Evidence of meeting #111 for Transport, Infrastructure and Communities in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was competition.
A recording is available from Parliament.
Associate Professor, McGill University, As an Individual
To a considerable degree.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
Sure, but I'd like you to expand on that a bit if you could. What regulations and what problems are the governments creating rather than solving?
Associate Professor, McGill University, As an Individual
Well, there's the sheer number of fees, the amount they add to tickets in Canada—airport fees and things like that—which in most jurisdictions are funded by the government rather than the flying public. There's a certain logic to saying, “let the people who fly do it”, but it's such an important part of our economy, and not just to travellers. Business travel is very important to getting business done here and abroad: You have to go and see a customer sometimes.
Airports are really strong economic drivers. We see this in Hamilton. It's very helpful when you have an airport that works well and is not irritating to go through, so Pearson and Trudeau are both spending a lot of money to make it a better experience.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
On that note, do you believe the government policies have left airports inadequately capitalized and that they're creating service levels and constraints?
Associate Professor, McGill University, As an Individual
Yes, but let me turn to my colleagues to modify that and qualify it, as I'm sure they're apt to, as good academics.
Faculty Lecturer and Program Coordinator, Aviation Leadership, School of Continuing Studies, McGill University, As an Individual
Yes, the question becomes one of if you let the system decide on its own what they think is best for them. Right now in the current governance model we have for our airports, the independent authorities that run these airports decide by themselves what's good and what's not good for them. There's no oversight, they spend money based on what they think is important. Trudeau airport decided that $4 billion is needed to fix road access to the airport and parking, but what are they doing about air access? What are they doing about gates? What are they doing about the terminal building? They decided on their own that their priorities are road access and parking. Is it the best use of money? I don't know.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
In other words, we don't have targets and if we're not measuring those targets when it comes to competition, then those airports obviously are not going to put competition first.
A good question along those lines is what should we be doing to create competition through the airport side? That could be real estate. As an example, I got off a flight and it was an Air Canada alley; it seemed entirely owned by Air Canada. So real estate seems to be an issue too. How do we entice airports to create competition through the gates in terms of having priorities on competition? How does that work?
I'll start with Karl Moore.
Associate Professor, McGill University, As an Individual
It's something where there is a fair bit of competition. When you look at food, it really has improved a lot in the big airports in Canada; it's much better than it used to be. Some improvements have happened over time, I would say. There's still room for more competition for sure. To some degree, Trudeau may compete with Plattsburgh, but it doesn't compete that much with Pearson, other than on some international flights. This has improved over the last five or 10 years; there are more flights going from Montreal than there used to be. So you don't compete with Pearson too much—in my experience, anyway.
Faculty Lecturer and Program Coordinator, Aviation Leadership, School of Continuing Studies, McGill University, As an Individual
I think one of the things we're seeing at Trudeau airport and at Pearson as well is that the decisions that are being made and the investments being made in the airports really are what the.... They don't really understand the impact of those investments on the whole of air transport and travel through the airport. Montreal is going to be a mess for the next two to three years as they go through this parking and road access investment. What are they doing about improving the connectivity of passengers inside that building? Nothing for now.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
I want to talk about Nav Canada's budgetary structure factoring into the level of fees facing both Canadian airlines and air travellers. Could moving Nav Canada into the Department of Transport's funding umbrella like the FAA in the United States potentially reduce airport fees?
Faculty Lecturer and Program Coordinator, Aviation Leadership, School of Continuing Studies, McGill University, As an Individual
It could. I think NavCan in terms of its investment profile and the way it's been managing its own fate over the last few years has been exemplary. I think it is considered one of the better-run nav centres around the world. I think one of the things that's happening in the U.S. is that there's been a lack of investment in the U.S. navigation systems, and it's coming home to roost. The FAA is finding it has some issues about navigation, which is forcing it to have a different governance structure. I'm not sure we have that same issue here in Canada.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Williams.
Finally for today, we have Mr. Iacono.
Mr. Iacono, you have the floor for five minutes.
Liberal
Angelo Iacono Liberal Alfred-Pellan, QC
Thank you, Mr. Chair.
I think we have to remember the following. I often hear my colleagues opposite blame the government. To their minds, it is always the government's fault. You will agree with me that it is easy to blame our government all the time. Airports have been around for a long time though, long before 2015. If there is a process in place now, that is because it has always worked that way.
Our government has invested a great deal in airports. You have to admit that the federal government does not control all the airlines. It plays a certain role, and has something to say about airports and how they operate. Yet I have never heard anyone say that the federal government directly controls all the airlines.
You also have to admit that airline companies also have something to say and have their own ways of doing things. Ultimately, it is a question of co-operation between the two parties.
That said, the federal government it is not entirely to blame. I have to say that everyone is in fact to blame if there is a lack of co-operation.
At the end of the day, everybody's just interested in making money. That's what it's all about. However, there's a problem: You're making money, but what about the service? That's where the Government of Canada steps in, because the service is being penalized. Everybody's out there to make money, and the service is getting worse and worse.
Mr. Ebrahimi, can you tell the committee about the relationship between performance management and the price of airline tickets?
Director and Professor, Université du Québec à Montréal, International Aeronautics and Civil Aviation Observatory
Thank you for your question, Mr. Iacono.
First, the goal isn't to assign blame to any particular government. You're right. Here in Canada, the issue is endemic. It has been going on for some time. My colleague, Mr. Gradek, provided a brief history of the situation.
Liberal
Angelo Iacono Liberal Alfred-Pellan, QC
The Canadian government isn't solely responsible for the issue.
Do you agree with me on this?
Director and Professor, Université du Québec à Montréal, International Aeronautics and Civil Aviation Observatory
For at least three decades, successive Canadian governments have failed to fulfill the role that they could have played in improving the situation. I can say that. Why am I making this statement? You're right to say that everyone wants to make money. However, if you look closely at the situation, Lufthansa is making money, and German airports are well managed. They generate profits, and the accessibility is good. The Paris airport and Air France are also making money, and accessibility is great.
Our airports are governed in such a way that everyone does more or less as they please. There isn't any type of overall consistency. The decision was made to spend almost $4.5 billion at Montréal‑Trudeau airport, and up to $10 billion at Pearson airport.
However, the federal government can decide that the additional slots created will be allocated to airlines that generate competition. The government can tell airlines that, if they have highly profitable international flights, they must also provide and maintain regional flights. The government can do this, because it's a federal responsibility. It can do these things.
That said, the goal isn't to become dictatorial or to impose a planned economy. However, with the co‑operation of industry players, the government can find compromises. It can be done.
We can generate a certain return, while serving the public properly.
Liberal
Angelo Iacono Liberal Alfred-Pellan, QC
Thank you.
The airfare reduction program has been in place in Quebec for almost 10 years, if not more.
Could we learn any lessons from this program? If so, what lessons?
Director and Professor, Université du Québec à Montréal, International Aeronautics and Civil Aviation Observatory
Quebec's various programs have never resolved the regional flight issues, despite its good intentions. Each investment has resolved the issue only for a limited time.
The Quebec government recently launched a program to provide $500 airline tickets. In the end, the results showed that it was a failure. Once again, for air transportation to play its part, there must be a demand. This demand is created when the necessary economic and social activities exist. These factors weren't addressed.
Liberal
Director and Professor, Université du Québec à Montréal, International Aeronautics and Civil Aviation Observatory
Not really.
Liberal
The Chair Liberal Peter Schiefke
Thank you, Mr. Iacono.
If there are no objections from the committee members, I'd like to ask one question of the witnesses.
I see none. Thank you, colleagues.
The question I have is for all three of the witnesses who are still with us. We have a model in Canada that is more of a pay-as-you-go model than that in the United States, where they tend to spend more federally to invest in reducing the taxes on the price of tickets.
What if we put forward an argument that it would be in our best interests to take off some of the taxes that are currently on plane tickets?
We had Mr. Rogers speak to the taxes that are added on, and we had several of our witnesses speak to that as well. You had referenced the fact that your starting price is this, and when you're done, it reaches that.
Let's assume we removed all of that and absorbed those costs as the government and made it a government expense. What would stop companies like Air Canada, for example, from saying, “Canadians are paying $1,000 for this exact ticket price right now, and the federal government, by removing all those fees, is absorbing $300 in taxes, making it $700?” What is to stop those companies from raising that price to $1,000, basically making it the same price for Canadian consumers, but the money would be going into the pockets of the companies, and taxpayers would be paying that amount?
Does anybody want to comment on that?
Faculty Lecturer and Program Coordinator, Aviation Leadership, School of Continuing Studies, McGill University, As an Individual
Welcome to open competition. That's the price we pay.
Unless you walk in there and start talking about controls, the market will in fact decide the pricing structure that's going to be in place. There's nothing preventing the airlines—
Liberal
The Chair Liberal Peter Schiefke
To be clear, there is the possibility that the companies could just raise their prices and consumers end up paying the same amount. In fact, they'd be paying more because they'd be paying through their taxes.
Is that correct?
Faculty Lecturer and Program Coordinator, Aviation Leadership, School of Continuing Studies, McGill University, As an Individual
That's correct.