Transport Committee on Sept. 14th, 2017

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

Thank you.

I will go back to the musicians.

I clearly understood that you want to see the greatest consistency or uniformity possible in services from one company to the next. I would ask you, however, to tell us the specific elements that would enable us to establish that consistency for all companies.

Would it be reserving the overhead bins for instruments? Or companies having pressurized equipment that would enable them to put larger instruments in the cargo hold? What minimum standards would you like each airline to accept?

[Allistair Elliott]

We refer to what our colleagues in the U.S. went through in the last few years with the FAA Modernization Reform Act of 2012. I don't have that memorized, but the consensus of it is primarily with regard to carrying instruments on within the cabin. If it fits in the overhead bin, it can be put in the overhead bin, not asked to be removed to be replaced with luggage and not asked to be taken off the plane.

If I'm correct, I believe there's a weight limit as opposed to a size limit. As we said earlier, musicians' briefcases are oddly shaped, and they don't fit in the little compartment that is for carry-on baggage. That's the crossover. It didn't get into storage of instruments or pressurized areas underneath the planes. We respect that there are a lot of dollars involved in the economics of that. It hasn't gone that far.

The biggest ask is consistency with regard to carrying instruments on, more than anything.

[Francine Schutzman]

I'd like to add that Air Canada's current practice, if I understood correctly, is that musicians will be allowed to pre-board. I think that we have all seen many things put into overhead compartments that could easily be put under seats.

It's a question of balance. When you're talking about something so extremely valuable that even putting it in a pressurized cabin, like animals.... We've heard of animals being harmed in pressurized cabins. It's part of your life. It's your soul, and you want to keep it as close to you as possible.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

We have completed round one. Are there any other questions anyone has that they would like to ask?

Mr. Graham.

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

I'm not going to take much time, I just wanted to finish with Mr. Priestley, from when we were cut off.

Just out of curiosity, in the north, how many of our airports have things that we take for granted in the south, like paved runways, control towers, or ILS?

[Glenn Priestley]

Nine out of 117, and only five of those have all of those things you mentioned.

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

That puts it into perspective. Thank you.

[The Chair, Liberal, Judy Sgro]

Mrs. Block.

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

I have just one more question. I want to go back to some of the observations I made around phase two. I cannot get away from that knowing what brought about the Emerson panel report was the fact that we expedited a statutory review. That statutory review takes place every 10 years.

If we're believing that phase two is going to happen anytime between now and 10 years from now, I'm interested to see how that's going to happen. It doesn't mean that you have to wait 10 years, but there's no requirement to do it. In fact, we've had witnesses recommend that we put back provisions in the bill that require a review of the changes that have been made because that's missing in Bill C-49.

What measures should have been put in this Bill C-49 to address the concerns you've raised about the costs that our air travellers incur, and do you see prices going down under any circumstances in Bill C-49 as it is?

[Douglas Lavin]

I'm happy to answer. I don't see any circumstances whereby Bill C-49 by itself would reduce prices.

In terms of what we would have liked to see, again, the number one focus was costs. First of all, we're on record saying that we want an elimination of airport rent, but even a phase-out of airport rent would be useful. A reduction in the CATSA fee and more government investment in security would be good, as opposed to putting that on the backs of air travellers. We see a lot of evidence in the Emerson report talking about how CATSA could be reformulated to address the security lines issues and to change the one-size-fits-all.

There are all those different things, and those all impact on the competitiveness of the airline business in Canada. The minister said that ownership.... If you listen to his remarks and look at Bill C-49, the only thing he points to on reducing costs is ownership and control, which in theory would increase competition in the marketplace. Again, Mr. McKenna and I have both stated that we find that highly doubtful when the costs to doing business in Canada are so high. It is not ownership and control that are preventing airlines from coming in here and doing business.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you.

Monsieur Godin.

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

Thank you, Madam Chair.

I have a very quick question for Mr. McKenna.

Correct me if I am wrong, but I think you said that the cost of reimbursements would affect the fees travellers pay. In other words, that cost would determine whether fees have to go up or down.

Is that what you said?

[John McKenna]

I said that if the bill or the subsequent regulations require the airlines to pay large amounts of compensation, that will ticket prices will of course be higher ultimately.

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

Okay. That brings me to my second question.

This summer, my son went to Victoria. Owing to special circumstances, Air Canada asked him to give up his place, which meant he had to wait at an airport for 24 hours. For a young person, sleeping on an airport bench is no problem, but older people prefer greater comfort. In any case, my son accepted the offer. His ticket cost about $435, but he was offered $800.

Is it common industry practice to offer compensation above the cost of the ticket?

[John McKenna]

You are talking about a case where one, two or three passengers are asked to leave the aircraft and are in turn offered significant compensation. It is a very different different situation when an airline has to offer compensation to all passengers due to a delay. The cost to the company is not at all the same. That kind of practice does exist. The airlines want to entice those people to leave the aircraft voluntarily, without leading to complaints or similar problems. Those are not really the same circumstances.

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

Okay, thank you.

[The Chair, Liberal, Judy Sgro]

Is everyone happy? Does everybody have sufficient information?

Thank you to the witnesses. It has been a bit of a long afternoon for you folks as well, so we thank you very much for coming and sharing your thoughts with us as we move forward.

We will suspend for the next group to come to the table.

[The Chair, Liberal, Judy Sgro]

I will call the meeting to order.

Our witnesses are in place, and our staff. We have a very short break between this group and the next, so if we can gain five minutes, I think it would be appreciated.

We have with us, Air Transat, Canadian Air Transport Security Authority, Canadian Automobile Association, and the National Airlines Council of Canada.

I thank you all for being here. Who would like to be the first up?

I don't see any volunteers, so how about Air Transat going first? Please introduce yourselves and go on with your opening remarks. Thank you.

[Bernard Bussières, Vice President, Legal Affairs and Corporate Secretary, Transat A.T. Inc., Air Transat]

Thank you, Madam Chair and dear committee members.

My name is Bernard Bussières and I am the vice president of legal affairs at Transat. With me is George Petsikas, senior director, government and industry affairs.

Transat is honoured to be invited to appear before you today as part of your consideration of Bill C-49, Transportation Modernization Act.

Since we were founded in 1987, we have always worked diligently and proactively with government decision- makers, legislators, and regulatory officials in order to develop informed policy that supports growth in travel and tourism, which is an important industry in Canada. It is in this spirit that we appear before you today.

You should be in possession of our detailed corporate brief that we filed with the clerk earlier this month. We would like to use our few minutes this afternoon to offer some supplemental thoughts and reiterate some of our key points outlined therein, which we trust will add value to your deliberations.

To begin, we regard Bill C-49 as a first step in resolving certain challenges facing the airline industry, which is vitally important to Canada. Although the bill attempts to include some of the Emerson report recommendations, it does not address certain key aspects such as tax policy for the sector, cost competitiveness, the funding of air travel infrastructures, revision of the user-pay model, and airport governance.

We would ask the federal government to follow up on these aspects as soon as possible in order to thoroughly and comprehensively improve the policies that affect our industry and travellers alike.

With respect to the proposed airline consumer rights framework outlined in Bill C-49, Transat was one of the first industry stakeholders to publicly welcome this initiative after the tabling of the bill in Parliament. As we publicly stated at the time, we are fully prepared to work with government regulators and our industry colleagues to achieve a fair and balanced compensatory and duty-of-care framework that ultimately enhances the consumer experience.

We refer to our further caveats outlined in our brief, and reiterate support for the input that will be provided by our NACC colleague today.

Today we would like to focus on our main concerns about Bill C-49, specifically the provisions pertaining to air carrier joint ventures. At first glance, these provisions seem harmless, but they are not. I readily admit that they are obscure and complex. In our brief, we tried to explain in detail why they are in fact a long-term threat to healthy competition in our industry and to achieving a fair and reasonable balance between the public interest and the interest of airline customers.

We therefore invite the committee members to consider the following as they examine the amendments we are proposing to these provisions.

Transat is not attempting to be obstructionist with its approach in this case. There are indeed many reasons why airline joint ventures may result in more services, destinations, and other additional benefits for Canadian travellers, communities, and for the economy as a whole.

This, of course, is good, but we do not believe it should be achieved at any cost or risk to the consumer interest. Put simply, stated efforts by the government to rebalance the public versus consumer interest consideration in this case have resulted in the pendulum being shifted to the other extreme and to the ultimate detriment of fair competition.

The ubiquitous public interest standard, which is a common feature of legislation seeking to provide residual powers for ministerial authority to address a broad range of undefined matters and circumstances, is simply not sufficient as drafted here to justify the pre-empting of critical competition law oversight to these potentially anti-competitive agreements between competitors.

The conservation and coordination of critical functions such as route development, capacity deployment, fare-setting, etc., among JV partners should be considered as a de facto merger of these respective commercial entities. Existing law is sufficient to establish whether these types of agreements between competitors are in the public interest.

Indeed, we believe it is incumbent on those stakeholders who are advocating for joint-venture specific provisions to justify why they are in fact needed and why their commercial or corporate objectives are impossible to achieve without same.

It must always be remembered that past commissioners of competition have already expressed serious concerns regarding potential anti-competitive behaviour by airline joint ventures, especially in environments where they control high concentrations of market share. This is not just Transat waving the caution flag here.

Furthermore, and as indicated above, we recognize that there has often been a legislative and policy balance to be struck between the concepts of the public and/or national interest versus the narrower consumer interest that competition law primarily oversees. This balance has already been achieved in the transport sector through the merger provisions incorporated through the Canada Transportation Act, which were crafted at that time jointly by the commissioner of competition and the then Minister of Transport.

Therefore, instead of reinventing the wheel, we propose for greater clarity and consistency that these merger provisions be largely adopted for the review and approval of joint ventures. The process that we propose would be more transparent as the report of the commissioner of competition, and the decision to immunize a joint venture, would be made public.

It would provide a public rationale for the choices made by the Governor in Council, with input from all relevant departments, instead of granting the Minister of Transport sole responsibility for immunizing joint ventures in a decision that requires no publication.

This would result in a decision enforceable by both the commissioner of competition and the minister of Transport, who have different knowledge and responsibility with respect to the joint venture.

It would include a periodic review process to ensure that the consequences of the joint venture continue to justify immunity.

In closing, the need for a fair, transparent and public process regarding the immunization of airline joint ventures from competition is particularly important in the Canadian context, where the industry is dominated by one major carrier. We believe our proposal, which mirrors the current process for mergers in the transportation sector, meets these objectives.

Thank you for your kind attention and we look forward to answering your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go on to Mr. Parry and the Canadian Air Transport Security Authority.

[Neil Parry, Vice-President, Service Delivery, Canadian Air Transport Security Authority]

Thank you, and good afternoon, Madam Chair.

My name is Neil Parry. I am vice-president of service delivery at the Canadian Air Transport Security Authority, also known as CATSA. Thank you for the opportunity to speak with you today.

As many of you know, CATSA is an agent crown corporation, funded by parliamentary appropriations and accountable to Parliament through the Minister of Transport. CATSA is responsible for taking actions, either directly or through a screening contractor, for the effective and efficient screening of persons who access aircraft or restricted areas through screening points. Also, the property in their possession is controlled, as well as the belongings or baggage that they give to an air carrier for transportation.

CATSA, as the civil aviation security screening authority for Canada, is regulated by Transport Canada and is the designated national civil aviation security authority. CATSA is subject to domestic legislation, regulations, and procedures in the way that it conducts its business and screening. In this context, CATSA's mandate outlines four core responsibilities within the realm of aviation security: pre-board screening of passengers, screening of hold baggage or checked baggage, the screening of non-passengers, and the restricted area identity card program.

Given the nature of today's meeting examining Bill C-49, the transportation modernization act, my remarks will focus on the amendment associated with the Canadian Air Transport Security Authorization Act. Specifically, this relates to the cost recovery of security screening operations in airports across Canada.

Bill C-49 contains two changes to the CATSA act. These changes would formalize policy authority for cost recovery initiatives for designated airports that strive for expedited passenger screening and cost recovery for non-designated airports. These services would normally be beyond CATSA's mandate and would require authorization from the Minister of Transport.

Under the direction of Transport Canada, CATSA has undertaken two trials on cost recovery to date. In 2014, the Greater Toronto Airport Authority sought the approval of the Minister of Transport to purchase additional screening capacity directly from CATSA for pre-board screening operations. CATSA and the GTAA subsequently entered into an agreement, following authorization from the minister, that allowed us to effectively sell them additional screening hours. A similar trial agreement was entered into in June of this year, between CATSA and the Vancouver Airport Authority, for the same thing.

In 2015, Transport Canada amended regulations to allow non-designated airports to enter into cost recovery agreements with CATSA for the purpose of attracting new commercial routes and potentially enhancing economic development. These airports must meet the same requirements as a class 3 airport within Canada. To date, CATSA has entered into consultations and discussions with 12 non-designated airports and while the discussions have been productive, no agreements have been signed.

With those introductory remarks, I thank the committee. I would be happy to answer any questions related to the subject.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Parry.

We will go to the Canadian Automobile Association and Mr. Walker.

[Jeff Walker, Chief Strategy Officer, National Office, Canadian Automobile Association]

Thank you very much.

My name is Jeff Walker and I am the chief strategy officer at the Canadian Automobile Association, or CAA as most people know us.

Thank you very much for having us here today. We're looking forward to speaking today on Bill C-49, specifically as it relates to air passenger rights.

I'm going to begin my remarks by providing a little bit of background on our role in air passenger rights issues. As many of you probably know, CAA has been around for over 100 years. We were founded in 1913 and our major mandate at the beginning was road and driver safety, as an advocate for the consumer and the consumer interests around roads and driving. Today we have 6.2 million members from coast to coast and we offer a wide range of services that go far beyond that.

In fact, CAA is Canada's largest leisure travel provider and we have a large network of 137 stores across the country and online that provide services to members. We remain a not-for-profit, member-driven organization that is at its heart an advocate for the Canadian traveller.

Our agents at CAA work with air passengers every day and we understand this business very well. This allows us to take a strong and informed position in favour of air passenger rights while at the same time recognizing that the consumer interest is best served by healthy, competing airlines.

The passenger protection regime we have in Canada has been untouched for many years, leading to a widening discrepancy between how U.S. and European air travellers are treated on one side, and how Canadians are treated on the other. It's time we do better when it comes to protecting Canadian air travellers.

We do a lot of polling, a lot of member research. The work we've done in talking to members and non-members alike has found that over 90%—in fact, 91%—of Canadians agree that it's time Canada had its own national airline consumer code. We welcome and support Bill C-49 as it contains many of the improvements that we have been calling for over the last several years, and we believe it's going to be better for the travelling public. At the same time, the bill will only take us partway to where we need to be. The bill leaves the all-important details on treatment and compensation—for example, when and how much—to a future regulatory process, and we urge this committee to pay close attention to that process. A good-sounding bill will end up not meeting expectations if the end result is a coffee coupon and compensation for being bumped somewhere someday. We all have to work to make sure that doesn't happen.

Bill C-49 addresses some important areas such as covering all airlines, both domestic and foreign, as well as all passengers, non-Canadian or Canadian, to avoid situations where there is an unlevel playing field. It sets out minimum standards of treatment and compensation for key categories such as delays, cancellations, overbooking, and lost bags. It addresses the seating of families with children at no extra fee. It provides the CTA's ability to collect and monitor airline performance data as it relates to passenger handling, and it gives the agency the ability to extend decisions to other passengers on the same flight who are affected by the same incident.

However, the bill relies on a complaint from a passenger in order to trigger any action. We agree with Scott Streiner, who is the CEO of the CTA, and David Emerson, both of whom said in testimony earlier this week that the regime would be more effective if the agency could initiate its own investigations when it deems necessary and make industry-wide rulings on minimum treatment rather than restricting its findings to passengers on one specific flight.

It's worth noting that the CTA was able to initiate hearings in the Air Transat situation a few weeks ago only because it concerned an international flight. It just happened to fall into that space; otherwise, unfortunately it could not even have been dealt with in that context. The CTA wouldn't have had the authority, even under Bill C-49, to decide to hold a hearing into a similar situation if the flight occurred within Canada, nor will the CTA be able to examine any broader systemic issues that the CTA might note unless they come from a specific complainant. It might have to ask the minister for permission to investigate them.

Another matter worth noting is that in some circumstances, regulations are likely to set out clear rules, for instance, that for a delay of x hours within an airline's control, passengers might receive y in compensation. The current system would require a complaint from a passenger in order to initiate that payment. Airlines have this information though, and they know when they're offside, so why does this system have to wait for a complaint? Why not compensate proactively in these cases?

This is an important consideration in light of recent findings from the EU consumer association, which reports that only one in four EU flyers is getting the compensation they're due for lengthy delays because airlines are not required to proactively offer it. This would allow CTA to focus on more complex complaints.

The International Air Transport Association says 60 countries have some form of passenger rights legislation already in place. For too long Canada has relied on the airline's own policy, and a needlessly complex complaint process through the CTA. While the vast majority of air travel goes off without a hitch, a clear set of standards would benefit everyone from passengers to the industry, which will be able to compete on a level playing field.

However, as noted earlier, whether this new regime is effective will be dependent on the regulatory process. As a consumer watchdog, here are some of what CAA is looking for in this process.

First is clear, simple, and understandable terms and conditions that the average traveller can understand. Second is levels of compensation and minimum treatment that ensure travellers are well treated and that for the airlines, in the words of Parliamentary Secretary McCrimmon, “it's not worth your while…to treat people this way”. Third is proactive disclosure by airlines of a consumer's right to compensation and minimum treatment. Fourth is regular reviews to ensure that regulations and compensation levels remain appropriate, and finally, airline performance reporting with respect to the handling of passengers and luggage should be made public regularly. Sunshine is after all the best disinfectant.

We will be participating in the regulation-making process to be sure that consumer interests continue to be heard loud and clear. In order for Canadians to judge the new system a success, we need to make this right.

We urge this committee to stay engaged even beyond these hearings to make sure the eventual system is one that works well for all Canadian air passengers.

Thank you. I'd be pleased to take any questions.