the price and service mix. So that is the proper perspective from which to view these measures.
Indeed, it is a perspective that casts this bill in a less than flattering light, not for what it addresses, but for what it does not. It purports to introduce measures that are friendly to consumers, but does not actually help to lower costs, does not help to improve efficiency, and does not help to improve value.
For more than a few years now, ATAC and its members have been pleading with successive governments on behalf of our passengers to reduce the crippling effect of government ground rents due by passengers at airports. Established in the mid-1990s in conjunction with the development of airports, these rents have contributed approximately $300 million annually, and $2 billion since their inception, to general government coffers. The total contribution has already exceeded the net worth of those facilities at the time of their transfer, which was approximately $1.5 billion, a figure, by the way, which in no way accounted for the significant upgrades to those facilities, since most of them were practically falling apart.
Transferring the airports allowed the government to offload that cost to the local authorities, which recouped the investment costs from the users, namely, airlines and passengers. In short, it is a misnomer to label these payments as rent. They are actually a simple but brutal tax on flying, and they make the system about $300 million a year more expensive than it needs to be or ought to be. We respectfully submit that if Parliament is truly interested in pursuing the best interests of passengers, it should first and foremost occupy itself with this pressing matter.
Still, we are presented with a series of measures in this bill that require our scrutiny. It is probably fair to say that the most high profile of these measures is the proposal to fold the activities of the air travel complaints commissioner into those of the broader Canadian Transportation Agency mandate. From our perspective, this is a sensible move, insofar as the existence of that office represented little actual value for taxpayers' money. This has been an institution that stands out from other sectors in its purpose and role. There is no complaints commissioner for other modes of transportation, nor is there such an office for practically any other sector of the economy. The reason is self-evident. Clearly, there can be no better arbiter of the consumer interest than a healthy and highly competitive aviation sector.
Let's recall that when the office was created, it was in an era of much hand-wringing about the future state of competition in this industry. Air Canada had just completed its acquisition of Canadian Airlines in 2000, and many observers, including many parliamentarians at the time, expressed significant concerns about Air Canada's potential dominance in the market.
Despite this industry's assertions at the time that the marketplace would in fact provide the appropriate level of service and competition demanded by consumers, the office was established, among a series of other measures, in an attempt to create by legislation a regulatory framework that would protect consumer interests in the perceived absence of competition. But as we said it would, the marketplace did in fact return to a level of providing competitive service that responded to the demands of consumers. Anyone doubting that assertion need look no further than the fact that WestJet's market share today, for example, is at approximately 40%, higher than any level previously achieved by Canadian Airlines.
While there will always be some level of service disruption in our industry from time to time, we respectfully submit that a careful analysis of the role and value of the complaints commissioner since the position has existed clearly demonstrates that a healthy and competitive marketplace, and not another layer of government bureaucracy, can best respond to the need of consumers.
Similarly, the proposed authority granted to the minister to review mergers and acquisitions in all sectors of transportation is another example of a legislative tool introduced during the hysteria of 1999-2000 that has little, if any, practical value for passengers. Unlike the previous measure, however, this one actually does offer very real harm to the interests of passengers.
Nearly all stakeholders in commercial aviation, from consumer groups to infrastructure service providers to airlines, support lowering the barriers to investment in this sector.
We all recognize that ours is a very highly capital-intensive business, with large start-up and operational costs that are required to support, ultimately, a low-yield business climate. If a healthy, competitive aviation sector is the goal, why put in place regulations that cast doubt on Canada's openness to investment in this sector?
Moreover, this authority vested in the minister runs counter to the stated principles of the CTA, including those that say that “competition and market forces are, whenever possible, the prime agents in providing viable and effective transportation services”.
As with the previous measure discussed, since this was a tool introduced to deal with a perceived problem that never materialized, parliamentarians should rightly be asking themselves: what is this for and what does it do for consumers?
As to the matter of empowering the minister to regulate airfares, we encourage parliamentarians to remember where this came from and to ask themselves what value it represents to passengers. Indeed, some of our own members may tell you it has some value. Carriers who primarily distribute their tickets through provincially regulated tour operators and travel agencies, for instance, may see some value in a federal standard that would apply throughout Canada, while others who market their services directly to consumers question the need for this measure in the first place.
Certainly we are all united by the common interest of ensuring that consumers are fully and directly informed as to the makeup of their ticket cost. ATAC's concern with this proposal in regulating airfares advertising simply rests with the potential for abuse. As you well know, the final average cost of a discounted airline ticket in this country is comprised of anywhere between 25% and 40% in additional various government and government-created monopolies' taxes, fees, and charges. I don't think it would be fair to consumers in any way to hide information from them as to who is getting their travel dollar. They have a right to know.
While we take no specific view as to the propriety of this measure, we question the focus on disclosing the full price when the real focus should be on helping to reduce it. After all, shouldn't we be more concerned with making a $99 fare to Toronto more sustainable in the long run than wringing our hands about whether or not that $99 fare includes all the various government fees and charges?
In a similar vein, this proposal also purports to empower consumers by giving the CTA the authority to regulate the display of its terms and conditions for international services on the carriers' websites. We would certainly agree with the notion of ensuring that consumers are fully informed of the terms of carriage, which is why we clearly state the restrictions applicable on any ticket prior to the completion of a sale. We would caution the committee, however, to seek clarification on the meaning of this measure.
As some members may know, the full tariff is a legal contract consisting of thousands of lines of detailed text, spelling out every travel eventuality and arrangement known. The full text of a tariff rule can run over a hundred pages. We respectfully submit that it is in keeping with the spirit of the legislation to clarify this clause in order to provide consumers with practical and clear information as to the terms of carriage, rather than a requirement to publish the full text of the tariff itself.
As to the matter of sharing aviation data between government agencies, our industry takes no specific view as to the merits of these provisions. This is a broader social question, which is not limited to the commercial interests of airline service providers. From our members' perspective, our limited concern rests with the integrity of that data, which rightfully belongs to our passengers. We urge government to proceed cautiously when sharing data information and to do so only to the extent necessary, and to ensure the integrity of our databases by limiting any data-fishing exercises.
Finally--and to be fair--this legislation proposes a few housekeeping measures, which the industry can support. It contains clauses to require that persons acquiring an air service from another licensee must themselves hold an unsuspended licence. It exempts operators of seasonal service from the obligations of providing notice when suspending a service, for obvious reasons. And several other sections are also amended to provide the CTA with greater flexibility in making its determinations on a number of regulatory matters. The industry, by and large, supports these measures in principle.
So while this legislation is not entirely without merit, I return to my opening statement about assessing the bill from the passengers' perspective. If we can agree, more than anything, that passengers want safety, efficiency, and value in their travel experience, we have to ask ourselves what, if anything, this bill accomplishes from that perspective. Sadly, the answer is very little.
Ultimately, motherhood statements about airfare advertising rules, air travel complaints, and reviewing mergers and acquisitions do nothing to lower the costs at airports or improve the travel experience for passengers.
As some parliamentarians may recall, this bill is the third incarnation of this legislation. For some strange reason, Transport Canada keeps focusing on these measures that offer words in place of action to actually address the cost structure of this industry and the interests of passengers.
With that, I can only conclude by saying that the aviation industry in Canada is disappointed in this legislation but looks forward to discussing issues of meaningful reform, including those contained in the Canada Airports Act. Also, we hope to finally see some meaningful airport rent reductions for our industry and passengers.
Thank you. I look forward to your questions.
