Transport Committee on Sept. 13th, 2017

[Some hon. members]

Oh, oh!

[David Graham, Liberal, Laurentides—Labelle, QC]

Most airlines these days overbook flights. I don't think that's a mystery to anybody. The United Airlines incident a few months ago certainly put that into the forefront.

On both of your airlines, if you have more seats sold than there are seats on the plane and there are no volunteers willing to leave the terminal, what do you do?

[Lucie Guillemette]

Before I answer that I just want to make a little bit of a distinction, because I think it's important.

When we look at our statistics and at our performance in cases of denied boardings, it's important for us to recognize what is truly an oversell, meaning it was a commercial decision for us to oversell a flight as distinct from a case in which we end up overbooked. It may not seem important, but it's an important distinction to make.

Even if a flight wasn't oversold at all and we end up in a situation in which we have more passengers than seats, it might be as a result of irregular operation or because we had a downgauged aircraft. Irrespective of the reason, if we were in a situation in which we didn't have any volunteers on board—and even prior to the incidents in the spring this was in our provisions—we would never, without a volunteer, remove a passenger. By that I mean we would come on board and would ask for volunteers.

At that point in time, truth be told, the compensation level might change to such point in time as we got a volunteer. If we never did, our operations control systems would probably help us in looking to see whether there's an ability to upgauge an aircraft, but we would deal with the situation as events progress.

Generally, I have to tell you, we don't face that kind of situation when we have voluntary programs. We at times know that we have a situation coming, so we pre-move passengers. We contact them, we pay compensation in advance to move them, or we'll buy seats on another airline. A multitude of things can occur. In truth, I don't recall in my experience at Air Canada in revenue management having been through a situation in which we had no alternative. We always have alternatives.

[David Graham, Liberal, Laurentides—Labelle, QC]

I have time for one more question.

Does it require, in your view, a bill of rights to raise customer service across the industry so that you're all rising together, so that you're not having to fight over who has better customer service? By putting in the bill of rights you all have to rise. Is that an advantage? Is that going to help us improve customer service overall?

I've flown in Asia, and the customer service is way better than anything we get in North America.

[Lucie Guillemette]

I think there's a two-prong answer.

When you speak about customer service, airlines should want to do that on their own. As I said earlier, we don't need regulation, but we're in favour of having standards across the industry if it makes it better for customers to have clarity in terms of what they can expect if something does go wrong. We're highly motivated to have repeat business and happy customers, to do what's right. It doesn't mean that we don't fail at times, but we're very motivated to do that on our own.

Do we believe some of the provisions could improve the industry at large? For sure. As we noted earlier, if we had a better understanding of all the steps within the process, where there are failures, for sure the industry could improve.

[The Chair, Liberal, Judy Sgro]

Thank you.

Sorry, you'll have to try to answer somebody else's question to get your point across at this moment.

Mr. Shields.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Madam Chair.

I appreciate your being here this evening. It's a service that I've used from both airlines, and I appreciate that we have this service in Canada. I've flown on airlines around the world. Some are a little more scary than what we have in Canada, and some that I've flown on in some countries are a lot more scary. I appreciate what we do to get people around our country.

There are a couple of other things.

WestJet, you didn't get the opportunity to answer regarding the joint ventures, or I didn't hear it.

[Mike McNaney]

I'll have to cast my memory back to some of the questions posed on it. There was a question about what carriers can do in terms of dealing with consumer concerns, and so on, and what's an initial metric. I think the first metric on it would simply be the concentration on the given city pair, or city pairs, that the venture wants to start to get engaged in. What happens to the totality, then, of competition and service if two entities are co-operating on a given route?

One thing that does get a bit lost from sight in terms of joint ventures is that if it's working appropriately, and I have no reason to suspect it would not, it actually is providing further alternatives for consumers and further options to then connect to wherever else, in whomever's network, which ultimately simply drives further connectivity.

[Martin Shields, Conservative, Bow River, AB]

You both might want to answer this if we have enough time. I'll start with WestJet.

There are a lot of pieces that you've referred to that end up in that ticket price. A lot of farm organizations, for example, have been here through the last couple of days. They're the end guy that produces and has no way to get it back. You must have some similar things that price into that ticket in the sense of the things that go on in an airport. Can you define a few of them quickly? Who else do you pay out of that ticket price that you have no control over?

[Mike McNaney]

What we're both familiar with, as are most consumers, is the airport improvement fee, which is an add-on to the ticket. Sometimes there is confusion that this is the totality of the funds that then makes its way to that airport for that service. We have what are called “aeronautical fees”, or you might think of them as landing fees or gate fees, that come out of the airfare itself to pay for those services to the airport in question.

As I mentioned at the closing of my comments, when you shake it all down, the totality of suppliers and costs that go to the airport authority and suppliers we have on the ground, WestJet made, on average, for those first six months, $8.34 or $8.35 per passenger, or “per guest” as we call it. What that underscores is that it is a volume business. When we talk about a $5 shift here or a $5 shift there on an AIF, or some other charge, it is very important to us when you put it in the context of $8.34.

Going back to my earlier comments—and yes, I'm trying to grab everything I can possibly say at this moment—in terms of accountability under this legislation and the entities, yes, we're all going to be providing information, but as far as I can tell, there is only one entity that is going to be asked for compensation.

[Martin Shields, Conservative, Bow River, AB]

With Bill C-49, do you see an increase in that cost to the passenger at the end?

[Mike McNaney]

I suspect it will. I saw a comment in one of the presentations given on I think it was the first day, and the commentary was that it shouldn't if the air carriers “up their game”.

I find that somewhat puzzling. I can't up my game if I'm taking delays because we have guests stuck in CATSA. I can't up my game if we have delays in conveying information with regulatory authorities in the other country for aviation security purposes and I'm not getting information back as to whether I can go or it's no-go with that passenger or passengers, and therefore, I'm delaying the flight. I can't up my game if there are delays at de-icing facilities that I do not control and that I do not operate. There's no way around that.

[Martin Shields, Conservative, Bow River, AB]

Air Canada.

[David Rheault]

I would just add to the the issue of cost, tax and fees, in addition to what Mike just said.

In our submission for the CTA review panel, our first principle was that the industry should be acknowledged as an economic enabler and the taxation regime should reflect that. In addition to what Mike stated, we also have in Canada what we call airport rent, which is a fee that the airport has to pay to government and that goes into general revenue. This money is not put back into the system. That represents a significant amount of money. In fact, it was billions over the last years.

What we basically say is that any amount that's taken from the industry should at least be put back into the industry.

[Martin Shields, Conservative, Bow River, AB]

Is this piece of legislation going to affect your bottom-line ticket prices?

[Lucie Guillemette]

I think it would be a little bit difficult for us to assess. Certainly in some areas when we look at maybe the compensation costs, things like that. To be truthful, we haven't formulated a view on what the incremental cost overall would be. We have to assume that in some circumstances, for example, like I said for compensation purposes, it's important that we understand the impact of the proposal.

[Martin Shields, Conservative, Bow River, AB]

Because the regulations haven't been written, that makes this...? Okay.

I would have assumed you would have done some financial analysis on what this might do to you.

[David Rheault]

If I could just add something, right now you have some principles under which there will be some compensation or indemnity payable to passengers. Right now we already have rules in our tariff that provide for compensation in most of these situations. It depends on what will be the regulation to apply that. That's why it's difficult for us to say exactly what the impact would be. Those are representations that we will make in the consultation process.

[Martin Shields, Conservative, Bow River, AB]

I just assumed there are tech guys in the background examining all sorts of ideas of where this could go, and you'd have all sorts of documents that would tell you what might happen.

Anyway, I'm probably out of time.

[The Chair, Liberal, Judy Sgro]

You are.

Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair.

I thank you for coming out tonight. I don't want to necessarily get into what's happened. I want to get more into what's going to happen moving forward.

Two of the themes we've really concentrated on in the last couple of days have to do with both safety as well as business. How do we become more of an enabler for you to be more competitive and to add more value and better service to the customer?

I want to start off with the safety part first. We talked with the rail industry about video-voice recorders. You obviously know what's happening there with Bill C-49 and what it's recommending.

My question to you is with what you have now in your industry, which is not necessarily a video recorder but a voice recorder, do you find that with that in place—and although it's not accessible, I get that, but it can be, if you really wanted it to be with new technology—you can use the voice recorders when it comes to safety, when it comes to prevention of and when it comes to reaction to?

Have flight recorders, voice recorders, served or would the airlines request further capacity or capabilities with those flight recorders?

[Mike McNaney]

In terms of the use of the recorders for learning purposes or for broadening safety, to some degree I'll have to check back with the ranch, the head office in Calgary, on some details for you on that. I think one particular aspect of commercial aviation is the specifics of the operations of a flight, so if something is occurring that shouldn't be occurring that information is being conveyed back and forth to our OCC. The voice recorders are certainly obviously a piece of getting to the bottom of an issue that may have occurred, but for the actual data in terms of what's going on with the aircraft and how it's performing, there's robust communication on that front that actually is not necessarily germane to the voice recorder itself.

[David Rheault]

I would agree with that.

I'm not an expert.

We should have in safety...and perhaps we can come back with something more specific, but in general we have very strong safety procedures in place to ensure that our operations are safe. If you have more questions regarding the use of the cockpit voice recorder, we can get back to you on this.

[Vance Badawey, Liberal, Niagara Centre, ON]

Essentially your voice recorders are being used in a reactionary manner versus being proactive for discipline or anything like that. They're not being used for that. There's no desire to use it for that.

I'm just going to cut right to the chase. Right now with some of the comments being made about the video-voice recorders for the rail industry, there's a lot of opinion on how far we should go with legislation, how far with the ability for, in this case, CP and CN, or any others that might be out there. What capacities would they be able to be afforded with respect to discipline, keeping an eye on, etc.?

Is there any desire with the airline industry to have that same capacity?

[Mike McNaney]

Just in terms of WestJet, I'm not aware of any discussions internally about that.