Transport Committee on Sept. 14th, 2017

[Jeff Walker]

I don't know that case in detail. What I understand about it is that it wasn't just any travel agency. It was a travel agency that was out of country, and there was some murkiness about what the pricing behind that ticket was. I don't want to comment, therefore, on that particular case.

However, there is one sub-element to it that I think we really have to understand. Other people at this table have already talked about it. What we're trying to do is put some system or practices in that are for ordinary Canadians—people who travel once or twice a year, like that family. They don't know their way around an airport. They don't know who to call. They don't know what desk to go to. We need some provisions in place so that it's easy for those people who go to an airport twice a year, not 25 times a year, to know what they're getting and that they're getting the same thing as the people who go 25 times a year.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Bussières, you were mentioning—or perhaps it was you, Mr. Petsikas—that when you had your situation on the ground, people were running around all over the place trying to figure out what would happen next. I think “meltdown” was the term you used.

As it would have been in the situation I mentioned with Mr. Walker, where was the person who just basically said, “My God, we've got to look after those passengers who are in the plane”? Where was that person?

[Bernard Bussières]

Thank you for your question, sir.

Let me put what happened into context, because the situation was exceptional and absolutely extraordinary.

The Toronto and Montreal airports were closed because of weather conditions. Twenty aircraft were rerouted to the Ottawa airport, including an Airbus A380 and some Boeing 777s and Boeing 787s. On those 20 aircraft were more than 5,000 people who suddenly and unexpectedly found themselves at the Ottawa airport. There was refuelling equipment, but no staff. There were also handling staff. That was the situation at Ottawa airport, and it was exceptional.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Sir, with respect, I understand—

[Bernard Bussières]

Sir, an investigation is under way.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

I understand how exceptional it was, but we didn't get complaints from those other aircraft, not that I'm aware of.

Again, if you become aware that you have people in your custody, in your plane.... It's kind of a rhetorical question at this point, and I understand that. But you could save yourself a world of pain and a world of grief from a government that is asked to do something about the problem that's created when people don't think, when they don't use their head, and they don't ask the simple question, “What are we going to do for our passengers?”

Johnson and Johnson set the bar pretty well in the Tylenol tampering. They said they didn't care what the problem was; they would just fix it. Lloyd's of London did exactly the same thing following the San Francisco earthquake. It just dealt with it and paid the claims.

That's the value statement that needs to be nailed to the wall in every airline, every business, in fact. Number one is the customer, and we failed, and that's why government is doing what it's doing right now.

Mr. Bergamini, I'm going to talk about the balance between user-pay and everybody pays. It was interesting that one of our earlier witnesses mentioned that we're first in the world when it comes to our airports. They're great facilities, great everything, but we're 61st when it comes to the cost. He didn't really seem to get the connection between the two: the fact that we do pay a lot is the reason we have really good facilities.

What is the appropriate balance between user-pay, through all of the fees, etc., that we talk about, and everybody pays, which turns into a government subsidy? What's the proper balance here?

[Massimo Bergamini]

I'm not sure I have a simple answer to that question. Let me just say that there's no doubt that, from 1994 to today, with the devolution of the airports to local, not-for-profit authorities, we've seen massive user-funded investments that have given us enviable infrastructure. That's the good news.

The bad news is that the governance system and the policy framework have not kept up. This is fundamentally what we're talking about here. As this committee and this government embark on a quest to improve the air traveller experience, it really is important to look at the entire picture, all of the players and all of the elements that are at play that involve whether a passenger movement is successful or turns into a nightmare.

With respect to user-pay—and all we have to do is look at other modes of transport that are heavily subsidized—there's a modal equity debate that we should be having. I can tell you one thing: if we embraced the Emerson report recommendations, reversed some of these historical policies, turned some of that money that is currently being collected by governments and/or through users, and put it back into the system, I think we'd have a much healthier, much more competitive, and much stronger air transportation system. I would even argue that it would be a lot easier to find solutions to some of the issues that we are trying to address through regulation and Bill C-49.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Bergamini.

Mr. Bussières, just hold your response here and if you don't get a chance to get your point in by the end of the meeting, I'll make sure to give you that opportunity.

Go ahead, Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Madam Chair, I just want to preface my comments by saying that this whole process and what we're trying to contribute to the overall, bigger strategy is quite frankly about people.

We're trying to balance passenger rights with value, as well as recognizing the returns that you expect to do business. As a business person, I recognize the challenges you have and that we all have. The way I was brought up in the business world was that you deal with it, period. Easy or not easy, you deal with it. While you deal with it, you put plans in place. You put contingencies in place and best prepare for those situations on an ongoing basis because we all recognize that businesses don't always run smoothly. At the same time, we also have to respect the people that we're actually trying to make it run smoothly for, who are once again, people.

Having said that, my first question is for Mr. Walker. With the organization you represent, it seems the Minister of Transport has moved fairly quickly on this bill. That's why we're here the week before the House is scheduled to sit. With regard to air passenger rights, which is our priority in having embarked on this process, in a span of a year and a half, he's put forward a very comprehensive set of goals and a regulatory plan to ensure necessary safeguards for Canadian air passengers. How long has CAA been pushing for such a regulatory track?

[Jeff Walker]

Informally, for more than a decade and probably since I took over this role, which was seven years ago. For seven years, we've been lobbying for this and talking to people as well.

[Vance Badawey, Liberal, Niagara Centre, ON]

With that said, obviously, we've been aware of the challenges for the past decade, if not longer. When I say we, I mean all of us, regardless of government. This is not partisan. This is business, regardless of sector or interests, actually. We've recognized this challenge for the past decade.

My question now is to the industry. Recognizing the challenges that are in front of us, was there in fact a strategic plan with identified objectives put forward? As part of that strategic plan with objectives recognized, was an action plan attached to each and every objective that recognizes, for over a decade, the challenges to yourself, with respect to what you're talking about, the expectations of government, but most importantly, expectations of the passenger? Was there a strategic plan, with objectives identified, and actions attached to those objectives?

[George Petsikas]

Are you referring to coordinated industry action and objectives or are you talking about a carrier-by-carrier basis?

[Vance Badawey, Liberal, Niagara Centre, ON]

It's to deal with the challenges that passengers are recognizing, I won't say on a regular basis, but on a basis that sometimes is more frequent than not. When situations such as Mr. Hardie and others were speaking of happen, in your strategy and the objectives you identify on behalf of the people you're actually servicing, the passengers, what are those actions over the past decade?

[George Petsikas]

In 2010, as head of the National Airlines Council of Canada, we coordinated with our member airlines the filing of tariff commitments in our tariffs, which are contractually binding. Unfortunately, this is one thing that we've messed up in terms of the public debate because we say there's nothing in Canada to protect the consumer of air travel, but that's incorrect. The largest airlines in this country, represented by the NACC, over 75% of the market, benefit from contractually enforceable tariff provisions regarding overbooking and procedures to be followed in that respect, including calling on volunteers, compensation to be offered, etc. Management of cancellations and delays with respect to duty of care, with respect to refunding of fares in the event that the delay exceeds a certain number of hours, that's in there. There are commitments with respect to baggage delivery. We already have a very clear framework on baggage compensation internationally.

In Bill C-49, I realize that we're trying to establish a clear framework for domestic compensation. We have no problem with that. However, my point is that these provisions have been in place since 2010. They're not widely reported, unfortunately, but what we're saying, for the record here, is that they are there and they provide very real rights for our customers and our consumers. As such, I have always said that we have a basis to work with and, if the minister and the government now wants to codify what we've already had in place since 2010, at least the four major airlines, then I'm there. We can do that. However, it was wrong to say that there was nothing to protect airline consumers in this country compared with the U.S., Europe, etc. That is wrong.

[Vance Badawey, Liberal, Niagara Centre, ON]

Mr. Walker, can you comment on that?

[Jeff Walker]

Yes. I think the challenge really is that those things are there in some cases, some airlines. Good luck finding them on the website. It's really tough. We had our team go and look for them, and it was a hell of a time to find that stuff.

The other thing is that it's case by case. Like I said, go back to my two trips a year people versus 25 a year. The 25-a-year people, they know where to find things. They know who to call and they know what to do, but families like the one that was just discussed a few minutes ago haven't got the foggiest idea that anything could be available to them.

[Vance Badawey, Liberal, Niagara Centre, ON]

Hence the reason we're here. I'm not here to talk about the past. I'm here to talk about the future.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Let's work toward that future to ensure that strategic planning objectives and the actions that are attached to them, we can move forward on, including Bill C-49.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Chong.

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

Thank you, Madam Chair.

I want to make a general point because I've been hearing this on this panel and on the previous panel, too, and that's about the high cost of air travel in Canada. The government's airport rents and the fees are always blamed for that as if it's exclusively the only problem, but the reality is that it's not the major area for why there's a cost differential.

There's a Conference Board report from 2012 that did an analysis of why airline tickets are more expensive in Canada than in the United States. It found that we do, indeed, pay about 30% more for air travel in this country than they do south of the border, but that only 40% of that cost is Nav Canada fees and airport fees, and that 60% of that cost is attributable to utilization rates, labour costs, fuel costs, and other things that have nothing to do with airport landing fees and other fees that are charged in the system. I want to put that on the record because, while 40% is a significant component of the 30% price differential, it's not the only thing that's causing that price differential.

I have a question about joint ventures. In the 2011 case where Air Canada proposed the joint venture with United Airlines, the competition bureau disallowed 14 transborder routes from that agreement. Did Air Transat do a cost analysis of what would have happened had the competition bureau not imposed those conditions on that agreement?

[George Petsikas]

No, not at the time. We have not done that.

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

Do you have any information or data for the committee that would inform us as to how much a ticket would rise in price if these joint ventures were allowed to proceed under the new legislation without any conditions imposed by the competition bureau?

[George Petsikas]

We don't have empirical evidence that would point to that necessarily. What we do have is analysis in terms of the trend, in terms of ticket prices in Canada. I mean, that's something that the NACC has worked on, and it showed that mean prices have dropped domestically.

Internationally we look at that, but we don't have anything that points to prices going up necessarily if these joint ventures are authorized, at least in the short term. What we do know is that we have evidence that they already hold dominant or fortress market shares in 20 of 30 transatlantic markets. This is the joint venture we're talking about that's of relevance, Atlantic plus, plus. As such, we're saying the chances are pretty good that, if this operation is immunized, protected, or exempted from competition law enforcement, there's a risk in terms of abusing that dominant position.

We're not accusing these companies of going to do that or doing that right now, absolutely not. What we're saying, though, is that you are more at risk for that sort of behaviour in terms of higher prices, because any economist will tell you, once you control a certain amount of market share in a defined market, you have an inordinate ability and power to drive pricing to your interest in that market, not necessarily to the consumer interest. That's not me talking. Any economist in any competitive market will tell you that.

What we're doing here, I think, goes against that. It basically confirms that wisdom.

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

Are there any other joint ventures that you're aware of that are in the works?