Good afternoon.
My name is John McKenna. I'm President of the Air Transport Association of Canada.
ATAC has represented Canada's commercial air transport industry since 1934. We have approximately 180 members engaged in all levels of commercial aviation operating in every region of Canada.
We welcome the opportunity to present our comments on Bill C-97, as the privatization of passenger screening in Canada is a key aspect of the passenger experience.
Let me state from the outset that we support the transformation of CATSA, or in this case the creation of a new DSA, if it is to be granted the necessary tools both to maximize efficiencies both in the short term and to be able to keep pace with the growth of our industry. We wholeheartedly endorse the comments made before this committee by the National Airlines Council of Canada on April 30.
Two years ago Transport Canada invited us to comment on the governance and funding models it was considering for what was then referred to as CATSA 2.0. The consultation identified four models, ranging from an enhanced and modernized current model wherein CATSA would remain a Crown corporation with a dedicated air carrier security charge; a non-appropriated Crown corporation wherein CATSA would remain a Crown corporation but would gain new responsibilities to set and collect fees to directly fund its operations and where fees could potentially be differentiated among airports; and an industry-led entity, the Nav Canada model, which would transition CATSA to an independent non-share and not-for-profit entity that would set its own fees and business plans. In the latter model, the government would continue to set security standards and regulations and would inspect operations. Finally, there was a designated delivery by airports model wherein airport authorities would become responsible for security screening and recovery of the costs from airport users to fund operations at their respective individual airports.
It was obvious from the very first meeting with Transport Canada and Finance Canada officials that the NAV CANADA model was going to be preferred. It was so obvious that, shortly afterwards, CATSA retained the services of John Crichton, who led the NAV CANADA negotiating team throughout that 18-month transaction process.
Today we are faced with a reversal of the successful Nav Canada process. While the bill establishing Nav Canada was drafted at the end of the negotiation process and reflected the collected stakeholder recommendations, the process we are faced with now is quite the opposite. A simple construction analogy would be that the roof and walls are being put up before the foundation is set.
Given the short time at my disposal, I will only comment on the financial impact on passengers and our industry. A price tag of $500 million is being shamefully attached to this privatization in an effort by the government to cash in on CATSA's book value. Again, to use a construction analogy, we could say that the government wants to sell back to passengers the house they have already paid for twice. Twice because CATSA has generated well over $500 million in surpluses over the CATSA budget allocations even in the past five years.
Transport Canada tells us that the book value price is non-negotiable. We believe that anything other than a nominal price of one dollar is not acceptable and could very well compromise the process. A solid precedent was set when the government divested itself of hundreds of airports across Canada under a previous Liberal government.
Another concern is that to pay this shameful price tag, the new DSA will have to include the debt payment when settling the new passenger screening charge. Need I remind the members of this committee that Canada already has one of the highest, if not the highest, aviation security charge in the world?
Finally, when asked, the government did not deny that it would probably seek compensation for the loss of the hundreds of millions generated by the ATSC surpluses. This is probably why Bill C-97 doesn't abolish the ATSC currently being collected. If not through the current ATSC, added to the new fees charged by the DSA, how would the loss of this general revenue be compensated if not by additional fees and charges to our passengers and carriers?
I have only raised some of the serious industry financial concerns in this matter, but that is not to say that we don't have operational and governance concerns that need to be addressed. Containing the costs to the public levied by the DSA is critical to maintaining Canada's competitiveness in the North American economy and to address the leakage to the U.S. market of travellers seeking cheaper fares. lt is government's responsibility to ensure that its policies support rather than hinder the competitiveness of the air transport services in Canada, much in the same way it continues to do so for passenger rail travel.
Once set, the new DSA will be in place for the next 10 to 20 years. Canadians deserve that this process not be governed by an electoral agenda and that all concerned take the time required to develop a strong, efficient, autonomous, transparent and well-governed model. We are not satisfied at this point that this is the case.
Thank you.