Transport Committee on Sept. 14th, 2017

[Douglas Lavin]

Our experience is that by definition the government in a sense re-regulating the airline industry through a passenger rights regime will drive up costs. That's why I stressed in my opening statement that we find it critically important that the regulators do a cost-benefit analysis. In the United States when the regulators pursued passenger rights regulations, three different sets of regulations, they estimated the cost and then they said that they would prove the benefits later. That's not the way to do a cost-benefit analysis.

But it will raise costs. Again, this is a significant issue here in Canada.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Okay. I want to follow up on that because it has been our concern on this side of the table that this bill is ambiguous at best in the details in regard to the passenger bill of rights. We recognize that detail is going to be left up to the CTA through regulations. I think what I've heard you say is that this is not the best model to use, in fact, it's better to use something different. You also mentioned you have seen 70 or more governments address this issue.

Can you just reframe for us what you think would be the best way to attack creating a passenger bill of rights?

[Douglas Lavin]

Yes, as I stated in my opening remarks, the approach that we see to be most effective is to ensure that the passenger understands what he or she is buying when they purchase a ticket.

One of the dangers of passenger rights regulations is that one of the big competitions between airlines is their passenger service. They compete at that level. If you put a passenger rights regime as a common thread across all airlines in the marketplace, it takes away competition. We find that in Australia, Singapore, and other emerging markets what they have done—and frankly what the CTA did last year—was to make sure that that transparency is there so that passengers can decide what they want to pay for.

All surveys, all evidence, suggest that when they are buying a ticket, any non-business passenger's number one, two, three, four and five concern is the cost of the ticket.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Now we go on to Mr. Graham.

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

Thank you.

Mr. Lavin, I have a problem with one of the things you said early on. You're suggesting that in the 70 countries that have dealt with this, some have gone the legislative manner and the others have enforced that companies clearly spell out what it is they are offering in their tickets. For the government to be required to tell companies to tell us what they are selling us is an admission that the companies are not currently telling us what they are selling us. Is that correct?

[Douglas Lavin]

It is certainly the government's position in those governments that they are not as clear as they could be. For example, in the United States, for anybody who looked at a contract of carriage, it's a very complex and long document. It's difficult for passengers to navigate that document, so what the U.S. did was require them to put it in plain language and put it on the websites in a way that the passengers can understand. IATA is strongly in favour of that kind.... If you would call it a passenger rights regime we're all for it. Transparency is important.

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

My point is, why should the government have to tell the airlines to tell us what they are selling us? Shouldn't they already be doing that? Why is that the level of service you're suggesting we need to be asking for?

[Douglas Lavin]

I'm not suggesting that governments should step in at all. Around the world if you look at the level of cancellations and delays they have all gone down. In terms of lost luggage that has gone down. Since 1996 air carriers' tickets have gone down by 64%. I don't see a reason for governments to intervene. However, governments do like to intervene at times and I would suggest that, if they do so, make it as transparent as possible for the passenger.

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

I propose to you, in response to Mr. McKenna's comments—and I'll leave it to both of you or to anybody else who wants to jump in—that 500 or so complaints out of.... Was it 14 million trips?

[John McKenna]

It's 140 million trips.

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

Okay, 140 million trips. Is it possible that people are not complaining because they're so used to the problems that they just don't see the purpose in complaining? I put that to you from a personal example because I flew to California for a vacation in January. On the way back, I flew United Airlines, which is known for its customer service, really.

During the flight from Los Angeles to Chicago, the crew never exited the galley at the back. They didn't pass once to offer service, they didn't respond to a single service call, and nobody complained because people were so used to that level of customer service.

If we're sitting at 500 complaints out of 140 million trips, maybe it's because we're used to bad service. Do you have a comment on that?

[John McKenna]

First of all, you should have travelled on a Canadian airline. You would have gotten better service, for sure.

I want to raise the question that was asked to the minister this morning as to why this is in regulations rather than law. I think the minister stated that it's easier to amend a regulation than it is to amend a law. Having dealt with Transport Canada for 15 years, I can say that nothing is easy at Transport Canada. Regulations there, on a good day, are very complex and difficult to follow.

I agree with what Mr. Lavin is saying. Whatever you decide to use has to be very clear and transparent for people. We've been waiting for regulatory changes for 10 years and they haven't come around. I think laws change about as quickly as that, so I don't think that's the solution. I do think that, for passengers, finding something in a bill or in a law is probably easier than navigating through Transport Canada regulations.

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

That's fair.

I have another quick question for Mr. Priestley. You mentioned the long-range planning problems. Can you give us a bit of a sense of the real-world differences between northern domestic airspace and southern domestic airspace, and what that means for you?

[Glenn Priestley]

As I said in my last testimony here, we own an awful lot of long, lonely routes. A flight on a daily basis from here to Iqaluit is the same as it is from Ottawa to Toronto or Montreal now. There's a beautiful new terminal that just opened up yesterday. Good investment infrastructure has gone into Iqaluit. However, we still have problems remaining at the 115 other airports in the north. They lack the infrastructure.

Say, for instance, we have to go to Pangnirtung. Pangnirtung is one hour and 15 minutes from Iqaluit. We can do that in an ATR-500 on a good day, and that means we have 40 passengers. On a bad day, when the weather's low, when the wind's blowing the wrong way—because we can only go in there one way, but we can go out both ways—we can only take 20 passengers. We have to reduce our load because of the local conditions.

Conversely, we have situations where we take off and fly further north than that. There is, of course, Rankin Inlet on the other side and Resolute to the north. Again, quite often because of the weather reporting, for instance, we can't get there, and we have to turn around and come back.

As I also mentioned, our passengers have a partnership with us. They understand. The average passenger in Canada south of the 55th parallel flies two trips a year. North of the 55th parallel, the average person flies six trips a year, so there's a better understanding.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

Monsieur Aubin.

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

Thank you, Madam Chair.

I would like to thank our witnesses for being here.

I will begin with a question for Mr. Lavin.

I clearly heard your complaints about high taxes, high rates, and the need to reduce airport rents. The government is considering privatizing airports in order to create capital funding for the Canada Infrastructure Bank. This has not yet been announced, and perhaps it will not be, but it is in the government's plans.

So I would like to ask you the following question. Do you think privatizing our airports would lead to lower rents as compared to the current system?

[Douglas Lavin]

Thank you for that question.

In terms of privatization—and I know that's not the subject of Bill C-49, but I know it's being considered—we are strongly concerned about privatization. There are easier ways to deal with rent than privatization. The government has collected so much rent that it is way beyond the price of the land that was turned over.

We have a significant concern with privatization because airports have a significant market power that they can abuse as part of any privatization. If privatization is pursued, we would need to see very strict regulation to ensure that they don't overcharge airlines for projects on which we have no ability to provide them some direction. We'd need an independent organization to appeal on those issues. No, we are opposed to it in the United States, and we're strongly opposed to it here.

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

Your introductory remarks gave me a bit of a start, especially when you said that, in certain countries that have adopted a bill of rights that sets out all the usual problems, the fines sometimes exceed the damages caused to the traveller.

How would you assess those damages? How can you say that a fine is out of proportion with the problem caused to the passenger?

[Douglas Lavin]

I apologize. I didn't catch your question. I'm having difficulty hearing. Could you restate it?

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

Yes.

You said earlier that, in certain countries that have a bill of rights, the companies have to compensate the aggrieved passengers beyond their actual losses. What are your thoughts on that?

[Douglas Lavin]

Thank you.

Certainly Europe is a very good example of the dangers associated with compensating beyond the loss of time or property. In Europe, with the high fines for even minimal delays, we've seen businesses crop up to help passengers collect fines above and beyond what their damages were. For example, businesses will help a passenger identify a flight that is chronically delayed, have the passenger pay 20 euros for that flight, see it delayed, get the 670 euros for the delay, and then split it with the company. That's the kind of thing we see in Europe and could see here.

I wanted to mention that I think it's important for everybody to note that passengers have significant protections here, but I'll respond if anybody wants any more information on that.

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

I will now turn to the musicians. We rarely have musicians around the table with us.

Welcome.

I was trained in classical singing myself. The instrument is fairly easy to transport, since it does not take up any more room than myself. I can well imagine that if someone puts a Stradivarius in the baggage hold it might be all right as long as no one puts two or three suitcases on top of it. Yet I have a friend who is cellist whose instrument is worth more than my house. To my mind, that is an extreme. Some people buy an extra ticket to keep their instrument with them on the flight, but forget about it if it is a double bass.

What would you like to see in the passenger bill of rights to protect all instruments? I guess some of the larger instruments, such as a double bass, have to go in the cargo hold.

[Allistair Elliott]

It's a great question. Thank you for asking it.

Double basses obviously are not going on a plane as carry-on instruments. We understand that there have to be reasonable expectations to the regulations, and we're prepared to do that. I think the biggest thing we're looking for is consistency. Right now, consistency doesn't exist. It's very difficult to make any travel plans with any kind of instrument because currently you really don't know what you're going to get until you show up at the gate. That's the biggest issue for us right now.

Double basses of course are not going to go on a plane. They're going to have to go in the hold. There have been instances where a musician shows up.... I had two of them this summer that I got calls on with different airlines and different situations. A musician was told that they could bring it on and then got to the airport and was told that it had to go cargo. Of course, that caused a delay, and different arrangements had to be made. Again, the biggest issue is the inconsistency in the policies right now.

[The Chair, Liberal, Judy Sgro]

Mr. Fraser.