Transport Committee on Sept. 11th, 2017

[Helena Borges]

I would have to check whether there have been any studies done on that recently that could be shared. We can take that back and get back to you.

On rail, cabotage exists today. The rail lines are taking things back and forth, so cabotage on rail is really not an issue. It's more on the trucking and on the air side.

[Erin O'Toole, Conservative, Durham, ON]

Now to my last 50 seconds, thank you very much.

Regarding the child portion of the passenger bill of rights, I see that children's ability to be seated near a parent is critical. I think all of us on all sides have been concerned by cases of children caught on no-fly lists and understand why the ministers has talked about it. Should the fairness and quick resolution of that not be a part of the passenger bill of rights, because these certainly are minors? Was that considered for this bill of rights?

[Helena Borges]

As you may know, it's the Minister of Public Safety who has responsibility for the security elements of the issue you're raising of children on no-fly lists, so I would have to defer that question to Public Safety and Minister Goodale.

[Erin O'Toole, Conservative, Durham, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. O'Toole.

Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you very much to our witnesses, to our chair, and to my colleagues, for being here.

I'll focus my questions on the portion of Bill C-49 that deals with air travel for now, and start with the passenger bill of rights.

You mentioned in passing, Ms. Borges, how these stories sometimes make the news in a rather undesirable way. It doesn't surprise me that some of these videos go viral and I think it's because when we see a passenger mistreated, we have an emotional and visceral response because it sometimes reflects our own experience. I've had my articles of clothing come out one at a time on the conveyor belt before. I've been sitting on the tarmac for hours at a time and I've had my instrument delayed an entire flight before I could pick it up, so I respond the same way the public does and I understand the frustrations.

You mentioned at the beginning a laundry list of the irritants and that language was to be required to be put in place so that essentially consumers understand what the remedies are and how they can enforce them. Could you perhaps go into greater detail to assure Canadians that they are going to have a remedy when their rights are infringed.

[Helena Borges]

Part of the list that I mentioned, or the first element, was that the air carriers will have to make very clear in their tariff what their obligations are in exchange for a ticket being sold, right? That will have to be very clear and understandable, and it will be the basis upon which then passengers can complain to the agency if something hasn't been done. By having the regulations strictly identify what the irritant or the issue is and how it is to be addressed, this will make it more obvious to passengers what they are entitled to if their rights have been violated. If you are stranded on a tarmac or delayed for whatever reason, what should the airline be doing? Or if you're bumped, what should the compensation be? All of that will become very clear because the regulations will specify all of it.

[Sean Fraser, Liberal, Central Nova, NS]

In terms of the scope of application, will this apply to all passengers travelling within or through Canada?

[Helena Borges]

Yes, it will apply to passengers coming into, leaving, or within Canada.

[Sean Fraser, Liberal, Central Nova, NS]

Excellent.

Assuming that one's rights are infringed by an air carrier, I don't necessarily think that governance by an angry mob is the way to go. I do have some sympathy for the airlines that they don't get unfairly dinged in the event they have a minor breach. Is the style of damages or compensation that we might be looking for a compensatory model, as opposed to a penal model so to speak?

[Helena Borges]

It will definitely be compensatory. In fact, what we envisage is that the penalty will go to the traveller, not as we do sometimes where the government charges the airline for the infraction. And it would be compensatory in terms of directly.... If their flight is bumped and they lose their ticket, it would cover that, but it would also cover the inconvenience faced by the passenger. All of that will be consulted on and we're looking forward to the views of Canadians based on some of their experiences and what we need to put in the regulations.

[Sean Fraser, Liberal, Central Nova, NS]

Certainly.

I would like to shift gears for a moment and deal with international ownership of Canadian airlines. I've met with a number of smaller airlines and discount airlines that were looking for this kind of a change. They've assured me that they can come in and offer lower cost fares. If you allow international ownership to be increased and they can raise the capital, they can open access to new markets within Canada.

First, do you anticipate that those benefits will come to pass with this rule change? Will we see the cost of airfares going down and see airlines servicing new markets in Canada as a result of this change?

[Helena Borges]

Indeed, we do. I'll say that before this bill was put together, the minister authorized two airlines because he has an exemption authority now under the act. Enerjet and Jetlines have filed an application to have greater foreign ownership and he approved that. Interestingly enough, one of them, Jetlines, just announced today that they're planning on starting up their service from Hamilton and Waterloo airports in Ontario starting in the summer of 2018. Those will be new services that are coming to Canadians and, hopefully, as they're saying, these will be lower cost services because they don't have some of the other activities that the other airlines do. We see this as bringing new flight opportunities for Canadians, and probably in locations where the other airlines are not providing sufficient level of service or number of flights.

[Sean Fraser, Liberal, Central Nova, NS]

Certainly.

While we still have a few minutes remaining, I want to tackle the idea of the magic number at 49%. Of course, we all know that's less than 50%, so control would remain within a Canadian entity, but why is Canadian control so important? Some of the arguments that we made—lowering costs and extending service—might be better served at 100% ownership and, of course, we've seen recommendations to that effect before. Why is 49% the right figure?

[Helena Borges]

We looked across the globe at what other countries are doing. This is a very strategic sector for Canada. Much like telecommunications and others, it is a network sector, and we want to have a strong and vibrant airline industry in Canada.

When we looked across the globe, most countries now are in the 49% range. A few are lower—say, 33%—and 49% provides enough flexibility for airlines to get the private investment they need while still ensuring that the control is based in Canada. We think that is a right balance which meets all the objectives we were trying to achieve.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Fraser.

We move on to Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Madame Chair.

I appreciate the opportunity to be here and to participate in this committee this week. You can thank us from the west for bringing summer to Ottawa, to those people who haven't seen it this year, though we will be inside and will be missing it anyway.

I appreciate, Ms. Borges, your presentation. One thing I would like to ask is this. As the sunset clause went into effect, people, knowing what they were going to be faced with, didn't extend. Did you consider extending, rather than going back to a previous structure?

[Helena Borges]

Yes, we did consider extending. Some of the provisions that were in the act have in fact been carried forward, such as level of service, arbitration, and penalties when they don't meet their obligations.

We have let one sunset provision go, which was the government's prescribing the volumes of grain that had to be carried. That provision, when it was implemented, was In fact for the situation of 2013-14, the bumper crop in the bad weather. We ended up using it for only about a year and a half, and then we stopped because the railways were in fact carrying more grain than we were mandating; that situation is gone. We believe we don't need it. It wasn't used for the last two years, so there's no need for it to continue.

The other one we allowed to lapse was extended interswitching, because after the assessment we did, we uncovered that it wasn't heavily used, but it was having unintended consequences on the competitiveness of our railways vis-à-vis the U.S. railways. We replaced it with a measure that we believe will provide greater benefit to more shippers across the country, which is the long-haul interswitching provision.

[Martin Shields, Conservative, Bow River, AB]

When you move into the proposals next, in the sense of an ongoing negotiation, it's not as if there will be a consistent formula out there: you have to negotiate it. There is some concern that there will be more bureaucracy, that both sides will have to spend more time to deal with it, if you have to negotiate it rather than having a set formula that's consistent over time.

[Helena Borges]

In fact, we encourage negotiation on everything in rail, but the long-haul interswitching provision is that if they cannot come to an agreement, then they go to the agency. It's the agency that actually sets the rate for the portion of the route where the product has to be carried to the interchange.

We've made the process quite efficient so that they would get a decision within 30 days. The rate would be based on comparable traffic moving in similar circumstances.

[Martin Shields, Conservative, Bow River, AB]

Okay. Thank you.

You mentioned that you consider the changes to the bill of rights as revolutionary. I guess there could be a slight need for definition of what “revolutionary” is. I don't quite see it as revolutionary in my context.

You also said that you're increasing services but that there would be no cost increase to the traveller. I have a little problem understanding, if you do this, how ticket prices will not be going up. Somebody is going to have to pay for this.

[Helena Borges]

We have tried to balance the expectation of Canadians, when they pay for a ticket to go from A to B, and what the carrier is selling them. The challenge we have right now is that in many cases the consumer—the traveller—is not getting what they've paid for.

We've made sure in constructing this and looking at these issues that the regulations that will come forward will balance these. We want to make sure that travellers are getting what they paid for—that's what they expect and that's what they're entitled to—and that carriers comply with that. If carriers step up their game and deliver the service better, then it shouldn't cost them any more than it's costing them today, because they're getting paid for it.

[Martin Shields, Conservative, Bow River, AB]

If they made more money the other way, though, when they overbook, and they're going to make less because they can't overbook—

[Helena Borges]

Yes, we're not prohibiting overbooking.

[Martin Shields, Conservative, Bow River, AB]

Ah.