Transport Committee on June 15th, 2016

[Duncan Dee]

Obviously, air and the north are great priorities to start with. I think the report, as a starting point, whatever one's views of the recommendations are, should provide the government with a road map to the challenges that stakeholders have identified.

We tried through our work, in particular, as a result of the experience that our chair Mr. Emerson had in compiling similar reports and recommendations for government, to ensure that the consultations were not focused on industry stakeholders or participants in the industry. We wanted to expand the consultation to include academics, experts, and to make comparisons with foreign jurisdictions.

Our hope is that whether or not the government feels any affiliation to the recommendations, at least we've succeeded in providing government with a road map, a view of the challenges that the industry faces. As Ms. Block pointed out earlier, it's a review that takes place once every 10 years, and when we went out and consulted, we had stakeholders who came up to us and said they had a huge list for us because they hadn't really gone through a review in over a decade.

As you said, I think the minister very rightly thinks there are so many economic implications that we can't afford to get this wrong. Hopefully, this report provides him with at least a framework for the challenges that industry stakeholders have identified as ones that would be helpful for them if they were addressed going forward in the 10-, 20- or 30-year time frame that the report is designed to respond to.

[Kate Young, Liberal, London West, ON]

I did want to be specific about CATSA and passenger screening. You mentioned that they didn't seem interested in making any improvements.

Is this a concern that can be rectified by more staff or is it really a technological problem that needs to be looked at?

[Duncan Dee]

As a panel, we were—I think the best word would be—gobsmacked, when we were told by aviation stakeholders that this was their number one pressing issue. When we met with airports, airlines, user groups, consumers groups, the thing that shocked us—and this is a sector that can barely agree on anything—was that they came out with a near unanimous consensus that this was becoming a bottleneck to their activities.

We looked at this quite closely. We looked at several models around the world, and while funding is definitely a key concern—CATSA will certainly repeat that their funding hasn't increased with the increase in passenger traffic—there are, based on our observations at least, deeper issues than simply funding.

Because of the way it's currently structured, with Transport Canada as a regulator, there are some limitations to the model of having CATSA as a service delivery provider and middleman, and then the contractors who actually provide the services on the ground at the various airports. We've provided suggestions in the report on how that model can be improved so that the issues raised by industry, stakeholders, and airports can be better addressed.

[The Chair, Liberal, Judy Sgro]

You have 45 seconds left if you want to use them.

[Kate Young, Liberal, London West, ON]

Well, I think it is an issue that affects every traveller through an airport. Is there any quick fix, or do you think it is something that's going to take some time?

[Duncan Dee]

The quickest fix is money, but I don't think that the monetary solution is actually going to result in any lasting fix. That's the problem. The way the current system works, any time you have an increase in passenger traffic, more money is required.

I would say that the quickest fix would be a better implementation of the trusted traveller model that CBSA uses in its screening of inbound travellers to Canada, and using that database, that information, and that technology to differentiate the screening of trusted travellers through pre-boarding security at the airports.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Iacono.

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

Thank you, Madam Chair.

In order to improve the viability, accountability and competitiveness of Canada's National Airports System, the review recommended that the largest airports be privatized, as they have been in the United Kingdom and Australia. The report also suggests that the airports become more accountable for their decisions with respect to investments, as well as charges and fees; and that some aspects of their operations be overseen by the Canadian Transportation Agency.

I have three questions for you. First, which stakeholders advocated for the privatization of the largest airports, and what aspects of their positions were most compelling? Secondly, how quickly do you think Transport Canada could implement this recommendation, which would involve policy development, legislative changes and multiple share offerings? Third, which, if any, air transport stakeholders were opposed to the notion of airport and privatization, and why?

[Duncan Dee]

If you don't mind, I will reply in English.

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

Of course.

[Duncan Dee]

On the issue of privatization of airports, you asked which intervenors supported privatization. It wasn't so much intervenors who came in with a specific model they had in mind. In our consultation with experts and academics looking at models, as you've pointed out, in the United States and Australia and elsewhere where the current model exists, one thing that became extremely clear, and somewhat ironic, was that some of the largest investors in airports outside of Canada are in fact Canadian pension funds. We have Canadian pension funds that currently invest in infrastructure, whether it's in the United States, in Australia, or in Europe, whereas in Canada we don't actually benefit from the same level of private investment in our airports.

In terms of the reason we arrived at this recommendation, our chair was David Emerson, who actually was the first airport authority CEO appointed when the government of the day decided to extricate Transport Canada from the management of airports and set up airport authorities. One of the things that became clear to him and to us as a panel was that the current model was not supposed to be the end of the road in the evolution of airport governance, but that when Transport Canada divested itself of the airports, while the current structure of airport authorities would serve for a period of time, for the largest airports at least there would be a path towards privatization. We also heard from intervenors, primarily users—airlines, customers, and travellers—who felt that the existing model did not provide them with a level of accountability for the governance at the airport authorities.

With that type of input and the numerous international examples that we looked at, we decided as a group that as a recommendation, privatization, given what we've seen in the U.K., Australia, and the U.S., and the fact that Canadian pension funds are very active in those investments, would be a recommendation that would not only enhance accountability but also provide the necessary discipline and capital that these airports would require going forward.

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

Thank you.

Peter, I can share my time with you.

[The Chair, Liberal, Judy Sgro]

Welcome to the committee.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Chair.

How much time do I have?

[The Chair, Liberal, Judy Sgro]

Two minutes.

[Peter Fragiskatos, Liberal, London North Centre, ON]

We all have constituents who have faced problems at the airport, in some cases very serious problems. They've lost bags. They're bumped from full flights. There are significant tarmac delays. The point I'm getting at is an airline passenger bill of rights. This exists in the EU. This exists in the United States. Canadian airlines are subject to these laws when they're in these jurisdictions.

I want to get your thoughts on this. Significant fines have been applied to American airlines for tarmac delays—for example, to Southwest Airlines, to be precise. There are many other instances. Could you comment on that and on whether or not you think this would be a reasonable measure for Canada to look into perhaps adopting?

[Duncan Dee]

It's an excellent question, and it's one that we encountered through our work. The one thing that we have to identify as a baseline, though, is that Canada, despite a lot of the challenges we face, benefits from generally high customer service in the airline business. We have not seen the level of horror stories that you've seen south of the border, for example, with some of the most egregious examples of customer service snafus or customer service issues.

One of the things raised, which you also brought up, was the fact that Canadian consumers travelling to a jurisdiction with a so-called passenger bill of rights benefits from those so-called rights, while somebody travelling within two domestic points in Canada would not be covered by that. That was something certainly a number of witnesses who appeared before our panel raised. In fact one of the recommendations we've made is for Canada to consider harmonizing its rules with those in the U.S. and in the EU, the two major jurisdictions with whom we trade significantly and exchange passengers and goods.

[The Chair, Liberal, Judy Sgro]

Mr. Dee, I must cut you off there. I'm sorry. The information is very important, but I must go to Mr. Berthold.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you very much, Madam Chair.

Thank you, Mr. Dee, for being here with us today and for your testimony.

My first questions will be about the north.

I read the part of your report that is about the north with a great deal of interest. The figures you present are quite impressive as to the investments needed to access northern resources.

In the table entitled “Cost-Benefit Estimates for Investments in Northern Resource Corridors”, you suggest that investments of $9 billion would be required to develop the infrastructures. We are talking about potential resource development expenses of $276 billion. At first sight, these figures are quite large.

What justifies the $9-billion investment in resource development; what is this based on? Out of the $276 billion, some expenses have already accrued, even if the investments to create these corridors are not in effect currently.

[Duncan Dee]

The figures we used in the report come from the industries that already work in the north, are already working on projects there, and are thinking about improving resource development in the Far North.

In studying this file, we made comparisons, such as with the Plan Nord in Quebec, which is currently being implemented in that province. It is important for Canada, as a northern country,

to look at in greater detail the issue of the development of the north and how we could harness the potential of the resources available there for the national economy.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Please allow me to interrupt you, since we don't have a lot of time.

These figures that industries provided to you—do they represent possible investment expenditures that would be added to what has already been done, or are they ongoing projects, with or without infrastructure investment?

[Duncan Dee]

They are strictly additional expenses.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

I see.

In your opinion, is this an optimistic forecast that may help to convince a government to invest?

[Duncan Dee]

Yes, it is an optimistic forecast, especially regarding the Far North. What we have is limited by current activities. However, as a northern country, we have to think about investing in a major way in developing the natural resources of the Far North.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

It's a bit like a bee that sees a vast field of flowers, but the bee is in a jar. The bee is indeed in a jar currently and cannot get out. So we have to find a way to let it out.