Transport Committee on Feb. 2nd, 2021

[Hillary Marshall]

Number one, Bob Deluce is here, and he's a fantastic spokesperson for the industry, so more questions for Bob....

Number two, our industry is saying that it could take as long as three to four years to recover and to return to 2019 levels. That was our last forecast, but with these additional challenges that have been presented to our sector, it could be longer. We could be looking at five to seven years.

There is no doubt in my mind that the implications are these. The recovery is taking longer, and airports and air carriers and other participants in our sector are facing incredible challenges financially. The investments that we would be making to maintain competitiveness with other global players we are not able to make right now. We have deferred capital investments at the airport—$245 million to $265 million in 2020—and those were investments that were being made in projects that were important to the growth and expansion that kept Toronto Pearson among the top global hub airports in the world.

A global hub airport attracts jobs. It attracts global headquarters. It attracts investment, and it attracts tourism, so don't forget about investing in our future competitiveness. That's what we're asking of you. While we keep in mind the need to protect public health, don't let us fall behind.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Ms. Marshall.

Mr. Deluce, to my understanding, pilots need to fly a certain number of hours per year to maintain their certification. What might be contemplated to keep the skills of your furloughed pilots up to date during this crisis?

[Robert Deluce]

Well, certainly in the initial stages it wasn't going to be a problem, because we were intending to start on June 1, but as it's gone longer, that has become more of a consideration. It's necessary to probably phase flying back in when it does resume, in order to get everyone back up and running.

We are maintaining management and some check pilots and training captains in a state of proficiency, and of course we're well structured to bring on others and get them back and trained up with simulator and line indoctrination as required when that event occurs, but there's no point in doing it until you can see your way clear.

Also, now that it requires such a massive training exercise, it's not like you can bring back 100% of your fleet on day one, even if it did turn—it's unlikely to—in that manner. Even if there was a greater demand all of a sudden, it would take some time to phase in, and we're sort of structured and set for that. I don't think that spending money training people is very useful until you see a light at the end of the tunnel. Some kind of minimal flying program with charter work has been useful.

On our part, I think we're doing all the right things just to make sure we're set and have the right people to train on simulator who are ready to do the line indoctrination and whatnot. I think on our part we're set to resume pretty rapidly once we have a green light in terms of the pandemic being under control and, of course, there being a reduction of travel restrictions, which will allow people to start flying comfortably again.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you for that, Mr. Deluce.

You mentioned that a significant portion of your workforce is furloughed. Roughly, how many of your employees are furloughed at home and receiving the wage subsidy?

[Robert Deluce]

About 90% of the 1,500 team members are on temporary layoff. The majority of those would be initially on CEWS, and now reverting to either EI or CERB, whichever is most appropriate and applicable to their particular situation.

The 10% who are working are being partially compensated through the existing program and through Porter. To the extent that they are working full time, they are being paid full time—those who, in fact, are working and providing the continuity.

That's a rough number; 90% of our workforce is currently on temporary layoff.

[The Chair, Liberal, Vance Badawey]

Do you have a quick question, Mr. Sidhu?

[Maninder Sidhu, Liberal, Brampton East, ON]

Yes, please, Mr. Chair.

Mr. Rodgers, what do you think has changed about your industry in a lasting way as a result of the pandemic? Just answer quickly because I think I'm running out of time.

[Bruce Rodgers]

What has changed significantly is the adaptability of the freight forwarders and how they have been able to move cargo in and out of the country. The charter operators working with the Canadian airlines on the conversion of passenger flights to cargo flights to move them in and out of the country has been very successful overall.

The biggest concern we have, though, is the pricing. Previously, because the cargo was moving in the belly holds of passenger aircraft, it was being partially subsidized by the passengers. Now that it's moving on all-cargo flights, the cargo has to pay for itself. As a result, that is having a significant increase in costs overall, which basically get rolled down to the actual consumer.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Rodgers.

We're now going to move on to Mr. Barsalou-Duval for the Bloc.

Mr. Barsalou-Duval, you have the floor for six minutes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

My first question is for the Nav Canada representatives.

Before you unilaterally imposed a 30% fee increase on air carriers in the middle of a pandemic, you asked the government for financial assistance. I would like to know what the government's response was.

[Ray Bohn]

We've had multiple communications with the prior minister, and maintain open lines of communications with the deputy minister and the minister's office. Certainly, in those conversations we continue to look for government aid. At this point in time, as you're aware, we have not been provided with financial support.

We are looking to seek financial support from the government going forward, but to date to no avail.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you.

Airlines were in serious trouble because of the pandemic. Could there be a worse time to impose a 30% fee increase on them?

[Ray Bohn]

Certainly we understand that the rate increase was difficult, but it was a necessary decision. We exhausted all our options prior to increasing service charges, including assessing the CEWS program and achieving significant reductions with respect to capital and operating costs.

This increase, in fact, could have been much higher prior to the reductions we imposed. Unfortunately, we certainly understand and are acutely aware that our customers are facing their own challenges. We worked through to minimize the impact of a rate change as much as possible by using our debt capacity and our liquidity to support our customers. I will note that in doing so we were deferring payment of the increase, interest-free, over a five-year period, as I mentioned in my opening remarks.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you.

On September 22, Nav Canada announced that it would carry out studies to assess the service levels required in many towers in Quebec, including those in Saint-Jean, Sept-Îles, Kuujjuarapik, Blanc-Sablon and Natashquan. Moreover, Nav Canada has been threatening to shut down the Rouyn-Noranda tower for years.

What we are hearing on our end is that Nav Canada does not intend to assess the level of service required, but to close the towers. Even with the studies not yet completed, it seems that the operators of all the towers currently under review have received layoff notices. However, you need ministerial authorization to do that.

Why are you breaking your own rules by making major decisions that could compromise safety and damn Quebec's regions before ministerial authorization has even been granted?

[Ray Bohn]

Thank you for your question. There are a number of points I would like to clarify.

Certainly, our level of service studies or aeronautical studies have not yet been determined. It's a process that evaluates whether alternate service levels are appropriate. We will be making recommendations, following our stakeholder consultations, that we believe are thorough and safety-focused. As I said, no recommendations have been made to date.

You bring up the point that letters of layoff were issued to air traffic controllers. I want to clarify that as well. These were letters of vulnerability, indicating that their jobs potentially could be at risk, depending on the outcome of these studies. In no way have these individuals been laid off at this time. They are still very much attached to a paycheque. They still very much continue to do the hard work that they've been doing within the communities that you mentioned, and beyond. They will continue to do so until such time as the aeronautical studies are completed and submitted to Transport Canada.

I wanted to make sure that the committee was fully aware that these employees were declared vulnerable and have not been laid off.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you.

You will understand that I am a bit surprised by your comments. We are told that controllers know they are to be laid off, but they must continue to do their job knowing that they will lose it in a few months. The decision has not yet been made, but they are all being laid off, and all control towers in Quebec are being closed. You will understand that we are very worried.

However, although you have increased your fees by 30% and are cutting hundreds of positions, which could jeopardize transportation safety in the country, according to what air controllers have told us, you have apparently put millions of dollars into bonuses and severance benefits for the members of your senior management.

Can you tell us how much money has been given to them over the past year?

[Ray Bohn]

First, I will comment again on these letters.

These notice letters are required by conventions of the collective agreement. Once the letters are issued, they trigger certain rights, in fact, that employees have within that agreement. That includes giving them access to other positions at other locations, in the event that the aeronautical study were to change the level of service and they were impacted.

With respect to management bonuses, I want to put this into the broader context. I think it's important for the committee to understand that management has been reduced by 20%. We have 20% fewer managers than prior to the pandemic. In addition to receiving these reduced bonuses that you referred to.... I do want to highlight that they have been significantly reduced from prior years. This is following management salary reductions and significant changes to the management pension plan on a go-forward basis.

Management employees have been significantly impacted with respect to their numbers, and they have also been impacted in terms of their total compensation package, in a fairly significant way.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Bohn. Thank you, Mr. Barsalou-Duval.

We're now going to move on to the NDP.

Mr. Masse, you have the floor for six minutes. By the way, Brian, it's great to have you out today. It's always a pleasure.

The floor is all yours.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I know you'll have some interest in my first question because it involves the Cleveland airspace and the Windsor Tower being under study.

Mr. Bohn, have you contacted the FAA, and when did that take place, with regard to our U.S.-shared space in Detroit and the Cleveland centre space that we occupy together?

[Ray Bohn]

I'm going to ask my colleague to respond to that question. He has been directly involved in this initiative.

[Jonathan Bagg, Director, Stakeholder and Industry Relations, Nav Canada]

Yes, Mr. Masse. I can confirm that we've had multiple exchanges with the FAA, and we have some meetings planned. We have been engaging with the FAA from a number of locations—Cleveland, Detroit, as well as their international coordination office. We are engaging actively with the FAA.

[The Chair, Liberal, Vance Badawey]

Mr. Bagg, go ahead.

[Brian Masse, NDP, Windsor West, ON]

Will that information be made public?

[Jonathan Bagg]

In the conduct of an aeronautical study, we do have to assess all of the issues that are raised. Certainly, we are well aware that—

[Brian Masse, NDP, Windsor West, ON]

I just want to know if your correspondence with the FAA is going to be made public.