Thank you, Madam Chair.
Good afternoon to everyone.
Thank you for the invitation to share elements of what I view as a success story at Nav Canada in moving a critical functional operation out of government—a model for what is before you in clauses 270 through 279 of this bill.
As someone who was involved since the beginning at Nav Canada, I'm happy to share this experience with the committee to provide context to the model and its possibilities, but I note, importantly for the record, that Nav Canada does not hold a position related to CATSA's commercialization.
On November 1, 1996, Nav Canada became the owner and operator of the Canadian civil air navigation system, or ANS, purchasing the system from the government of the day for $1.5 billion. Today, Nav Canada remains one of the only fully private companies in charge of air traffic control-related services typical of such a provider. The Nav Canada model serves as the organizational and corporate basis for safely and efficiently managing what is the world's second-largest ANS in terms of air traffic movements. Of course, within that model, we continuously seek to improve our relations with all those affected by our operations.
For today's purposes, looking back, the question is, what was behind this model? Simply put, by the 1980s Canada's air navigation system was not working as well as it needed to. While there were areas of excellence such as its operational people, the infrastructure needed renewal and major system projects were falling behind under escalating costs. System delays were increasing, and efficiency was decreasing. All of the stakeholders, including airlines, employees, and indeed the government itself, were unhappy and change was needed.
An analysis of the issues found a government department with highly skilled and motivated people operating under traditional government rules and constraints while attempting to deliver an essential service in real time to a vital and hyper-competitive sector of the economy. Quite simply, it could not keep up—nor, in fairness, was government designed to allow that at that time. Further, in a world of competing government budgetary priorities, the ANS became chronically underfunded over time, and the result was an inability to manage a system that lived up to its requirement.
The stakeholders in the air navigation system came up with the following conclusions. First, band-aid solutions would not work and a paradigm shift was needed. Second, the ANS was in fact a service provider to customers and should be operated and guided by commercial principles. Third, there was no reason that the air navigation system could not operate safely in accordance with independent safety regulation by government, just as airlines did and do. Indeed, by separating the operator of the system from the regulator, an inherent conflict of interest between those separate functions could be eliminated. Finally, the ANS needed to have certainty of adequate funding and the ability to control its costs.
All stakeholders came to these conclusions, as there truly was a consensus that change needed to happen. This included not only commercial carriers and business aviation and general aviation, but also air traffic controllers, airline pilots, bargaining agents of other ANS employees, and of course the government itself representing the public interest.
Ultimately, these groups together made fundamental decisions that formed the cornerstones of the process: first, that the ANS should be commercialized; second, that key stakeholders had to ensure that aviation issues were understood by the new operational entity; and finally, that each group had to work together for the common goal and respect the others' legitimate but sometimes differing interests at all times. This is ultimately the foundation of our corporate governance structure at Nav Canada.
This governance structure works in concert with two other elements. First is legislation. The Canadian Civil Air Navigation Services Commercialization Act, or CANSCA, was brought into force at the same time. It facilitated the transfer of the system and established our service and rate-charging mechanisms. The bill before you today is markedly similar to CANSCA. The final essential element complementing corporate governance in the legislative framework is the regulatory framework—a framework focused on performance and results, and not on prescription of how the system and the business must be run.
If we fast-forward to today, Nav Canada remains unique and is admired for its structure around the world. We are a private, non-share capital corporation whose governance reflects the needs of the stakeholders we serve. We are driven by our focus on safety and providing value to all our stakeholders, and our standard of safety is regulated appropriately on a performance basis by Transport Canada. Our secure, stable financial model gives us the agility to mobilize funds and seize opportunities in real time. We sell our technology and data, we invest in game-changing initiatives like space-based ADS-B, and we continuously invest to maintain Canada's ANS infrastructure at the cutting edge. We have a reputation as a global leader in safety and technology.
We are also recognized as one of Canada's top employers. The structure we built gives us purpose, focus, and a system of checks and balances that enable success. However, I cannot overstate that at the end of the day it's our people, and their performance within this structure, who have delivered these results.
Thank you, Madam Chair. I'd be happy to take any questions from the committee.