Transport Committee on April 30th, 2019

[Massimo Bergamini]

We're on the record, with respect to passenger rights regulations, as saying that they're just not ready for prime time. The basic problem is that our industry is incredibly complex. The ecosystem in which we operate is incredibly complex. That complexity does not align well with agendas that may be hurried or driven by external considerations. It means that we're not an easy customer. That's our reality, but our role in this country and the economy of this country requires perhaps a different relationship than exists with other groups.

With respect to this particular process, I think it is instructive to remember that consultations actually began with respect to Nav Canada in 1994, and took place over three years to get to that destination, which was the legislation that created the new entity. We're being confronted with a reverse process, which is legislation and then negotiation, and it's absolutely wrong.

The government did have consultations, beginning in 2017. They could have chosen to sit down with all partners at that time, but for whatever reason, they chose not to. That's where we are today.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Just following up on that comment, I think that in your opening remarks you mentioned you had sent a request to the government and that basically the questions were a dead letter.

Can you explain that a bit?

[The Chair, Liberal, Judy Sgro]

Absolutely. It's public domain.

We participated in 2017 consultations. Our submission is part of my brief. We also followed up with meetings with officials over two years to try to get some answers. Answers have not been forthcoming, in part because this was really managed as a budget issue and therefore under that budget cone of silence. Therein lies the problem.

In 2018, we wrote to the Minister of Transport and the Minister of Finance, reiterated our concerns, and pressed for a sit down, and meaningful discussions. Instead, we were confronted with a fait accompli in the budget.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

[The Chair, Liberal, Judy Sgro]

We'll move on to Mr. Iacono for five minutes.

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

Thank you, Madam Chair.

I thank the witnesses for being here this morning.

In 2015, the committee reviewing the Canada Transportation Act determined that CATSA did discharge its fundamental air security mandate, but that the increase in costs and wait times during predictable peak times undermined the efficiency and competitiveness of Canada's air transport services. Consequently, the review committee recommended that the regulation, funding and service delivery of airport security be reorganized. To do so, it proposed that CATSA be replaced by “a single integrated aviation security agency with responsibility for both regulatory oversight and operations.”

What do you have to say to that?

[Massimo Bergamini]

I'm going to make a few comments.

The Emerson committee, which was tasked with reviewing the Canada Transportation Act in 2015-2016, did indeed find a certain number of obstacles to competitiveness in our industry in Canada, such as the ones you raised.

The review committee recommended that the government provide the necessary sums in a predicable way so that the current agency could provide world-class quality service. We all agree that the current level of service is not sufficient and that we are lagging behind, but it is clear that we don't agree on the solutions.

What is absolutely essential in our view is that any potential solution be anchored in a solid partnership between the industry and public authorities so that we may agree in a completely transparent manner on the challenges to be met and on the expectations of Canadians with regard to that new agency.

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

Would any of the other witnesses like to comment?

[Ferio Pugliese]

I'll start with saying that there's no disagreement with your statement with respect to the origin or the genesis of the need for this committee to be founded.

I've spent a good part of my career working in this industry in Canada with two of the biggest national carriers. They can tell you that this is a topic that has been discussed in Canada for many years. We are in desperate need of good facilitation at airports. It's good, then, to see this happening. I think all of us have made that point very clear.

What we are very concerned about is the manner in which we are approaching this. It is rushed; it appears to be thrust upon us at the eleventh hour, if you will, through a budget bill. Now we're being told, in the midst of all the other regulatory reform we need to prepare ourselves for as an industry, that we need to embark on this.

The challenge and the issue we have with this is that we are the ones who are going to have to live with it—we, our customers, the travelling Canadian public and international travellers—for many years. If it's not done right, we're going to be back at having to take on reform.

The manner in which it has been suggested, with the transfer of costs and the transfer of assets to it, is—much in line with what Massimo has shared as well—that it's going to layer on additional costs to the travelling public. Today, based on rates, fees, and charges, we in Canada are one of the most expensive jurisdictions in the world to travel within.

It is our hope that for once, when we sit down as an industry with policy-makers and regulators, we come up with a solution that doesn't just transfer additional costs to the travelling public but in fact introduces efficiencies that could potentially get us to the point that we could increase service and accessibility, rather than just layer on additional costs for facilitation.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Pugliese.

We'll move to Mr. Aubin for five minutes.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Madam Chair.

I thank our guests for being with us.

My questions are addressed to Mr. Bergamini, but I want the other witnesses to feel very comfortable answering them as well.

First, let me give you my first impression so that you may corroborate it or tell me if I am mistaken. This will help me with my thinking on the matter.

My sense is that with this proposal, we are solving a false problem. As you said several times in your opening remarks, the basic problem relates to the funding of CATSA. That organization does not enjoy stable, predictable and sufficient funding. According to what I understood, the problem is not related to the quality of the services being provided but to their quantity, because the funding is insufficient.

CATSA comes to see us every year and asks for its funding to be increased, while the government is accumulating profits in the Treasury. Does the structure really need to be completely changed? Is the problem not rather the absence of predictable, recurrent long-term funding to meet the needs?

I have a related question. You conduct activities in international airports. Do our security screening services compare advantageously to those of other countries or are they so ineffective that we need to change the structure?

[Massimo Bergamini]

I will start by answering your last question.

I think it's important to recognize the remarkable work of the management team and employees of CATSA, because really they have, for years, provided exceptional service in the financial and decision-making context in which they had to work. I think it is important to say so.

That being said, we are not at the top with regard to results or passenger service in large part because of underfunding and the lack of political will over the past years. This is not new. This does not only relate to the last three years, but has gone on for many years. There is a lack of political will on the part of the federal government to invest, on the basis of an in-depth analysis, the necessary sums to ensure a level of service that would compare to the one that exists in other...

[Robert Aubin, NDP, Trois-Rivières, QC]

Forgive me for interrupting you, but time is running out.

If, in order to manage its budget, CATSA now had the total amounts travellers invest in security, would that allow you to reach the standards you would like to reach?

[Massimo Bergamini]

It's a bit difficult to say; it's a hypothetical question.

To manage to serve 90% of passengers in 10 minutes—that is one of our objectives—it would cost about $40 million more. The short answer is yes.

That does not mean that we shouldn't evaluate other options as well. We should examine and study what can be done to improve this absolutely essential service. However, in our opinion, it is a bit irresponsible to raise this as a strictly financial matter in a pre-electoral context.

[Robert Aubin, NDP, Trois-Rivières, QC]

The new structure Bill C-97 would put in place would generate efficiencies of $40 million at least—and we've only talked about one problem.

Would we, through privatization—because finally, that is really the term—reach these enormous efficiencies of scale that would allow you to recover $40 million, by reducing employees' salaries or reducing personnel, for instance? Where would you go and get that?

[Massimo Bergamini]

In the short term, it's almost impossible, especially given the transfer of assets, as Mr. Pugliese indicated, as this will put the organization in a position where it will have to finance the debt.

We will add financing the debt to these operational costs. So to those $40 million we may add perhaps $10, $15 or $20 million a year.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

[The Chair, Liberal, Judy Sgro]

We have to leave for the vote.

Here is a suggestion to our current panel: If you'd like to stay around following the presentation from our next panel following the vote, you can stay at the table if that's okay with the committee members. That way, if they have additional questions for this panel or the following panel, you'd have the opportunity to answer them. I'll leave it up to your schedules whether you can do that, but I am making the offer if you want to stay around. We would have all of you at the table for questioning from the committee.

We'll suspend. Please come back immediately following the vote.

[The Chair, Liberal, Judy Sgro]

I'm calling the meeting back to order. Thank you all, partially for returning quickly.

For our next panel discussion we have, from the Canadian Airports Council, Daniel-Robert Gooch, president. From the Vancouver Airport Authority, we have Stephen Hankinson, vice-president, planning and innovation. From the Ottawa International Airport Authority, we have Mark Laroche, president and chief executive officer. From the Greater Toronto Airports Authority, we have Lorrie McKee, director, public affairs and stakeholder relations, and Greg Owen, associate director, government agency programs.

Welcome to you all. You all have been here many times over these last several years, and you're quite familiar with the committee and how the structure functions.

Mr. Gooch, can we start with you? You have five minutes, please.

[Daniel-Robert Gooch, President, Canadian Airports Council]

Thank you.

Madam Chair and members of the committee, thank you for the opportunity to appear before you today, as well as for your ongoing support in our efforts to improve the experience at airport screening.

My name is Daniel-Robert Gooch. I am the President of the Canadian Airports Council, which represents 54 airport operators.

My remarks for this afternoon have been split into two, with Steve Hankinson of the Vancouver Airport Authority continuing with the second part.

The Canadian Air Transport Security Authority is led by a hard-working team of professionals, but the organization's structure and funding as a Crown corporation is simply not responsive to the demands of a fast-growing air transport sector and the millions of additional travellers we're seeing at Canada's airports each year. This should not be seen as a negative reflection on CATSA's staff or screening officers, who remain committed to keeping air travel safe.

This is an essential service for commercial aviation today, but while Canada's airports have confidence in the security value delivered by CATSA screeners, the reliance on an annual political process to fund a service that travellers are already paying for through user fees simply doesn't work in a fast-growing, volume-based business centred on the care and comfort of real human beings.

Moreover, this reliance on tight annual funding decisions hampers the organization's ability to plan long term or invest in innovations that can deliver improvements in both security outcomes and faster processing times. The organization has not been able to deliver service levels that are acceptable to the industry or our air travellers, nor does it have the prospect of being able to do so as long as it is structured the way it is today. This has frustrated travellers, industry and government alike, which is why Canada's airports have worked with our air carrier partners for several years through an industry-led screening working group in a bid to improve the service for travellers.

These efforts culminated in a December 2015 submission to government on the need for internationally competitive service-level standards for screening, a letter that was signed by the CAC and Canada's two largest air carriers. We recommended a service standard of 95% of passengers being processed through high-volume checkpoints in under 10 minutes and no passenger waiting more than 20 minutes.

Having worked for years to convince government of the need to reform CATSA, Canada's airports are pleased to see the commitments made in budget 2019 to transition CATSA to a not-for-profit entity, using the non-share capital corporate model developed to similarly transfer Nav Canada and 21 privately operated national airports system airports in the 1990s.

We are pleased with the direction that government has chosen with this corporate model—which has been a success—but this effort is different, given that CATSA is traveller-facing and there is a lot to get right in the governance.

[Stephen Hankinson, Vice-President, Planning and Innovation, Vancouver Airport Authority]

Good afternoon. I'm Steve Hankinson, and I'm vice-president, planning and innovation from Vancouver Airport Authority and the former chair of the screening working group that brought together airports and airlines toward a common goal of improving screening.

While we are still in very early days, and success is not guaranteed, the transition to a not-for-profit entity for CATSA represents a rare opportunity to improve an important part of the travel experience. With this move, Transport Canada would continue to regulate aviation security in Canada, but operational responsibility for this critical part of the air traveller experience would be transferred out of government to an organization whose mandate would be continued high security delivered more efficiently, more effectively and with leading standards of professionalism.

Whatever service-level standard is ultimately set by the new designated screening authority, our goal is to improve on the rough service target averages followed today and for wait times calculated on an hourly basis to more accurately reflect what travellers experience at Canada's airports.

The organization also will be self-funded, both for operations and the investments needed in innovations to get ahead of growth. After 2016, when Minister of Transport Marc Garneau first committed to looking at governance of CATSA and to holding it accountable to international service standards, our industry working groups submitted a series of additional recommendations for a new designated screening authority that continued to be valid.

The new designated screening authority should be structured to the highest standards in corporate governance and public accountability. Screening must be effective and efficient, responsive to threats while becoming more innovative and entrepreneurial, and enhancing Canadian aviation competitiveness.

The organization must be able to raise its own funds in a transparent and predictable manner to support consistent national standards across the organization's full mandate to screen all air travellers, their bags, and airport workers. The new designated screening authority must have the flexibility to innovate, not only in terms of financial flexibility but also in the ongoing regulatory relationship with Transport Canada.

For example—

[The Chair, Liberal, Judy Sgro]

Mr. Hankinson, I'm sorry, I have to cut you off. Your five minutes are up.

I have to move on to Ms. McKee from the Greater Toronto Airports Authority.

[Lorrie McKee, Director, Public Affairs and Stakeholder Relations, Greater Toronto Airports Authority]

Thank you very much, Madam Chair, and thank you for your time and attention.

My name is Lorrie McKee. I am the director of public affairs and stakeholder relations for Toronto Pearson. I'm here with my colleague, Greg Owen, who is the associate director responsible for government agency programs.

Toronto Pearson has been a long-time advocate for changes to address the challenges in the current model for CATSA. As several of my colleagues have mentioned, we have never questioned the safety or security provided by CATSA. In fact, we applaud CATSA leadership and the front-line employees for the security screening service that they provide.

However, the lack of multi-year funding to properly plan and accommodate growth and to invest in new technologies and new requirements added to CATSA's mandate over the years without additional funding has led to globally uncompetitive wait times, flight delays, missed connections and inconvenience to passengers. This threatens Canada's economic objectives, making our country less attractive to foreign direct investment, tourism and trade.

Toronto Pearson is Canada's largest airport. Last year, it processed almost 50 million passengers, making it the ninth-busiest airport in North America, the second for international traffic, and the fifth most-connected airport in the world. CATSA screened approximately 20.5 million passengers in 2018.

Given the hub role that Pearson plays to connect travellers to other Canadian cities and countries around the world, how security screening is delivered at Pearson matters to Canada's economy and this country's desire to diversify trade and grow jobs.

For many years, the allocation model has meant that CATSA at Toronto Pearson has received insufficient funds to deliver a global competitive level of service. Since the fall of 2014, the GTAA has worked with CATSA to purchase additional screening services to reduce wait times. In 2018, we invested $10.7 million to support security screening. This, combined with additional investment by the government in CATSA, has improved the situation.

However, wait times during many peak travel times remain globally uncompetitive. We therefore welcome this governance change to an industry-led, non-profit entity.

We are committed to working with our colleague airports and leaders in the airline sector to stand up this new entity. Like the airport authority model, we believe that a non-profit commercial model will allow security screening to be delivered in a more globally competitive manner with a clearly defined regulatory regime applied by Transport Canada.

International travellers have come to expect a better travel experience. Hong Kong, Heathrow and other global airports have proven that it is possible to maintain security and process 95% of passengers in five minutes or less.

With respect to division 12 of Bill C-97, we're generally supportive of the text as introduced. There are two changes that we propose.

The first is removal or clarification of the charging principle in paragraph 26(1)(d), which provides “that charges may be used only to recover costs for security screening services”. It appears to preclude raising funds to support any investments in innovation or process improvements, which has historically been an issue for CATSA under the appropriations model. We note that there was no similar charging principle when Nav Canada commercialized.

The second is that, for added clarity and flexibility with respect to the imposition of charges on passengers or other persons required to undergo security screening, subclause 24(1) should be amended to add “and/or” so that the option exists for the new entity to introduce a charge for non-passenger screening, but that it's not considered mandatory.

With respect to the setting of charges, the new entity will be limited to increasing charges at or below the rate of inflation. Larger increases are possible, but only following a public process and review by the Canadian Transportation Agency. While we appreciate the rationale for this process, we also would like to point out that such a restriction on the setting of charges may have an impact on the ability of the new entity to raise funds cheaply.

Finally, with this shift to a commercially based security screening service, we suggest that the government capitalize on this opportunity to work with industry to simplify the regulatory framework for security screening. We understand that a similar exercise was undertaken at the time of the Nav Canada commercialization and was an important step in enabling the new entity to establish itself quickly with the confidence of all stakeholders, including the financial markets.

Thank you. I'd be pleased to take any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. McKee.

Now we'll go on to Mr. Laroche from the Ottawa International Airport.

[Mark Laroche, President and Chief Executive Officer, Ottawa International Airport Authority]

Good afternoon, Madam Chair and members of the committee.

I am also chair of the Canadian Airports Council's large airports caucus.

I am pleased to appear before you today to discuss the future of security screening service delivery in Canadian airports, and seize with you the unique opportunity that is being given us to implement positive changes for our clients and the air transport industry as a whole.

In fact, we collectively subscribe to the Airports Council International and International Air Transport Association's vision where passengers will one day have an uninterrupted journey from curb to aircraft door, where passengers pass through the security checkpoint with minimal need to divest, where security resources are allocated based on risk and where airport amenities can be maximized.

Former transport minister, Lisa Raitt, also raised the issue in 2014 when she asked that Mr. Emerson opine on the ability of CATSA to meet the challenges of increasing demands with limited resources.

The problem this bill aims to solve is not new. Several governments have in turn attempted to find a solution to the problems posed by CATSA and its funding model. In the Canada Transportation Act review report tabled by David Emerson in 2016, there are several recommendations on the CATSA model.

We are pleased that Minister Garneau has taken these recommendations to heart and intends to make security screening more responsible in the context of reaching an internationally competitive service standard and providing sustainable funding that is better adapted to the situation, while seeking to improve safety and passenger experience.

Obviously the security screening service commercialization act does not go into detail on how a new DSA will become a world leader in security, service and value for money that will support the overall, long-term competitiveness of air transport in Canada.

We raise the following concerns regarding the charging principles as written in the proposed act and therefore require some clarifications.

The first is uncertainty of the DSA's obligation or right to impose charges on non-passenger persons required to undergo screening. The second is that the principle that DSA must observe to establish, revise or terminate charges is somehow contradictory and appears to preclude the DSA from innovating and fostering innovation. In order for the new DSA to succeed, airports will be relentless in demanding that passenger screening service standards be world class.

Our ability to achieve such standards will depend on many factors that will require further discussion and concurrence before we can agree upon a transfer date. Notably, the first is that Transport Canada, the regulator of DSA, commit to undertake a review of all current aviation security regulations pertaining to security screening of passengers, non-passengers and baggage, and report back to this committee in government within a timeline to be agreed upon with the industry.

We need to ensure that regulations will move security screening to an intelligence-driven, risk-based approach that will permit the DSA to leverage proven technologies and existing trusted traveller programs such as Nexus and Global Entry to achieve performance standards in security and customer service that are comparable to the best international aviation practices.

We also need to ensure that the price asked by Finance or Transport Canada for the transfer of assets from CATSA to a new DSA will not be a debt burden that impedes the DSA's ability to provide, within 12 months, a world-class service standard at a cost to passengers no greater than the current air travellers security charge; and that the air travellers security charge should no longer apply, thereby ensuring that a new funding source of the DSA will not contribute to increasing the cost of flying in Canada.

We respectfully request that the enabling legislation required to effect the transfer of CATSA to a DSA proceed. This legislation is a critical first step if we are to meet our collective goal, which is the creation of a nimble, innovative, customer-service-driven organization that ensures a safe and secure, efficient and professional experience for all travellers.

Once this law has been passed, we commit to working diligently to set up a dedicated screening administration that will correspond to what Canadian air passengers, airlines and airports have been asking for for years.

Thank you, Madam Chair.