Transport Committee on Feb. 4th, 2021

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Rheault.

Thank you, Mr. Kram.

We are now going to move to Mr. Rogers.

Mr. Rogers, you have the floor for five minutes.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Thank you, Chair.

Welcome, guests.

Many people in Atlantic Canada and rural Canada are left wondering what it will take to restore lost connectivity.

From that perspective then, how feasible do you think it will be to restore all regional routes that we have lost after the pandemic subsides, and what kind of timeline do you anticipate before that would happen?

You can decide who wants to go first.

[The Chair, Liberal, Vance Badawey]

Mr. Gibbons.

[Andy Gibbons]

That's a very good question and it's really at the heart of our discussions currently.

I do want to stress that when we did cease services to many of our Atlantic Canadian cities, we did brief the premiers of those four provinces in advance, and we did so as transparently as possible.

Obviously, I don't speak for them, but the feedback in those communities was, obviously, devastating. We can think about Gander, and we can think about Sydney.

WestJet investments fundamentally altered the affordability and connectivity to these communities in that region. People in that region remember what it was like before WestJet brought low fares and competition. That competition has really brought air travel to life in Atlantic Canada.

In terms of restoring routes, the policies put in place by the provincial governments there—and they are under no illusions about this, and I don't mean this in a combative way—are not designed to bring our investments there and to bring our guests there. It's the opposite. We understand that. We very reluctantly decided to cease services up to 80% and to cancel service to some cities.

Mr. Rogers, I think it really depends again on the operating environment that the premiers and the Prime Minister and the governments want to implement, and if we can have a domestic framework in queue to develop in this country under which your premier and members of your provincial caucus can say that they will be comfortable with Canadians visiting Newfoundland and Labrador when the COVID level is x, or when this percentage of the population is vaccinated.

I think if we get some certainty or a safe plan around that, it's what's going to be the biggest factor, but I also want to assure you that serving and investing in communities is not something the government has to extract from us. It's something we love doing and want to do.

[The Chair, Liberal, Vance Badawey]

Mr. Rheault, go ahead.

[David Rheault]

I would say that in our case, reducing flights in many provinces and stations in Atlantic Canada was a difficult decision to make.

We have been operating in certain of these markets for 75 years, dating from the time of Trans-Canada airline. Contrary to our competitor, we are trying to keep at least one station in each province to keep provinces linked to our network.

I would say with regard to re-establishing routes that I have had many discussions on that. We have talked to mayors and we have talked to the premier, and we had exchanges with them on the impact and on how we can work together going forward, but I guess fundamentally to restore services, we need passengers. There has to be demand to have a service.

The policies in place, particularly in Atlantic Canada, have had a devastating impact on the number of passengers. That's why we need to have a conversation and a path forward for a national reopening of travel at least within Canada first.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

From that perspective, I was going to ask you which routes you would consider restoring. What might be the criteria for deciding which ones you would restore first post the pandemic? After the pandemic, what would likely be the routes that you might consider restoring first, second, third and so on?

[David Rheault]

I can tell you that we're looking forward to restoring services. It's important for us to serve these communities. Of course, it's going to depend on how the traffic starts. It's difficult because I can tell you that in a normal environment, at Air Canada we plan on a six-month-to-six-month basis. Now we have to make decisions on a week-to-week basis.

Decisions are made very quickly when we see traffic deteriorating. Hopefully, when the market comes back it will come back at a pace that will allow us to restore service at an adequate pace, but it's very difficult for us to plan when we don't know what the demand will be in the next month. Airlines are about planning.

[The Chair, Liberal, Vance Badawey]

Mr. Gibbons, please provide a quick answer.

[Andy Gibbons]

I'm not going to tier cities for you in this meeting, obviously. I reiterate that it really is going to depend on the demand environment and the set of policies and where COVID is in this country and how it's being managed. These are the essential ingredients. We were very sad to eliminate some of these routes, and we want to restore them as soon as possible. I'm not being coy; there is no better answer than that. We look forward to being back as soon as possible.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Gibbons.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

And we look forward to having both of you back. Of course, we're fortunate that the Atlantic bubble did one thing: It saved lives. So we're quite happy from our perspective.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Rogers.

We're now going to move on to Mr. Barsalou-Duval for two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Rheault, earlier, in response to one of my questions, you said that one of my statements was false. We may not have time today to explore what was false in what I said, but if you could report back to the committee about it, that would be a good thing. It would help us to get the right information from your perspective.

Earlier, I asked you a question about jobs. I did not feel you were very confident about jobs. We know that the European Commission has twice suspended its analysis of the transaction between Air Transat and Air Canada due to a lack of cooperation on your part. According to the sale agreement, Air Canada has the final word on any major operational decisions. The transaction has been on the table for almost two years. That means Air Transat's management have had their hands tied for two years.

It's well known that Air Transat is having financial difficulties, and we learned in the Air Transat proxy circular on the new sale to Air Canada, that apparently Air Canada refused a credit facility for Air Transat on two occasions, May 6 and August 7, 2020.

I'd like to know what Air Canada's strategy is. Is it to weaken Air Transat to the point of bankruptcy so that it doesn't have to spend $200 million to eliminate a competitor?

[David Rheault]

I have to say that Air Canada has always worked cooperatively with regulators and is looking forward to the government's decision on this transaction.

It is a strategic decision for us, and it's very important that this transaction go through to allow both companies to move forward together, to save jobs and to create a world champion based here in Quebec. It's a source of pride, and we are convinced that, together, the two companies will form one incredible carrier that will allow us to rebuild our Montreal hub, among other things.

Some big names in Quebec society supported this transaction, Mr. Barsalou-Duval. They recognize the economic impact for the community. The Caisse de dépôt et placement du Québec and the Fonds de solidarité de la Fédération des travailleurs et travailleuses du Québec voted in favour—

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

Thank you.

I would like to ask Mr. Gibbons one last question.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Rheault, and Mr. Barsalou-Duval. We're over time right now. We have to move on to our next speaker.

For two and a half minutes, we have Mr. Bachrach.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you very much, Mr. Chair.

I have a couple more questions for Mr. Rheault regarding regional routes. It's a topic that is very pertinent to the riding I represent in northwest B.C. Currently Air Canada has suspended service out of Prince Rupert, a community that depends very much on your scheduled passenger service.

One of the things we've heard from communities is a real concern around the resumption of service. When services resumed in Smithers, which is another regional route in northwest B.C., Air Canada offered flights online and when there weren't enough bookings, they cancelled those flights. We had a couple of rounds of that and it undermined the communities' confidence that those scheduled flights would come back.

I am wondering if you can commit to working with communities like Prince Rupert to ensure that when there are the passenger volumes, the resumption of service is as smooth as possible and that we avoid any unnecessary cancellations, understanding that it's really difficult for the community to purchase flights online and then have those flights cancelled and not receive refunds. Is that a commitment you can make to communities?

[David Rheault]

I can assure you that we're committed to working with communities to try to restart services with the least possible delay. The difficulty for us, as an airline, is understanding the demand, how it evolves and when it's going to come back to a point that is sufficient to ensure services. That's always the challenge we have. Of course, we talk to many airports, mayors and chambers of commerce to see how we can work together on re-establishing these services. The problem we have is that we are in uncertain times where the demand pattern is always changing rapidly based on factors that we don't control.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Rheault.

Mr. Bachrach, you have a few seconds left if you want to throw one in there.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I really appreciate your commitment to working with communities.

Mr. Rheault, earlier I asked you about the total number of tickets and passengers that have been affected by cancellations and your offer of vouchers. You didn't have those numbers at your fingertips. I'm wondering if you would be willing to provide those figures to the committee after this meeting.

[The Chair, Liberal, Vance Badawey]

Mr. Rheault, yes or no?

[David Rheault]

I will check internally and get back to you. It depends on whether this contains commercially sensitive information.

[The Chair, Liberal, Vance Badawey]

Wonderful. Thank you.

Thank you, Mr. Bachrach.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.