Evidence of meeting #40 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 aircraft.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

John Crichton  President and Chief Executive Officer, Nav Canada

9:25 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

Oh, yes, we're a public company in the sense that we're a public issuer. So we're just like any company that trades on the stock exchange. We're subject to the same disclosure rules. You can get all of our corporate documentation on SEDAR. So we're just like any other public company.

9:25 a.m.

Conservative

Ed Holder Conservative London West, ON

How did you do financially this last corporate year?

9:25 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

We've done well. We've been holding our own and—

9:25 a.m.

Conservative

Ed Holder Conservative London West, ON

“Holding your own” sometimes means just breaking even and hanging on for the ride. What would you say in your case?

9:25 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

We don't try to make a huge profit. How we ultimately judge how we're doing financially is whether or not we had to raise our charges to our customers. I can sit here today and tell you that we have not done that for eight years. In fact, over the last eight years we've reduced them twice.

At the same time we've made some pretty substantial investments in technology, and so on. We've gone through some pretty severe downturns in terms of traffic, which of course reduces our revenues, and we've still not raised those rates. We've managed to find innovative ways to run the business and to introduce new technology without doing that.

9:30 a.m.

Conservative

Ed Holder Conservative London West, ON

To ask point blank, if I may, how much money did Nav Canada make in the last year before it decided to use those funds to do other things?

9:30 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

We do about $1.2 billion a year in sales. I've forgotten exactly what it was last year, but it was within $10 million of breakeven, or something like that.

9:30 a.m.

Conservative

Ed Holder Conservative London West, ON

So with any of those profits that you make, there are always things one can do in business. If you felt this automatic weather reporting equipment was required in the north, might you make some investments in that, or have you done so already?

9:30 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

We already have and we're prepared to continue to do that. It's just that we can't justify the amount that would be required to do the whole thing. Because you have to remember that when we make an investment in a particular area, where the revenue cannot pay for it, then we're asking our customers in other parts of the country to pay for it.

9:30 a.m.

Conservative

Ed Holder Conservative London West, ON

But I thought I heard you say in your testimony earlier, Mr. Crichton, that there are some areas of the country that really don't pay and carry their weight. So that's not something foreign for Nav Canada to invest in.

9:30 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

No, and we do invest and have invested heavily in the north. But I think to introduce a new technology of this type, a little government assistance would help because it does bring a lot more benefit than just to people flying airplanes.

9:30 a.m.

Conservative

The Chair Conservative Merv Tweed

Thank you.

Mr. Toet.

May 31st, 2012 / 9:30 a.m.

Conservative

Lawrence Toet Conservative Elmwood—Transcona, MB

Thank you, Mr. Chair.

Thank you also to our guests this morning. It's been very interesting to see some of the technologies.

I want to touch on that a little. In your statement you talked about many of your technologies being developed in-house by your engineers, along with the controllers. That's what I'd like to have clarification on first. Are other collaborative efforts that are ongoing? If so, how are those collaborations working and what type of groups are you collaborating with to bring forward further technologies that NavCan can bring out?

9:30 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

There are essentially two types of technology in our business. There is what we call CNS—communication, navigation, surveillance—which is typically hardware. We don't develop those. There is a large market of suppliers and a very competitive, very good marketplace. We just compete our procurements in those areas.

The other technology is what we call an ATM system—air traffic management—which is essentially software. In that area, we are distinctively probably the only ANS in the world that develops all its own ATM software. Other ANS groups typically use these large system integrator companies and so on. That's what the government in Canada used to do before we came along. We put an end to that. We find that producing it ourselves produces a much better product—a faster and lower-cost product, and so on. Because we produce it all ourselves, we own it, and therefore we can sell it to other countries. We build the systems through integrated internal teams largely involving our engineering people, our air traffic control people, and others in the company to develop these projects from start to finish, to implementation.

Since marketing these products around the world, we are now finding that we've developed a lot of collaboration with people in other countries in our business who have unique requirements. They'll say, “Yes, we want that here, but this is London Heathrow, and we have to do things this way. Can you change your system so that it will do that?” To which we can say, “Absolutely.” The British, for instance, use our oceanic system. We had to adapt that to certain requirements they had on the European side.

We're becoming quite well known around the world as somebody who can do things and develop these products. This is really starting to develop into quite a business, which I think is great for us, great for Canada. It brings a lot of stability and in fact growing employment.

9:35 a.m.

Conservative

Lawrence Toet Conservative Elmwood—Transcona, MB

I assume there must be some real good cooperation and a great working relationship with some of your hardware providers in order to create what you're doing in the software aspect of things. Have you managed to establish those types of relationships where there's a real ability to work back and forth through those processes?

9:35 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

The ATM itself is largely just software. It's not really dependent on.... I mean, there's lots of hardware you can run the software on. That's not a problem. We do have relationships with particular suppliers where we will enter into cooperative arrangements with them to bid on work in other countries that we do from time to time.

9:35 a.m.

Conservative

Lawrence Toet Conservative Elmwood—Transcona, MB

I just wanted to go back a little bit to your comments regarding performance rather than method on the regulations and how that would work out in essentially an outcome-based solution. Rather than looking at regulations that say, “This is how you have to get to this point”, you're saying that you just want to work with the regulatory bodies to say, “This is the outcome we want, and this is required performance”, and then work within the context of that to get to that.

You gave us one example of that, but as you go through the process of your development, are you able to work with some of the regulatory bodies? You obviously worked through one of these situations. Is that something that is an ongoing process, where you're working with the regulatory body to try to change that mindset, and also to show, as you're going through the process, the capabilities you have, the changing capabilities, and how they can be adjusted to bring forward better performance in the end, without having to rely completely on a system where we're looking at everything from a methodology point of view rather than a performance point of view?

9:35 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

Yes, and let me be clear that our suggestion here on performance-based versus prescriptive regulation is not to be interpreted in a negative way towards Transport Canada. Transport Canada is very familiar with the concepts and the differences between the two of them. We have a very professional and productive relationship there. They understand these issues. I think they're very supportive of these issues in a lot of ways. There's a lot of dialogue going on there.

In our view, to really reap the benefits of the technology that can be available, we need to get over the old prescriptive way and start to embrace, perhaps, a little more the performance-based approach. But people are coming around to that. There's no question about it.

9:35 a.m.

Conservative

Lawrence Toet Conservative Elmwood—Transcona, MB

You're saying there is a good relationship with the regulatory body as far as that goes. You're able to work through those processes.

9:35 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

Oh, yes. I'm not here to complain about anything like that.

9:35 a.m.

Conservative

Lawrence Toet Conservative Elmwood—Transcona, MB

How does that work on the international front? Obviously, like you say, you're selling your software throughout the world and you run into some of those same issues.

Are you able to also work collaboratively on an international front to try to bring some of these ideas forward?

9:35 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

It's very interesting. Some countries are very, very prescriptive, and I think this is where Canada can have a real advantage. We run into this frequently.

We have to go through some hoops to demonstrate to other regulators in some other countries why our systems work. One of the advantages is that we are so well thought of, and Canada is so well thought of, that we have quite a bit of credibility when we go to do that.

9:35 a.m.

Conservative

The Chair Conservative Merv Tweed

Thank you.

Mr. Sullivan.

9:35 a.m.

NDP

Mike Sullivan NDP York South—Weston, ON

Thank you, Mr. Chair.

Thank you, Mr. Crichton for being here.

I want to go back to the noise contour issue, and the issue that I've heard a lot about as well. Perhaps you haven't had a lot of complaints about this because it's very difficult to find the number on the website of whom to complain to at Pearson airport.

As I understood the issue, to save the airlines fuel, Nav Canada was changing the arrival and departure runways in Toronto in order that they could use less fuel to get from the runway to the gates.

I understand flight path changes, but as we understood it, there used to be a distribution, a kind of even-handed distribution, of which neighbourhoods were going to experience the noise—depending on the weather, of course. If the wind is strong enough, you can't do this.

Can you comment a bit on whether that's something you've done and whether that has in fact changed the exposure patterns?

9:40 a.m.

President and Chief Executive Officer, Nav Canada

John Crichton

What has really happened, I guess, is a partial implementation of PBN, which allows the aircraft approaching Toronto to stay higher longer, thereby changing some of what we call the “bedposts” or final approach fixes for the different runways.

What it has done is that people will now be seeing aircraft in areas where they didn't used to see aircraft. But the aircraft are higher.