Evidence of meeting #69 for Transport, Infrastructure and Communities in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was c-49.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Cam Dahl  President, Cereals Canada
Bob Masterson  President and Chief Executive Officer, Chemistry Industry Association of Canada
Jeff Nielsen  President, Grain Growers of Canada
Kara Edwards  Director, Transportation, Chemistry Industry Association of Canada
Fiona Cook  Executive Director, Grain Growers of Canada
Pierre Gratton  President and Chief Executive Officer, Mining Association of Canada
Joel Neuheimer  Vice-President, International Trade and Transportation and Corporate Secretary, Forest Products Association of Canada
Karen Kancens  Director, Policy and Trade Affairs, Shipping Federation of Canada
Brad Johnston  General Manager, Logistics and Planning, Teck Resources Limited
Sonia Simard  Director, Legislative Affairs, Shipping Federation of Canada
Gordon Harrison  President, Canadian National Millers Association
Jack Froese  President, Canadian Canola Growers Association
Steve Pratte  Policy Manager, Canadian Canola Growers Association
François Tougas  Lawyer, McMillan LLP, As an Individual
James Given  President, Seafarers' International Union of Canada
Sarah Clark  Chief Executive Officer, Fraser River Pile & Dredge (GP) Inc.
Jean-Philippe Brunet  Executive Vice-President, Corporate and Legal Affairs, Ocean
Martin Fournier  Executive Director, St. Lawrence Shipoperators
Mike McNaney  Vice-President, Industry, Corporate and Airport Affairs, WestJet Airlines Ltd.
Lucie Guillemette  Executive Vice-President and Chief Commercial Officer, Air Canada
Marina Pavlovic  Assistant Professor, University of Ottawa, Faculty of Law, As an Individual
David Rheault  Senior Director, Government Affairs and Community Relations, Air Canada
Lorne Mackenzie  Senior Manager, Regulatory Affairs, WestJet Airlines Ltd.

4:50 p.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

It's an empty container. It's an empty trailer. If you're talking about moving the empty container from where it was unloaded to where it's going to be loaded, why should you have to hire a third party to move that container? That's what I'm trying to figure out.

4:50 p.m.

President, Seafarers' International Union of Canada

James Given

Again, that movement is taking place. I think we've established that it takes place by rail or truck. Now the foreign ship operator wants to move it. Why?

4:50 p.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

Because the ship arrives with the container. The ship wants to move their container. They're not moving someone else's container. They're moving their own container to the next port where it's going to be loaded, and they're going to leave. I'm trying to see where—

4:50 p.m.

President, Seafarers' International Union of Canada

James Given

It's still a cabotage run, and under the definitions of cabotage that are there, that's cabotage. That's considered cabotage, because you're moving something between two Canadian ports.

This has to be perfectly clear. That shipowner still has the ability to move that. All he has to do is apply for a waiver, which he'll get if no Canadian shipowner wants to move that particular container.

If you look at all of these years where it's been done by rail and truck, why all of a sudden is it open? Under CETA, it was open for certain reasons, and I believed the reasons that I was told. There were compromises made. It was a negotiation. That's what was done. However, to open it more, to liberalize it more under Bill C-49, is opening the gate to any flag, to any rogue owner, and anything that they want to do.

Concessions were made in a trade negotiation. We all understand that. Concessions are made every day. How they got to that concession...like I said, it was explained to me and I accepted it. Now it's a conscious choice of whether we open it up to more cabotage. We're not in a negotiation with anyone but ourselves right now on what we're going to do with cabotage.

4:55 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much

Mr. Badawey, a short question.

4:55 p.m.

Liberal

Vance Badawey Liberal Niagara Centre, ON

It has resurrected something that happened in our community a few years back. We had a foreign vessel come in to our harbour and it was transiting the canal, and every individual on that vessel was sick, with no idea what they were sick from.

Mr. Given, in your experience with a foreign vessel coming in, what is the protocol? I'll tell you what the protocol was then, and this was only about five or six years ago. The protocol then was that nobody would touch it. Health Canada wouldn't touch it. We ordered the seaway not to allow that vessel into our community, because we didn't know what they were sick from.

It got to the point, just based on human response and wanting to help, that I sent my fire department out there. We are a city of 20,000 people, and I had to send my fire department out to what could have been an international incident. Who knows what they were actually stepping into?

Again, when it comes to labour conditions and protocols within our waterways and allowing something like this, what do you see as a proper protocol when these vessels come in and, as you mentioned earlier, there are health-related issues that have to be dealt with?

4:55 p.m.

President, Seafarers' International Union of Canada

James Given

Again, I'm going to take the easy way out and go back to the waiver system. It's put in ahead of time, there are screenings done, and basically everything is looked at, Mr. Badawey.

That kind of incident happens more than you think, and there isn't a protocol. Again, as you've said, nobody wants to get involved with it. The only protocol I know is with ITF inspectors who go down and try to help these guys. That's the job I used to do. Then we hope that somebody in the community will get involved. Church groups right now get involved with giving winter clothing to these crew members when they come to Canada in the fall, because they're not prepared for it and they don't have it.

Unfortunately, people die on ships because there is nowhere to turn and there's nobody to turn to. There are international conventions. There's a new convention, which is the convention for seafarers' rights, which goes a lot further than what we've ever had. Again, enforcement is the key, but enforcement is only as good as the people who do it.

September 13th, 2017 / 4:55 p.m.

Liberal

Vance Badawey Liberal Niagara Centre, ON

Thank you.

4:55 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much.

Thank you to the panel.

Before I suspend, I want to ask the committee if we could have 15 minutes for committee business either following our next panel, which ends at 6:45, or 15 minutes of our lunch hour tomorrow, for some committee business. What are the wishes of the committee, either 15 minutes following our next panel tonight or 15 minutes of our lunch hour tomorrow for committee business?

4:55 p.m.

Liberal

Vance Badawey Liberal Niagara Centre, ON

Don't we have time now, Madam Chairman, between now and the next set of panellists?

4:55 p.m.

Liberal

The Chair Liberal Judy Sgro

No, the next set of panellists is at 5:15.

4:55 p.m.

Liberal

Vance Badawey Liberal Niagara Centre, ON

I have 6:30 on our schedule.

4:55 p.m.

Liberal

The Chair Liberal Judy Sgro

That's because we squeezed a half an hour of our lunch hour to keep things moving along here.

4:55 p.m.

Liberal

Vance Badawey Liberal Niagara Centre, ON

Excellent, you're so efficient.

4:55 p.m.

Liberal

The Chair Liberal Judy Sgro

Tomorrow night we will be finished at 7:15 rather than 7:45, as of our schedule now.

What's the thought process of the committee?

4:55 p.m.

Liberal

David Graham Liberal Laurentides—Labelle, QC

We have an hour-long lunch tomorrow.

4:55 p.m.

Liberal

The Chair Liberal Judy Sgro

We could take 15 minutes of our lunch hour tomorrow and discuss committee business.

Is everybody in agreement with that? Okay, tomorrow we'll take 15 minutes of our lunch hour.

4:55 p.m.

Liberal

Vance Badawey Liberal Niagara Centre, ON

Madam Chair, would there be an opportunity this evening to possibly put a notice of motion forward?

4:55 p.m.

Liberal

The Chair Liberal Judy Sgro

Let's do our committee business tomorrow, and following a discussion with the committee, we can see where we go from there. That would be my suggestion.

5 p.m.

Liberal

Vance Badawey Liberal Niagara Centre, ON

Okay.

5 p.m.

Liberal

The Chair Liberal Judy Sgro

I'm going to suspend until the next panel gets in.

5:15 p.m.

Liberal

The Chair Liberal Judy Sgro

I'll call back to order the meeting on our study of Bill C-49. We welcome representatives from Air Canada and WestJet Airlines, as well as an assistant professor from the University of Ottawa.

Mr. McNaney, would you like to start off?

5:15 p.m.

Mike McNaney Vice-President, Industry, Corporate and Airport Affairs, WestJet Airlines Ltd.

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.

5:25 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much. Now we move on to Air Canada.

Please introduce yourselves. You have 10 minutes for your opening comments.

5:25 p.m.

Lucie Guillemette Executive Vice-President and Chief Commercial Officer, Air Canada

Good evening, Madam Chair.

Good evening, members of the committee.

My name is Lucie Guillemette and I am the executive vice-president and chief commercial officer at Air Canada.

I am joined by my colleagues David Rheault and Fitti Lourenco.

We are here today to speak about the modernization of the Canada Transportation Act, specifically the intent to improve the traveller experience.

Air Canada is Canada's largest airline. In 2016, Air Canada and its regional partners carried close to 45 million passengers, and operated on average 1,580 scheduled flights each day, offering direct service to more than 200 destinations on six continents.

Since 2009, Air Canada has grown by more than 50%, extending the reach of its global network and achieving its ambition to become a global champion.

We employ 30,000 people and 3,000 of our employees were hired in the last three years alone, providing a significant boost to job creation in this country.

Headquartered in Montreal, Air Canada operates four hubs: Pearson airport in Toronto, Vancouver airport, Trudeau airport in Montreal and Calgary airport. We open Canada to the world and provide travellers unparalleled international access.

We've launched new training programs for front-line staff, introduced on-board customer service management programs, improved and clarified our customer service plan, and created new policies for family seating, family check-in at airports, and the carriage of musical instruments. We have also pioneered flight passes and branded fares, offering more choice and flexibility to our customers, who can select the attributes and features that are most meaningful to them.

We recognize that valuable services and features for leisure vacationers vary significantly from those for business passengers, and we aim to meet the needs of all our customer segments, domestically and internationally.

The airline industry is extremely competitive, and we view service as an important differentiator. Financial stability and sustainability has allowed us to invest significantly to improve passengers' experience. For example, we have renewed our fleet and acquired modern aircraft, such as the Boeing 787 and the Bombardier C series. We've reconfigured our cabins, introduced a new premium economy cabin, and improved the inflight entertainment systems. We've invested in a new website and have developed new applications that simplify the passenger experience.

For all our efforts, we are very proud to have been recognized by Skytrax as the best in North America and to be the only international carrier in North America to receive a four-star ranking. I can assure you that we are committed to continuing our efforts to improve the experience of our passengers on the ground, in flight, and post-travel.

In the current regime, carriers have different standards and offer different compensation in a system based on complaints. Having a clear set of standards for all carriers would be appropriate, without, however, imposing an undue financial burden on carriers or limiting their ability to distinguish themselves through the customer service policies they offer.

Although Bill C-49 takes positive steps in laying the groundwork for the regulatory process, we have concerns, and I would like to address a few now.

Number one is simplifying the regime. The proposed regime would be applicable for flights to and from Canada. This creates complexity for carriers and confusion for passengers, since other regimes are applicable in other countries, which could provide for different rules, different exemptions, and different levels of compensation. For example, in a situation of denial of boarding on a flight departing from the United States to Canada, should we apply the Canadian or the U.S. regime? To simplify the regime and make it effective, we suggest that it be limited to flights departing from Canada, as the American regime is limited to flights departing the United States.

We also submit that in the case of code-share flights, the claim shall be made with the operating carrier, as in the European regime. These adjustments would simplify the regime for carriers and passengers, allow for the speedy and timely issuing of compensation, and avoid the risk of double compensation.

Second, on baggage liability, Air Canada agrees with the principle of harmonizing the rules of liability related to baggage. The bill should, however, acknowledge that passengers are already protected by the Montreal Convention, in the case of international travel, which provides clear and consistent rules that are applicable internationally. We therefore submit that the rules provided in the bill should be limited to domestic travel and harmonized with the rules of the Montreal Convention. This would also simplify the rules for carriers and avoid confusion for passengers.

Number three, apply one decision to all passengers on the same flight. In its current form, the bill could also allow for a generalized type of compensation, which would fail to consider the particular circumstances of each passenger. For example, if one passenger submits a claim and is compensated for a delayed flight, the same claimant compensation could potentially be applied to all passengers on that flight. The decision to extend compensation to other passengers should not be arbitrary, but should take into account each passenger's individual circumstance. A connecting passenger who arrives late on the first leg of the trip but catches the next flight is not ultimately delayed.

Number four is on future amendments. Future changes should be transparent and involve all stakeholders, including passengers and carriers. As it stands, Air Canada is concerned that the bill could give the Canadian Transportation Agency powers to create regulations outside of the specific situations provided in the bill. We ask that the committee clarify this language to specify that the regulatory power of the CTA is consistent with the scope of the bill.

Number five is joint ventures and foreign ownership. The amendments to how joint ventures are examined by the government are very positive. In our own experience and from other examples around the world, joint ventures are innovative ways for carriers to expand their networks, add new destinations for passengers, find efficiencies, and offer more pricing options for passengers. Joint ventures allow us to develop the Canadian aviation infrastructure by building international superhighways.

While giving the Minister of Transport the ability to consider joint ventures is excellent, as his department is best-equipped to understand the complexities of our industry, some of the amendments are not in line with best practices around the world. One example is the ability for the minister to review a new joint venture at the two-year mark from approval. The initial period of any joint venture is devoted to better co-operation between partners while the most important changes that pertain to network and fares take more time to implement. We propose that the term for review be lengthened and start from implementation versus approval of the joint venture.

The bill also suggests sanctions that are too punitive, given the commercial nature of JVs. Indeed, the sanction of imprisonment could dissuade a potential partner from even considering the possibility of a joint venture. These issues alone could be a significant barrier to make any use of the benefits of the bill. We ask that the committee consider the suggestions in our submission carefully on this issue.

With respect to foreign ownership, Air Canada is supportive. However, we ask that adjustments be made so that foreign investors cannot negatively influence Canadian carriers or circumvent the spirit of the bill. We also recommend changes that would allow for a ready implementation of the new ownership structure.

Finally, I would like to stress that we operate in a very complex environment. The collaboration and efficiencies of many other stakeholders are instrumental to the overall improvement of the traveller experience. These include airports, CATSA, CBSA, and Nav Canada.

Unfortunately, the airline is too often left to manage all of the negative consequences, but we do it because it is the right thing to do for our customers. While the bill would require carriers to provide the CTA and Transport Canada with data, I would submit that all other agencies and organizations required and involved in the transportation system should be equally accountable for their operations, and submit data in a public and transparent manner.

We also invite the government and the committee members to study the measures that could be implemented, so that all government-controlled agencies contribute to the improvement of the traveller's experience and support the growth of traffic by Canadian carriers. After all, we are powerful economic enablers. If the world indeed needs more Canada, we want to bring it to them.

I thank you for the opportunity to present our views. We look forward to your questions.