Evidence of meeting #10 for Transport, Infrastructure and Communities in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was maintenance.
A video is available from Parliament.
Liberal
The Chair Liberal Judy Sgro
Either one of you gentlemen has one minute left in Mr. Boulerice's time.
President and Chief Executive Officer, Van Horne Institute, As an Individual
Thank you very much. I'll start on that one and then ask Mike to comment.
You brought both Mike and me together to talk to you about some of the policy issues as they relate to aviation policy as opposed to dealing with rather complex issues that are more in the political and the legal framework in the province of Quebec, so I'm not entirely sure that it's a fair question to both of us.
Chief Economist and Chief Strategy Officer, InterVISTAS Consulting Group, As an Individual
If I can add a few remarks, this has been 30 years and in that 30 years we have seen new important airlines created and grow, whether it's WestJet and Porter Airlines, or Air Transat and so forth, and government, rightly or wrongly, decided to use competition. I would suggest that airlines would go bankrupt and typically after the second round of bankruptcy there is no more airline. That's not protecting jobs.
I don't fully understand the question. It sounds like it's a political question. If you choose to have a competitive environment as the basis for your policy, there is a range of competitive issues there, and maintenance is one of the important ones because it's such a large portion of aircraft cost, and you have one airline that has to compete with other airlines that don't have these restrictions.
Again my advice is to focus on safety and tax policy to create incentives for these jobs to be located in Canada as well as manufacturers. Where the manufacturers are you tend to get a lot of jobs clustered around them. That is very important.
Liberal
Liberal
Sean Fraser Liberal Central Nova, NS
I will be sharing my time with Mr. Hardy, so I'll try to keep my questions brief, gentlemen.
One of these questions we posed to the minister, who wasn't quite sure of the answer.
You mentioned government-owned airlines, Mr. Tretheway, are the exception. Are you aware of any other jurisdiction where they actually regulate the location where maintenance work or a corporate headquarters must exist?
Chief Economist and Chief Strategy Officer, InterVISTAS Consulting Group, As an Individual
I know that places where they used to, like Australia, no longer do that. I don't believe the U.S. has any regulations on that. I confess I don't know the details for Germany, but Lufthansa Technik has actually grown into a global maintenance group and I don't believe that Lufthansa is actually required to utilize them. But I confess I don't know the details on that. I'd say the norm throughout the world is no restrictions on where maintenance has to be done.
Liberal
Sean Fraser Liberal Central Nova, NS
As a follow-up, in a jurisdiction like Australia that has made the change, what has been the impact on the aviation industry in maintenance work on their continent?
Chief Economist and Chief Strategy Officer, InterVISTAS Consulting Group, As an Individual
Australia has I believe grown in total maintenance jobs, but not so much on the heavy checks. They tend to move offshore into much larger plants where they can even out the flow of maintenance. Qantas has got 12 A380s and they can't possibly justify a maintenance line for the heavy checks for that aircraft. However, as that market has grown overall because they've become more competitive, we see more of the line checks.
I'm optimistic for Canada because we have aircraft production here, not just in Montreal but also in Toronto, and I see the opportunity for us to build a bigger maintenance base than a country like Australia could.
Liberal
Sean Fraser Liberal Central Nova, NS
Mr. Wallis, you focused a bit on the sort of fettered discretion of the airlines in your opening comments and you mentioned that a typical airline will have 10% to 15% of its costs eaten up by maintenance.
Are you aware of any analysis of the actual costs that the current legislation has in respect of Air Canada?
President and Chief Executive Officer, Van Horne Institute, As an Individual
No, I don't have any information on that.
Liberal
Sean Fraser Liberal Central Nova, NS
I just have one quick open-ended question before I pass it on to Mr. Hardie.
Mr. Tretheway, you mentioned that in some respects the legislation may not go far enough to level the playing field. Do either of you have recommendations on how an amendment to the existing legislation could make Air Canada more competitive?
Chief Economist and Chief Strategy Officer, InterVISTAS Consulting Group, As an Individual
I find it hard to understand why we have a 25% foreign ownership limit in the Air Canada Public Participation Act when the Canada Transportation Act has exactly the same limit applicable to the same airline. It just strikes me as being peculiar that this is the case.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
I'd like to turn this on its head a little bit.
You both now have been engaged by the aircraft maintenance industry, and short of suggesting that we do a race to the bottom with local wages versus the wages that they're competing against in other countries, what advice would you give to Canada's maintenance industry in order to maintain good paying jobs and a robust presence here in the country?
President and Chief Executive Officer, Van Horne Institute, As an Individual
I don't think anybody's suggesting that there isn't a robust presence in this country. There are a number of maintenance operations across Canada that continue to thrive in maintaining a number of different aircraft types. I can tell you that here in Calgary at the SAIT, which is the Southern Alberta Institute of Technology, Aero Centre, they have graduates coming out in the area of avionics, airframes, and other areas of maintenance and they're all getting jobs coming out of that centre.
It seems to me that this industry is really quite robust.
Chief Economist and Chief Strategy Officer, InterVISTAS Consulting Group, As an Individual
If I could add here I do think the key success factors are things such as investment in training and sometimes that's in educational institutions. Peter made a reference to here in Vancouver where we have the B.C. Institute of Technology, and again their graduates seem to get placed into jobs. But it's also training incentives, for example, in Newfoundland Bonding & Composites, as more and more parts of the aircraft are composite materials and it takes about two years to train somebody to work in that.
Also, the tax incentives are extremely important. Maintenance facilities require a lot of investment in equipment and parts.
I think a combination of tax incentives and training incentives is absolutely critical for this.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Just quickly then, how close are we then to having ideal conditions to ensure that that industry continues to be, as Mr. Wallis says, pretty robust and has growth potential? How close are we to that?
Chief Economist and Chief Strategy Officer, InterVISTAS Consulting Group, As an Individual
I think we have a way to go.
When I look at some other countries, for example, I run an annual conference in Europe and most of the time we're in Germany and when I look at the education programs there and the funding they have for both trades education as well as a higher maintenance engineering type of education, Canada's a long way away from the types of incentives to get people to major in the hard aspects of our economy: trades, engineering, and so forth.
I think we're also pretty far behind in terms of incentives on the taxation side for investments in transportation generally, not just specific to air transport. I think it's a general problem in Canada that Dr. Emerson actually identified as well.
Liberal
Angelo Iacono Liberal Alfred-Pellan, QC
Gentlemen, in your view was privatizing Air Canada the right thing to do? How does Bill C-10 fit into this logically? Might this encourage Air Canada to do more maintenance outside of Quebec, Manitoba, Ontario?
Chief Economist and Chief Strategy Officer, InterVISTAS Consulting Group, As an Individual
I think that privatizing Air Canada was a very enlightened thing to have done. As I said, the rest of the world now has private airlines. Where you still have government-owned airlines are exceptions, and problems are often associated with that. Air Canada faced a lot of challenges to become a truly private airline. I think that since 2003, and especially in the most recent years, we've seen some tremendous changes there. At the same time, we've also been able to grow other private airlines.
We often forget. I remember prior to Air Canada's being privatized, in 1985 dollars it would cost me, for economy class, $2,900 to travel from Vancouver to Ottawa. We didn't have discount airfares. We had very high-cost airlines. The most recent trip I took, I think was $399 return. We can go further, but I think this has served Canadians well.
President and Chief Executive Officer, Van Horne Institute, As an Individual
I'd like to echo that. If you'd asked me that question a number of years ago, when I was an officer of Canadian Airlines, my answer may have been slightly different, relative to the benefits of privatizing Air Canada. In the fullness of time, it was the right decision. I think the economy of the country has benefited from it.
Liberal
The Chair Liberal Judy Sgro
You have four minutes left, if any of you want to share that time, or we will move on to Ms. Watts for six minutes.