Evidence of meeting #36 for Transport, Infrastructure and Communities in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was technology.
A recording is available from Parliament.
Vice-President, Government Services, Discovery Air Innovations
Government makes choices every day, and through the application process someone will determine whether this is a worthwhile venture, balanced against other requests.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Isn't it always better for that someone to be making decisions with their own money, rather than with other people's money? Because that's what government does: it spends other people's money.
Vice-President, Government Services, Discovery Air Innovations
But government invests in aerospace all the time. The funding for SADI is close to a billion dollars. They gave CAE $250 million last year for developing something. What was that for?
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
My question was about your asking for incremental government expenditure. We don't have any money in government: governments just take money from other people. The people we take it from are those who earned it. They obviously have taken risks to earn that money. Why should your enterprise have it instead of them?
Vice-President, Government Services, Discovery Air Innovations
Because I believe that this is a worthwhile venture. I believe it is going to create a lot of benefits for Canada, not just in terms of what the technology will ultimately do so that this government can realize the vision it's communicated with its northern strategy, but also by creating economic benefits.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
You mentioned these economic benefits. For example, let's say that a mining company takes advantage of the technology. Frankly, when I looked at your technology it seemed extremely promising, and if I were doing business in the mining sector, particularly in a remote community, I would be very interested in what you have to offer. But these mining companies would be paying you, so any benefit you're creating for a mineral firm, for example, would be reimbursed to you through their payment for your service. I don't understand where the taxpayer needs to be involved in that transaction.
Vice-President, Government Services, Discovery Air Innovations
We're asking the Government of Canada to assist in the early-stage developments of this technology. We're not asking for handouts. In fact, any money that would flow into this program we would expect to repay through the commercialization of the technology. We have a lot of companies that are interested in this, but given the stage of the technology they are not going to pay for something they have not seen see work yet. We believe a proof of concept and a technology demonstration is a prudent way to progress. We're not expecting the Government of Canada to fund this. We are going to put our own funding into this and, hopefully, some of these industry partners are going to put some funding into it as well.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
If we're talking about repayable contributions, we have whole industries in the financial sector that do that for a living. They lend money to businesses. So I don't understand why taxpayers then have to take on the role of banker?
Vice-President, Government Services, Discovery Air Innovations
If we were going out and acquiring a 747 to put into service, I'm pretty sure we could get traditional financing for that because if the business case for it fell apart, the lender could seize the asset and there's a resale market for an aviation asset like a 747 or 737s or Q400s.
But we're not talking about an airplane that goes into the airline industry. We're talking about a brand new technology, and maybe 20 years from now there'll be secondary airship market, but right now there isn't even a market. So traditional lenders are going to look at this thing and say, “Okay, if we can't get our money back by seizing the asset, what else are we basing this on?” It would have to be based on project cash flows. The cash flow relies on customers. Customers are reluctant to commit based on the fact that they want to see this thing and see it work. That's why we think Canada, the government, has a role to play in doing a technology demonstration, which I don't think is a lot to ask considering there is a significant upside.
Conservative
Jeff Watson Conservative Essex, ON
Thank you, Mr. Chair. Thank you to our witnesses for appearing and to the chair once again for the study on airships.
This has been fascinating. I'm still barely at the novice stage of understanding all of the capabilities. I appreciate hearing that the limit of landing one of these hybrid air vehicles is 80 kilometres per hour. That was useful. We were trying to get some of that information out at our last hearing and weren't able to. That it has the same cargo capacity as a 747 is pretty impressive if you're moving items to the north, for example.
Do we have any way of gauging what the global demand is for hot air vehicles, or even the North American demand for HAVs? If you were going to begin manufacturing, what is the realistic market or demand for these, since we're still in a fairly early stage of commercialization on this?
Vice-President, Government Services, Discovery Air Innovations
There's been a variety of market studies dating back to the late-seventies, and the upper limit of the global demand for these things has been forecast as 1,400. We think that's—
Conservative
Jeff Watson Conservative Essex, ON
Over what timeframe? For that 1,400, would it over the next five year? Ten years? Twenty years?
Vice-President, Government Services, Discovery Air Innovations
If you could instantly produce 1,400 of these things, there are market studies saying there are customers who could use that capacity. So if you had a production capacity that could produce that much, you could find a market. We think that's a little on the high side. The average for any of the studies we've seen is more like 200 to 300 air vehicles, and that's consistent with our own market analysis.
Vice-President, Government Services, Discovery Air Innovations
At steady-state, it would take about 12 months.
Conservative
Vice-President, Government Services, Discovery Air Innovations
Well, sure. You're assembling an air vehicle that's the size of Scotia Bank Place. It's going to take a lot of work.
Conservative
Jeff Watson Conservative Essex, ON
I presume that some of the major costs include actually building a hangar facility in which to manufacture or construct one of these things. I was just thinking of a hangar built in the city of Windsor for maintenance and repair overhaul that fits a 747 and a 737 side by each, but it's only about 40 feet high. It cost $21 million. I imagine that if you more than double the height of that and get to 10 storeys, we'd be talking about a significant investment just for a single piece of infrastructure.
Vice-President, Government Services, Discovery Air Innovations
We've had quotes ranging from $35 million to $57 million for a facility, depending on the construction methods.
Conservative
Jeff Watson Conservative Essex, ON
You've said that you plan to be operational or will be putting into service a hybrid air vehicle by 2015. You've presented a number of possible recommendations, but you've also dealt with some obstacles. If nothing were to change, would you still be operational in 2015? And if changes were made, what would introduce that quicker?
If we did nothing, if we made no recommendations to change anything at all—and I don't suspect that will happen—would it still be operational in 2015?
Vice-President, Government Services, Discovery Air Innovations
I would say that there's still a high probability that we would have one of these air vehicles built and, hopefully, through the certification process, depending on how cumbersome that becomes.... It's a bit of an unknown at this stage. We may operate these in Canada if there are customers, and we know there are customers, but things like manufacturing and final assembly, all the R and D associated with new fabrics, engine technology, that kind of stuff will not take place in Canada.
Conservative
Jeff Watson Conservative Essex, ON
If changes were made with respect to the regulatory environment, how would that have an impact on what you propose to do? Would it get you much closer? Is it still too far away? That's a practical consideration to bring to the table, even though we don't favour one technology over another. It at least brings to the table HAVs as an equivalent consideration with other forms of technology.
Brian Bower Vice-President, Fleets and Engineering, Discovery Air Innovations
I think our schedule, as it is right now, is based on a regulatory environment that adopts standards. Right now, Transport Canada, for example, doesn't have appropriate regulations for these and borrows them from other groups. There are the airship design standards from the FAA and there's also a standard in Europe with EASA. These are probably going to be the full basis for the vehicle, because a vehicle that will be globally operated will need to have one or both of those. But to operate it as a Canadian operator in Canada, we have assumed that Transport Canada will adopt regulations consistent with and appropriate to a new vehicle, in other words will not use balloon regulations or things like that.
Conservative
Jeff Watson Conservative Essex, ON
For licensing purposes, should an operator have some sort of fixed-wing aircraft licence as a precursor rather than a balloon licence?
