Transport Committee on Sept. 14th, 2017

[Ryan Greer]

Just to step back to one of your earlier questions about the cost of air travel in Canada, I think all of these extra taxes and fees and the airport rents are one of the reasons why it is more expensive to fly in Canada. Obviously there's the density of our population, but there are also our carriers that serve a lot of routes that aren't as profitable, including into the north, where some of their bigger haul routes actually can cross-subsidize and get into smaller communities the flights that may otherwise not make commercial sense for them. I expect that there is some cross-subsidization when it comes to making sure that Air Canada, WestJet, and other carriers are actually getting into smaller communities where there's maybe not a lot of potential to make money.

The user fee principle built into air travel makes sense, but again, only if those fees are used for what they're determined for. The problem with the air travellers security charge is that not all of that money is put back into CATSA screening. One of the things that Bill C-49 will do in allowing airports to contract out new services from CATSA is that inevitably those authorities will end up recouping those costs through their landing fees and other mechanisms, which are then built into ticket costs. That means consumers could end up double-paying for security fees. They're paying the air travellers security charge, and then they're going to be paying whatever fees end up getting built into tickets because of these additional costs that are being contracted out.

We think it's time for a review of all of the government-imposed costs. We're not saying to get rid of all of them. We're not saying that there shouldn't be a security charge. We're saying to make sure that we're accountable for how those fees are used and that they're invested in what they're supposed to be invested in. Also, then, there's looking to see if there are ways in which we can make the sector as a whole more competitive. Again, airport rents are an area where we impose very high costs, which then of course have to be recouped through the end users.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Greer.

Mr. Chong.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you to our witnesses for appearing. I appreciate the candour of your opening remarks and testimony.

In addition to failing to introduce market forces in grain handling in Canada by lifting the maximum revenue entitlements, thereby failing to address the underlying cause of the grain-shipping crises over the last 20 years, based on your testimony it looks like the government is also weakening the competition in another area by weakening the power of what is a law enforcement agency, the Competition Bureau.

I found it really interesting that in your opening remarks, Madam Fisher, you elaborated at length about the bureau's 2011 case where you went after Air Canada and United Airlines and their proposed joint venture, and ultimately required that they exempt 14 transborder routes from the joint venture in order to ensure greater competition for Canadian consumers and ultimately lower prices for Canadian families.

It's clear to me that the bill in front of us today weakens the bureau and weakens law enforcement by introducing a new process that would allow the minister to essentially bypass the bureau. Had the 2011 case been introduced under this proposed law, it's clear to me what would have happened. Air Canada and United Airlines would have applied directly to the minister for this new process and very likely the minister would have approved the joint venture, possibly without the exemptions for the 14 routes. That ultimately would have led to less competition and to higher prices for Canadian consumers.

I think it's safe to say that Bill C-49 weakens law enforcement. It weakens the powers of one of our premier law enforcement agencies when it comes to competition. Would you agree with that statement?

[Melissa Fisher]

The bureau is an enforcer. We enforce our legislation as it's been enacted. If the present legislation is enacted, we will enforce it as well, and we are strong enforcers.

In terms of our substantive competition analysis under the new legislation, that will not change from the current legislation in terms of how we conduct our review and in terms of the quality of our analysis. The rigour we apply will not change.

The proposed legislation does require the minister of transport to consult with the commissioner with respect to proposed remedies related to competition. We will continue to negotiate hard for those remedies. I don't see any of that changing.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you for that answer.

I just have a comment to make, Madam Chair.

I find it really interesting that there seems to have been a very cozy relationship between big business and government over the past two years. I don't think it's without coincidence that Air Canada purchased the C Series jet, thereby helping a Canadian company, while at the same time provisions concerning maintenance facilities for Air Canada in Winnipeg were watered down. We also now have a bill in front of us that would essentially allow joint ventures, like the one proposed in 2011 between Air Canada and United Airlines, to proceed without a rigorous, mandatory Competition Bureau review. It would also remove the ability of the bureau to directly negotiate the terms and conditions of those joint ventures.

I think it's concerning. Ultimately, the bureau is a world-class organization that has done very good work over the last number of years in enforcing competition and creating greater competition for Canadian consumers. I worry that this legislation weakens the powers of the bureau to continue that role in its world-class manner.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Chong.

Mr. Fraser, you have five minutes.

[Sean Fraser, Liberal, Central Nova, NS]

Thank you.

I'll start with you, Mr. Greer. You mentioned that when we're dealing with long-haul interswitching, the absence of reciprocity is a problem. When we spoke with some of the witnesses who testified on behalf of the railways, one of the things that came out of the testimony was that in fact a very, very small portion of their business is subject to being lost to the United States.

What's the extent of this actual threat, with the lack of reciprocity, with business going to American railways?

[Ryan Greer]

As Bill C-49 is currently drafted, both major class Is stand to lose some business in southern Alberta and southern Manitoba. That's what the current exemptions of the bill provide in Ontario, British Columbia, and Quebec.

I think my comment in my remarks was that in the absence of those exemptions, both those railways would stand to lose a significant amount of rail business, and then Canada would lose a significant amount of port business in both Vancouver and Montreal. As it currently stands, there will be a loss of traffic. The railways would have to give you a more precise description of what that loss of traffic in Alberta and Manitoba will be. With the exemptions, which would be maintained, a massive loss of traffic in some of our major centres won't be had.

[Sean Fraser, Liberal, Central Nova, NS]

I'm just curious, then, if we compare it not with the status quo but before Bill C-30 sunsetted, and if we look at the extended interswitching as a comparison, from your perspective, what's the relative loss of business that you would see under a new regime with the excluded corridors? This is as compared with the extended interswitching regime.

[Ryan Greer]

Part of the challenge with LHI, as I think you heard from both the railways and the shippers, is that there's still a lack of understanding about exactly how it would function and what the outcomes would be. The railways will hope that it doesn't lead to a larger loss of business. Some of the shippers have suggested that the old interswitching provisions weren't used nearly often enough but were an important negotiating pressure point for them. It's unclear how LHI might itself include into it. Reading the bill as it is, I think LHI is probably an improvement from the old Bill C-30 in that it's seen as a matter of last resort, but again, we'll have to wait and see until it's in action.

Again, to us the biggest concern is that the exemptions stay in place. Without them, it would really be a free-for-all on major Canadian lines.

[Sean Fraser, Liberal, Central Nova, NS]

I'm going off memory here, so forgive me if I misinterpreted something from your testimony before the fire alarm went off. You spoke about the importance of data. I was unclear as to whether you were saying that the measures put in to enhance access to data were positive, or if you were saying that we need to go further and give the disaggregated data the shippers were talking about to really influence decision-making, or maybe both.

Could you perhaps elaborate on the importance of that quality of information in terms of enhancing efficiency in the transportation system?

[Ryan Greer]

Yes, the use of data, and having more data for all members of the supply chain, is hugely important and should be applauded. I think outside of this bill, the government is taking some actions to establish a new data and information group within the Government of Canada.

To me, when you start regulating certain amounts of data, it becomes a tricky proposition. We don't always know what the burden will be on companies to provide that and in a certain timely manner. However, there are a lot of examples of industry and government working together collaboratively, often on a voluntary basis, to bring together information from all parts of the supply chain. Our view is that more of that data is needed to make decisions on infrastructure investment and to make other policy decisions. That data also needs to look at the Canadian network as a whole, not just individual parts of it, and at how all decisions and infrastructure investments will impact supply chains from coast to coast to coast.

[Sean Fraser, Liberal, Central Nova, NS]

If I could move on to the competition folks, perhaps, Ms. Fisher, you'd be in the best position to answer this.

I've seen from a few recent news articles that Air Transat has come out swinging against the joint measure provisions here, using phraseology like this is going to kneecap the competition regulator. Do you think the provisions in this bill are going to prevent you from doing your work?

[Melissa Fisher]

In terms of our substantive analysis, the proposed legislation provides that the parties to the arrangement will provide the information we need to conduct a review. Having that information, we're going to apply the same rigorous test that we apply now. Our analysis is very well set out and is based on international standards. We'll continue to apply the same analysis as we have applied historically in conducting our review.

[Sean Fraser, Liberal, Central Nova, NS]

I'll go to Mr. Schaan quickly.

[The Chair, Liberal, Judy Sgro]

Mr. Fraser, your time is up.

Mr. Godin.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Thank you, Madam Chair.

Ladies and gentlemen, thank you for taking part in this exercise, which I think is very important to make sure that the bill is complete, well written, and that it achieves the objectives set out by parliamentarians.

My first question is for Ms. Fisher, from the Competition Bureau.

You said to one of my colleagues earlier that you enforce the law; that is the Competition Bureau's mandate. I understand your role very well. If, however, the bill is not clear, if it is incomplete or evasive, will you be able to play that role effectively? Will the bill give you the necessary tools and enough strength to play your role?

[Melissa Fisher]

In terms of the proposed legislation relating to joint ventures, I think our role has been very well described and it's limited to competition to the extent that there are other public interest factors that are being considered by the Minister of Transport. Those are his considerations to take into consideration.

We will conduct our analysis as we have conducted our analysis and we will prepare our report as we are required to do under the proposed legislation. In terms of how our analysis will be conducted, the factors that we will take into consideration are very well defined and industry players will know what those are.

We will continue to do that in the way that we have always done it.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

As parliamentarians, we want the bill to be even more effective. What would you add to this bill to help the Competition Bureau be effective?

[Melissa Fisher]

That's a good question.

I think the development of the guidelines will be very important in the proposed legislation because they're going to set out the information that we need to conduct our review. The quality, the comprehensiveness, the accuracy of any work we do is all dependent on the information that we have access to.

We're committed to working with Transport to develop those guidelines and ensure that the information that we require to conduct an analysis of a joint venture is clearly set out in the guidelines.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I have no concerns about the effectiveness of the Competition Bureau in applying the letter of the law. I do have one concern, however. In the case of joint ventures, the minister has the right, after two years, to intervene on the grounds of public interest, but that public interest is not well defined. Is it political interest or a one-time interest? The question is perhaps more for Mr. Schaan.

I am a bit uncomfortable about this power being given. As I said to Mr. Garneau this morning, I do not have doubts about the current minister, but as my colleague said earlier, a law is above individuals and it has to be applicable in the future also. There is nothing in the bill that indicates the kind of public interest that would justify the intervention of an individual politician in that process.

[Mark Schaan]

Thank you for your question.

I have two important points.

First of all, with regard to alliances, the process already exists.

The same process that currently exists in the Canada Transportation Act for mergers is what we are now introducing for joint ventures. This notion about a public interest consideration has actually been in our laws since 2000. What we are doing is keeping up with the times in the way the industry internationally is moving forward. Our competitors in other jurisdictions, the United States, Australia, and others, have access to public interest considerations in their joint venture reviews, and Canadian airlines do not. That's one of the views.

The public interest considerations, the minister having heard from the commissioner of competition compulsorily about the considerations from a competition perspective, will be articulated and enumerated in guidelines. They include safety, access to increased connectivity, economic viability, and all sorts of important factors that impact the Canadian economy, Canadian travellers, and the healthiness and competitiveness of our Canadian air industry. Those will be set out in guidelines, and as I say, it's predicated on a process that has already been in existence.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Monsieur Aubin.

[Robert Aubin, NDP, Trois-Rivières, QC]

I have a very simple question for the Competition Bureau officials.

Are lobbyists allowed to lobby the Competition Bureau?

[Anthony Durocher]

I think it is allowed. To my knowledge, there is no prohibition against it. I can tell you, however, that in practice it is specifically in relation to files or investigations that we have dealings with the company representatives or their lawyers. That is how it works. That is partly because the political aspect is for the department to deal with, and not the bureau. Companies and their lawyers have dealings with us when we are conducting investigations.