Transport Committee on May 2nd, 2016

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

We observed the discussions that took place between Air Canada and the two provinces. As I already said, our department has for some time wanted to clarify provisions in Bill C-10 in order to minimize the possibility of legal action. The right time came up after decisions were taken regarding the intentions of Quebec and Manitoba.

[The Chair, Liberal, Judy Sgro]

I'm sorry, Mr. Berthold, but your time is up.

Thank you, Mr. Garneau.

There's sufficient time for another round.

Mr. Sikand.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

I have two quick questions.

In regard to the aerospace industry, are we the only country that stipulates or requires a carrier to have their operations set somewhere?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

It's a good question. I don't have the answer to that. Certainly we did have the specific strings attached to Air Canada for almost 30 years and they're still officially attached.

I'll turn to my colleagues. I don't know whether other countries have similar.... There are state-run airlines in other countries, but in terms of independent carriers I don't know the answer to the question. I suspect it's probably unusual.

May I ask my associate deputy minister to speak on that?

[Catherine Higgens, Associate Assistant Deputy Minister, Policy, Department of Transport]

I'd be pleased to.

We're not aware of any other country that has similar requirements. We would be happy to look and to return with that information to the committee.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Thank you.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

I think I heard you say, Minister, that Air Canada employs 25,000 people?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

That's correct.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Potentially that's the number of people who could be at risk if that company fails to be competitive on the global scale?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

There's no question that the airline world is extremely competitive and Air Canada has to compete out there with everybody else. It's a big picture and with Air Canada the maintenance activities are a significant portion of its financial obligations.

It obviously has to maintain the airplanes so that they remain safe and continue to provide all the flights that it advertises. How they do the maintenance and where they do the maintenance is a factor that all airlines consider. Certainly in Canada at the moment Air Canada is the only one that has the constraints of Bill C-10.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Thank you, sir.

Madam Chair, I'll be splitting my time.

[The Chair, Liberal, Judy Sgro]

Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much, Minister, for joining us today.

Building on the theme of Air Canada's competitiveness, the CTA review indicated that in a major international market that is very competitive that's the direction Air Canada would need to go in to experience growth. Do you agree that we do need to reach into the international markets and is labour a relevant factor in gauging the competitiveness of Air Canada?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Certainly Air Canada operates not only domestically but internationally and for it to grow it has to continue to build those markets. There are opportunities for it to build markets internationally.

With respect to the question of labour, could you tell me a little bit more about what you meant?

[Sean Fraser, Liberal, Central Nova, NS]

It seems to me that under the existing legislation the locations that you can recruit the labour force in are restricted. I'm wondering if you can expand on the impact that that restrictive nature has on Air Canada's competitiveness to branch out into these new markets.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

It's a good question. It's one I would have to get back to you on. I think it's a big, serious question and I don't have the answer at my fingertips, but we'll look into that.

[Sean Fraser, Liberal, Central Nova, NS]

Sure. Turning the page a bit, legislation is obviously one tool that's available to encourage growth, but I don't believe it's the only one. Could you highlight potentially some other things that Air Canada could explore to experience growth?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

This allows me to bring up the fact that the “CTA Review—Report”, tabled on February 25, makes certain suggestions that the government may wish to look at. One issue, which I'll bring up as an example, is increasing foreign ownership to 49%. The argument that is brought forward by the “CTA Review” is this would encourage the creation of other companies to come into the market and would make the whole business more competitive for the consumer.

We're going to be looking at them and all the other recommendations related to air passenger transport that are contained in the “CTA Review” during the course of the spring, summer, and fall.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much.

If there's time left, I'm happy to give it to Mr. Iacono.

[The Chair, Liberal, Judy Sgro]

Mr. Iacono, you have a minute and 15 seconds.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Chair.

In your opinion, Minister, how can we protect Canadian jobs and also allow Air Canada to modernize and remain competitive on the North American market?

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

That is the dilemma we are facing. Air Canada had some very specific obligations under the previous act or under Bill C-10 in its current form.

In 1989, Mr. Mulroney's government privatized Air Canada and gave it its independence and the opportunity of integrating the airline world. He asked them, however, to respect four requirements, one of them being to keep its aircraft in three specific cities. Now, in addition to clarifying the act, we recognize that Air Canada has to compete with other carriers in a world that is fiercely competitive, and we feel that we have to give it more leeway with regard to decisions about maintenance.

[The Chair, Liberal, Judy Sgro]

Thank you, Minister Garneau. The time is up.

Ms. Watts, you have six minutes.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Thank you very much, and thank you for being here again.

I need some clarification on a couple of things. You're saying the bill is introduced based on the litigation between Air Canada and the provinces.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

It's introduced as a result of our getting an indication that the Quebec government and the Manitoba government, which was an intervenor, said very clearly that they intended to drop their litigation with Air Canada.