Thank you Madam Chair and members of the committee for the invitation to speak with you this evening.
My name is Mike McNaney and I am vice-president of Industry, Corporate and Airport Affairs at WestJet. Also with me this evening is my colleague, Lorne Mackenzie, senior manager, Regulatory Affairs.
On behalf of over 12,000 WestJetters, we are pleased to participate in your deliberations with respect to Bill C-49 and the critical role that companies such as WestJet play in connecting the economies and people of Canada to each other and the rest of the world.
Our investments and growth over the last 21-plus years have led to downward pressure on airfares, market stimulation, and incredible job creation in many sectors of the economy, including aerospace, tourism, and regional economic development.
Our success in a very tough, low-margin industry is a testament to our frontline employees who strive every day to provide our guests with quality service.
Our award-winning culture of care and guest service is a source of tremendous pride. It is not just what we do; it is who we are, and it influences our approach and our respect for the obligation we have to ensure our social and economic licence is strong.
In addition to various awards over the years, this year we were very pleased to be recognized by TripAdvisor as the best airline in Canada and a Travellers' Choice Award winner for mid-sized and low-cost airlines in North America. As members know, this award is based on authentic reviews by the travelling public.
Before providing you with an overview of our views on the legislation, I want to provide a broader context of WestJet operations today.
WestJet is in the midst of an extraordinary evolution from the carrier that launched in February 1996 with 200 employees, three aircraft, and five destinations, all in western Canada. In 2016, we carried over 20 million guests. Getting 20 million-plus guests where they need to be, safely and on time, is a logistical and operational challenge. Things will go wrong, and we do our best to get it right when they do.
We operate approximately 700-plus flights a day, carrying approximately 70,000 guests daily, with a WestJet plane departing approximately every two minutes. Our current fleet consists of 161 aircraft, including Bombardier Q400s, as well as narrow body and wide body aircraft from Boeing. This year we begin taking delivery of the newest version of the 737, the 737 MAX, and in 2019 we take delivery of our first 787 Dreamliner. With respect to the Toronto-manufactured Bombardier Q400, next year we will become the third-largest operator in the world of Q400s with the delivery of our 45th Q400 aircraft.
Based on our most recent economic impact study, utilizing our 2016 operating data, our investments and growth strategy in 2016 has supported over 153,000 jobs in Canada, a labour income in excess of $5.3 billion, over $12 billion of GDP expenditure activity, and an aggregate economic impact greater than $17.3 billion. These employment and economic benefits accrue throughout the country.
In terms of communicating with our guests, we are continuously working to find innovative ways to effectively meet their needs. In April 2016, we became the first Canadian carrier to move its social media team to a 24-7 operation, open 365 days a year. We took this step in recognition of the fact that more and more consumers utilize social media to communicate with companies in real time. Our social media response team now sits in our 24-7 operations control centre to respond to guest questions and concerns in the moment. We also still maintain the more traditional communication means of email and phone contact for guests who wish to reach out to us through those means.
The operations control centre, or OCC, is responsible for all facets of our daily operations: flight schedule, crew scheduling, maintenance, responding to weather, operational delays, and guest services. The composition of this team includes experts from all areas of our business. To say this service has been well received would be an understatement. How our guests interact with us on service issues and questions is now 57% through social media, 34% through email, and 9% through telephone.
In the last year, we have also made the following enhancements, in co-operation with the Canadian Transportation Agency. We developed and posted on our website a plain-language, searchable summary of the provisions of our tariffs related to events most likely to be of concern to travellers, such as denied boarding, flight delays, and misplaced baggage. We placed a full page article on our inflight magazine describing our customer service department and how our guests can get information on their rights should something go wrong. We added a link to every electronic itinerary to make our guests aware of their rights and where to go for additional information.
That brings me to the aspects of Bill C-49 dealing with passenger protection. WestJet supports these provisions and the broad framework the bill sets out to create.
I do want to note for the committee that WestJet currently has enforceable penalties for many of the areas in which the legislation calls for enhanced regulation. These include lost or damaged baggage, delays and cancellations, and tarmac delays. Our obligations are outlined in our tariff, which is accessible online and is used by both us and the CTA to resolve complaints.
Bill C-49 will bring uniform standards to all of these issues, and we are supportive of that action.
Within the context of rights and obligations, I would like to encourage the committee to more broadly examine the role of our partners in the travel supply chain. This would include airports, air traffic control, border services, immigration, aviation security, as well as Transport Canada. Our performance is scrutinized by Parliament and the public, and rightly so. However, all these organizations should have the same performance reporting requirements, as well as overall accountability for the services they provide.
You will no doubt have seen media reports over the past several weeks concerning breakdowns of airport baggage systems, understaffing at air traffic control centres, CATSA funding shortfalls, and delays in processing security clearances for aviation employees. How will all these elements of the supply chain, all of which are critical for operations and all of which are completely outside the control of an airline, fit into the new regime established by Bill C-49, as far as accountability is concerned?
Concerning joint ventures, WestJet supports in principle the Government of Canada's approach to airline joint ventures. Airline partnerships are a critical component of our business model. WestJet does not belong to an international alliance. What we do have is 45-plus code-share and interline partners who are all offering greater choice and flexibility for Canadians. These partnerships, coupled with our domestic and international networks, are bringing tourists to all parts of Canada and providing the international connectivity our economy needs.
While we support the JV policy initiative, we have questions that we are discussing with Transport Canada as we seek further clarification on certain points.
With respect to foreign ownership, the foreign ownership provisions outlined in Bill C-49 are ostensibly already in effect, with exemptions granted to two potential ULCCs. Our policy preference with respect to foreign ownership is that any change in the limit should be on a reciprocal basis, particularly with respect to the United States. The government has opted for a unilateral approach, and obviously we respect the government's decision.
Within the context of this unilateral policy change, we believe it is critical to ensure that Canada maintain a strong “control in fact” test. This is a test administered by the Canadian Transportation Agency to ensure that new carriers are controlled and run by Canadians. We believe that Canadian carriers should make their network decisions in Canada for the benefit of Canadian communities, the travelling public, and workers.
I would also like to remind members that we have recently announced the creation of our own ULCC. This was done without foreign investment or any proposed policy change. The objective is straightforward: to provide Canadians with more choice for their travel dollar. We are engaged with both the CTA and Transport Canada on the necessary regulatory approvals to commence service in mid-2018.
With respect to the CATSA provisions that will allow small airports to purchase CATSA services and large airports to top up services, we consider these measures to be stopgaps.
Delays caused by factors such as passenger screening are becoming more and more frequent in our operation. It is a disturbing trend. From a policy perspective we have been frustrated for several years by the government's unwillingness to fully allocate funds collected from the ATSC and tie these funds directly to screening services, the services our guests are paying for when they pay the air transport security charge.
The provisions in Bill C-49 are a stopgap measure that will allow the industry to spend more money to provide services that we believe the ATSC should be covering. We have recommended comprehensive reforms to the funding model and governance of CATSA. We urge this committee to recommend that all money collected from the ATSC be allocated to screening services at Canada's airports.
Before concluding, I want to briefly comment on another aspect of commercial aviation that is certainly of interest to consumers and Parliament. You may have seen the news from StatsCan last month that base air fares in Canada, domestic and international, were on average down 5.4% in 2016 as compared with 2015.
At WestJet, our average fare in 2016 was $162, down $13 from 2015. Our average fare in the first six months of this year was $158, a further drop from the first six months of last year. To provide perspective on these numbers, our average profit per guest in the first six months of this year was $8.34. I provide these figures to give context when discussions turn to the concept of financial penalties.
In conclusion, WestJet recognizes that Bill C-49 has the potential to benefit the aviation industry and Canadian consumers. We look forward to participating in upcoming sessions with the committee in order to improve the overall travel experience for Canadians.
