Transport Committee on Sept. 24th, 2018

[Dr. Tim Nohara]

We should. To use a hockey analogy, to do anything smarter is team play. Whether we're a shipping company, the seaway, the government, the regulators, Transport Canada, we all have an individual role to play. This is voluntary team play because it makes us all better. It's system-wide and enterprise-wide.

For example, there is the operational fluidity I mentioned in my opening remarks, about congestion with respect to pleasure craft. Let me give you a few more examples.

We have environmental concerns. We have climate change and high water levels. In the last couple of seasons, we have seen high water levels. What happens? We have ships, especially foreign ones, moving through our waters for trade. The water level is much higher. We have been flooded here in the area. They can now carry more cargo. It's what they are going to do. They are going to move more cargo. They don't reduce their speed. Now the power of the wakes they are creating is causing massive infrastructure damage at the shoreline. Part of the smarter shipping would be recognizing the connection between climate change and actual operations.

There are many examples like this that come from the stakeholders, the community itself. There are the right whales. We need to enforce the speed of vessels through corridors. We have ice in this region. We use hydro in Ontario and Quebec. We're very proud of our hydro generation, our clean power generation. Would you believe that the operational efficiency of the generation of that power in dams relates to the underwater ice structure in the winter months, and that relates to the speed of the ships during the freezing?

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

On that example, I can say that it's mainly the port's responsibility to upkeep itself, to improve itself. It wouldn't be a government thing.

Second, if that is the case.... I'll make a reference to my port in Montreal, which I visited recently. They are the ones who brought to me the concept of intelligent ports. When they said that, I asked whether they have visited Laval. This is the riding I represent, which is one of the one or two ranked smart cities.

When we're focusing on smart cities, what are the ports focusing on? Is it going to be an intelligent port city, or what is it exactly? People from the Port of Montreal are going to visit the city of Laval, the STL, which is the urban transport system, to get a lot of their tips with respect to intelligence.

In this case, given that some ports are already using technology somewhat, is there a sharing of information among all the ports of Canada?

[Dr. Tim Nohara]

There isn't as much today, but that's what I'm proposing. Sylvie at the Port of Montreal is one of our strong supporters in this shared maritime domain awareness. You are correct. It does connect back to smart cities.

Here in Niagara, we're dealing with a technology from a marine component we're just installing right now with OPG. It's going to support firefighters and search and rescue. It's going to support the marine units that are municipally funded. When they get a call and they don't know where somebody is stranded, that sharing of maritime domain awareness is going to give them a better fix so they can spend fewer hours in search.

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

What do we do with pleasure craft? How do we solve that problem?

[Dr. Tim Nohara]

It's more about that fact that, first of all, if you know where the congestion is, you can plan. If they happen to be at a choke point, the harbour masters tell us.... They are all part of this initiative and well understand smarter shipping. They have a relationship with the marine units, and they will dispatch them and say, “I have a ship that has an appointment in two hours at my dock facility. There's a fishing group going on right now. Can you move those vessels down so we don't have to stop at an anchorage point after the ship has been full steaming, burning fuel and pumping greenhouse gases into the environment?“

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

Thank you.

[The Chair, Liberal, Judy Sgro]

I understand that Mr. Badawey has a question or a comment.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I just have a short comment. It goes to Mr. Aubin's comments with respect to the need to help facilitate and to take the next steps so that we can take all this technology and all these ideas and come forward with a trade corridor strategy specific to southwestern Ontario, and then how it fits into the national agenda as it relates to the national transportation strategy.

My question to you folks is this. With that said, and with us trying to facilitate that discussion, what is your opinion or what are your thoughts on how we actually take the next steps? What is the take-away? We—as in the hockey analogy, “we”—talked about other areas.

Mr. Robson, you mentioned passenger movement. High-speed rail is another example. I know that Mr. Aubin is very much interested not only in railway safety, but also in passenger railway.

When you look at that and walk away from here today and it becomes Tuesday tomorrow, what are the next steps you expect? Also, what would you be willing to participate in?

[Patrick Robson]

Thank you for the question. I just have a couple of points on that.

First, we've heard the term “collaboration”. We have multiple jurisdictions. Having worked in a binational area for a number of years, I note that the first thing you do is establish your common objectives. If you have agreement upon those, how you deliver on them is the stuff of concerted effort.

My other comment is that we also talked about integration of systems. Integration is not a concept. It's a verb, so at some point there has to be a strong statement to say, okay, now is the time. If there are partners, levels of government and industry that want to be part of the solution, they have to jump in and actually act in that fashion. That requires collective will and, I believe, some leadership. Certainly, in terms of things like borders policy and programs that come from that, I believe they're a good trigger for prompting that kind of integrated action.

[Vance Badawey, Liberal, Niagara Centre, ON]

How much time do I have?

[The Chair, Liberal, Judy Sgro]

You have about two minutes.

[Vance Badawey, Liberal, Niagara Centre, ON]

I'm going to ask you guys to go further on that, but I have to make this comment before I run out of time.

I have to congratulate and thank the committee for taking this opportunity to come down here. Although we all belong to different parties and wave different flags, there is sincere thought and a sincere effort to further this agenda because of the need nationally, albeit we're here to discuss one region in a national agenda.

The reason I say that—not only in appreciation but also with respect to the next steps and the leadership role this committee can take under our fearless leader, Chair Sgro—is to actually take those next steps and help facilitate, take a leadership role and do exactly what Mr. Nohara was speaking about earlier with respect to putting all these pieces together.

[Dr. Tim Nohara]

I've travelled the country, and we've deployed solutions across the country into the United States and around the world. I'm a very proud Canadian.

One thing I recognize is that this region.... The Great Lakes seaway is bigger than Niagara. It's the entire 3,700-kilometre border through the middle shipping trade corridor, which hits all the next points along the way, with Niagara of course being at the centre. This is a vibrant, hugely valuable asset.

I do binational trade and international trade. I want to be here, but we need this region, this area recognized for what it is. I also believe that if it's recognized we can make a contribution nationally and internationally. We're equally active on the west coast, and a little less so on the east coast. With the contribution we can make by doing the kind of work that you ask questions about, and with the big data and the research institutions here in Niagara and in Quebec and Ontario, and exporting that around the world, I think it's just very impressive.

I'd like it to be recognized. I'd like all the partners recognized. You talked about smart cities. All the CEOs from the major ports and small ones are part of this initiative in terms of a dream, in terms of recognizing it. If we're recognized, I think we might be able to attract the investment. The collaboration is already there.

[The Chair, Liberal, Judy Sgro]

Thanks very much, all of you. This has been a very interesting panel.

We will suspend now for 15 minutes for a tea break.

[The Chair, Liberal, Judy Sgro]

I call this meeting back to order.

From the John C. Munroe Hamilton International Airport, we have Cathie Puckering, president and chief executive officer. From WestJet Airlines Ltd., we have someone we know very well, Andy Gibbons, director of government relations and regulatory affairs.

I'll open it up for five-minute remarks from each of you, and then we'll have questions.

Ms. Puckering, go ahead.

[Cathie Puckering, President and Chief Executive Officer, John C. Munro Hamilton International Airport]

Thank you.

Good afternoon, Madam Chair and members of the committee.

My name is Cathie Puckering. I am president and CEO of the John C. Munroe Hamilton International Airport. I hope this day has been informative, and I'm very fortunate to have the opportunity to add to the conversation.

The airport is a key stakeholder, enabling the movement of people and goods in this vital transportation region. Our feedback for potential solutions will provide the Government of Canada with our perspective on ways to improve both infrastructure and key linkages across the corridor.

[The Chair, Liberal, Judy Sgro]

Could you slow down a bit? The interpreter is having difficulty keeping up.

[Cathie Puckering]

I'm proud to say that we're the fastest-growing airport in North America. Almost 600,000 passengers flew from Hamilton last year, an outstanding increase of 80% thanks to the market stimulation being created by the entrance of low-cost air carriers. The federal government has recognized the growing consumer demand for low-cost travel and enabled new entrants to our market.

We are also Canada's largest overnight cargo airport. We facilitate the movement of goods across the country, into northern communities, across the border and into global markets. In 2017, our cargo grew 14%, a result of e-commerce activity and high-value and time-sensitive goods such as pharmaceuticals, perishables and automotive parts. Our partners are extensive and they chose Hamilton for its strategic location, acting as a key link between the ground network and global markets. Our region is broad. With a 12-hour drive, you can reach key markets such as New York, Chicago and Boston.

Growth creates demand for aviation-related services. Maintenance facilities are expanding and in need of a highly skilled yet constrained workforce. Developers in industries such as aerospace manufacturing are signalling interest to build on our land. Emerging opportunities are attributed to the fact that we are part of the GTHA, a population of 9.2 million people, yet disadvantaged by having only one major mobility hub, unlike U.S. metropolitan areas with similar population sizes that have at least two.

We are part of the Southern Ontario Airport Network, a group of the most commercially significant airports in southern Ontario. More than 110 million passengers and over one million tonnes of cargo will flow through this region by 2043. These opportunities align to our vision—to be recognized by the world as the best global gateway in Canada for affordable travel and goods movement.

Three key matters, with your support, will enable our growth potential.

First is the need for adequate transportation infrastructure. Increased activity and aging infrastructure exist in Hamilton, and airfield rehabilitations are costly. Our 24-7 operation supports diversion activity from Toronto airports, adding further pressure on our infrastructure to support the region. Moving people and goods efficiently through security and border crossings is challenging, and commitment is needed from CATSA and CBSA to reduce bottlenecks. Infrastructure must be viewed as a key government priority by further supporting growth opportunities.

Second is the need for reducing costs and relaxing rules. U.S. tax structures are much lower and compete with those in Canada. Each year, five million Canadians drive through U.S. borders to fly with low-cost carriers. Let's repatriate these travellers back to Canada.

Finally, there is a need for integrated intermodal connectivity, a viable ground network system that links our airports to all markets. The mid-peninsula highway would traverse the central part of Niagara region parallel to the Queen Elizabeth Way and connect to Highway 401 to provide congestion relief and unlock a key trade corridor.

As governance is split between municipalities and the province, it is difficult to implement plans to address congestion and coordinate improvements. Truck drivers will say that it takes them three to nine hours to cross the border. This is costly. Highway congestion challenges the timely and efficient movement of goods by truck, where minutes do matter.

The government understands the importance of Canada's trade corridors, which are key to the success of doing business in the global marketplace. I want to commend its leadership.

The Hamilton airport is a critical link in the supply chain of Canada. As low-cost travel emerges and cargo activity exceeds global forecasts, some may view our recent successes as an experiment. However, since 1996, under private management of an airport that was deemed surplus by the government, we continue to be a creator of jobs and an economic engine for the region.

Together with our partners, who have invested and committed millions in facilities and training for the future to ensure success and seize the enormous market opportunities, the role of the government must be investment in its vital transportation network, very much inclusive of the John C. Munro Hamilton International Airport, as underscored by our address today.

Thank you.

[The Chair, Liberal, Judy Sgro]

Mr. Gibbons, go ahead.

[Andy Gibbons, Director, Government Relations and Regulatory Affairs, WestJet Airlines Ltd.]

Good afternoon.

My name is Andy Gibbons. I'm WestJet's director of government relations and regulatory affairs. It's my pleasure to be here today to join you in a timely and valuable discussion about transportation corridors and the movement of people and goods.

On behalf of over 14,000 employees of the WestJet group, I thank you for your interest in how our investments are growing the economy in this region, and our recommendations on government policy overall.

Our investments in growth over the last 22-plus years have led to lower airfares for Canadians, overall market stimulation, and incredible job creation in many sectors of the economy, including aerospace, tourism and regional economic development. Our success in a very tough low-margin industry has been hard-earned.

I will focus my remarks today on our current investments at John C. Munro Hamilton International Airport, which we have chosen to be the eastern hub for our ultra low-cost carrier, Swoop. Abbotsford, British Columbia is our western hub. The good news is that Abbotsford is in the west. As for Hamilton, that clearly depends on where you are geographically located. Air service in this region has had its ups and downs, but with our valued partner we are witnessing some very positive news. Stakeholders in this region have asked for years for a company to invest and grow this market. We are so pleased to be in the initial phase of meeting those demands.

Prior to that, I would like to touch briefly on some of our current investments that are relevant to Canada's overall trade corridors and how we are furthering those objectives.

The first is that we are Canada's Atlantic gateway airline. We serve four destinations in the U.K. and Europe from both Halifax and St. John's. From Halifax, we have service to Paris, London and Glasgow, and from St. John's we have daily service to Dublin, Ireland. In developing an Atlantic gateway, our investments are driving the aviation side of leisure.

Second, we have signed a joint venture with Delta Airlines for Canada-United States transborder service. This agreement requires regulatory approval on both sides of the border, but when it takes effect it will have a positive impact on the integration of Canada-U.S. aviation networks. This is an area of aviation that will benefit from increased competition and choice and our partnership with one of the world's best global airlines to enhance economic connections and opportunities between our two countries.

Third, in a few months we will be taking delivery of our first Boeing 787 Dreamliner. Canada will have two global network scheduled carriers for the first time since Canadian Airlines went bankrupt. This is an incredible achievement for an airline that started with three planes in five cities in 1996. We are looking forward to bringing more of Canada to the world and more of the world to Canada.

With respect to our current investment in developing a low-cost hub in Hamilton, I have a few notes.

Service began in June with domestic service only to Abbotsford, Edmonton, Winnipeg and Halifax. This October, service will commence to Orlando, Tampa, Fort Lauderdale and Las Vegas, and December marks the launch of service from John C. Munro Hamilton International Airport to Montego Bay, Jamaica. Currently, we are operating at over 95% load factors. We are seeing many first-time flyers, and we are beginning to see U.S. licence plates in the parking lot at Hamilton airport. This is a superb development that we're very proud of.

Because of the unique cross-border element here in this region, government policy with respect to aviation is critical. I have a few notes.

Buffalo airport openly boasts of two million Canadian travellers last year. They cite government fees and third party charges; that the airport has very low operating costs; the 12-minute wait times at security; and low parking charges. This competitiveness gap has nothing to do with our airline or Canada's airlines. It is 100% related to our cost structure and user-pay system. I'd encourage all committee members to review the website of the Buffalo Niagara International Airport. They aren't shy about how much economic activity they are taking from this region. The cost structure that Canadian air carriers operate under is of importance to this region and its ambition to continue to build.

Given that importance, we recommend the following to this committee, and we'd be pleased to follow up with submissions.

One, to ensure the flow of people at border crossings at Canada's airports, the committee should recommend a review of facilitation services to ensure intermodal equity, world-class standards and cost competitiveness. This should include CBSA and CATSA.

Two, to ensure Canada's global access to markets through air, the committee should recommend that the government review Canada's aviation cost structure with the aim of reducing barriers to growth. This should include all fees levied on Canadian travellers and should be comprehensive.

I would be happy to take your questions on these matters.

Let me thank you for your interest and your time to hear from us today. We value and appreciate our relationship with the communities and elected representatives at all levels of government.

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you, Andy.

Mr. Liepert, go ahead.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you, both, for being here. You touched on our cost structure, and I want to pursue that a bit. This particular study is relative to trade, but in the 21st century, trade isn't just goods; it's people. We have business travellers every day filling up airlines, going back and forth between Canada and the United States. My comment, then, will be more about the cost of people travel versus the cost of goods travel.

I don't think many Canadians realize what portion of airfare goes to the airline versus what portion goes to a whole bunch of other folks. Here's one way to realize it. Let's say I travel to my place in the United States and I book using WestJet dollars. WestJet dollars will cover only the cost of the ticket. When I leave Canada, I get billed about $125 in fees and service charges on my Visa card. My return trip is about $57. Both are in Canadian dollars, not U.S. dollars.

Do you have any comment on the fees and what kinds of things this committee could be looking at in that area?

[Andy Gibbons]

Thank you for using WestJet dollars to book your travel.

[Voices]

Oh, oh!

[Andy Gibbons]

We really appreciate that.

It's a big subject area. A couple of years ago, the Canadian Chamber of Commerce identified the cost of travel as one of their top 10 barriers to economic growth. We don't like to talk about it in strict commercial terms. It is a larger economic issue.

Your question is about where to start. I think we need to start with a review of all third party fees and surcharges on Canadian tickets. Then we can have a shared understanding of what the lay of the land is. Transportation 2030, which is the government's transportation plan, talks about costs. It says that lower costs will provide more opportunities for travel and make it more attractive to come to Canada.

So it's a shared objective, but decisions have to be made. Tying the air traveller security charge directly to screening is one example. Taking a very close look at the impact of a price on carbon for aviation would probably be number two. Three, I think we're looking forward to potential changes to airport governance and public accountability. That's something that was in the Emerson report. We look forward to potential movement in that regard.