Transport Committee on May 2nd, 2024

[Ryan Williams, Conservative, Bay of Quinte, ON]

Air Canada testified. They said there's more competition in Canada than in those other jurisdictions, so maybe you can comment about Australia, New Zealand and parts of Europe. Does Canada have enough competition?

[Stephen Jones]

I did hear the comments, and I was wondering how much time it spent in Europe, because Europe is a very competitive market, and ultra-low-cost carriers operate there quite successfully.

I think, absent Flair, Canadian airfares would be much higher. Absent Flair, I think the competition in this country would revert back to what it was like previously, when you had to pay $800 to fly for an hour and a half. You know, it just shouldn't be that way.

When we came, I think one of our biggest competitors was actually the couch. People had given up on the concept of affordable travel. They just stayed at home. We've gotten people off the couch and we've gotten them flying around the country more often, to more places.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Jones, and thank you, Mr. Williams.

Next we have Mr. Iacono.

Mr. Iacono, go ahead for six minutes.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Chair.

Mr. Jones, I have a question for you. My colleague said that when competition exists we have decreased services and low prices. Is that correct?

[Stephen Jones]

Yes.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Also, WestJet representatives stated earlier that no American company wants to fly out of Canada because of the disadvantages that exist, and also high taxes, but I want to also put up a point that taxes were much higher when the Conservatives were in power prior to 2015 than what they are today.

Now, continuing on that point, if we don't have any American company wanting to fly in Canada...and you're a Canadian company. Is that correct?

[Stephen Jones]

That's right.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

You're a Canadian company. What does that give you guys? All the Canadian companies that are flying out of Canada, what does it give you guys as the pie? Do you have a bigger part of the pie?

According to WestJet, he's highlighting the disadvantages because no American company wants to be here, yet, if an American company were in Canada, flying out of Canada, what would happen to all the Canadian companies flying out of Canada? Would you be still laughing and giggling and being happy that you're making good money, or would you be concerned that you have a bigger competitor in the arena?

[Stephen Jones]

I'm fundamentally a free marketeer. I believe that competition is good. I think that if we saw an open market, we would see better outcomes for consumers generally. Obviously the airline industry is one that's full of regulations that go back to the beginning of civil aviation in time, you know? The cabotage, the flying within a country by foreign carriers, is generally limited, but competition is good for customers.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Sir, you're in a company and you're in business to make money, right?

[Stephen Jones]

Yes.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Okay. When you make a profit, do you share your profit with the Canadian government?

[Stephen Jones]

Through taxation, we would. We haven't gotten to that point yet.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

We all pay taxes, that's for sure, but you don't share your profits. You don't give your profits over to Canada. You're in business to make money—to offer a service and make money for it. Do you agree with me in saying that is it the fault of the Canadian government that the airline industry is having such difficulty, or is it thanks to the Canadian government that all airline companies are making a profit?

[Stephen Jones]

I dispute the last fact—

[Voices]

Oh, oh!

[Stephen Jones]

—because the airline industry, I think in its entire history, if you add it up, has never made much money, but I think this is an expensive place to do business, and what is an incontrovertible fact is that if there were lower costs in the system, more people could afford to fly—

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Mr. Jones, how do you manage to remain in competition with Air Canada, WestJet and Air Transat?

[Stephen Jones]

We have a very simple model: It's keeping our costs as low as possible and passing that on to customers in the form of lower fares.

We do that through two things. The first is running an efficient business, and the second is providing choice to customers around what we charge for.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Jones.

Mr. Badawey, the remainder of the time is yours.

[Vance Badawey, Liberal, Niagara Centre, ON]

I have the same question, Mr. Jones, that I asked Mr. Liebman earlier with respect to how you did it, or how you are doing it with respect to keeping your nose above water and becoming more of a competitor here domestically.

[Stephen Jones]

I'm not going to pretend it's been an easy journey. It hasn't, but we are still here. We've done it without any specific support from the government, with the exception of the RATI funding of $11 million we received, and that went directly to encouraging regional connections. We didn't get the $270 million that Porter got, the $370 million that Sunwing got, the $800 million that Transat got, or the $5 billion that Air Canada got.

We have been funded privately, and it's very tough, but again, we do it by being very focused on our business model, so we know what we're about. We're about low-cost, low-fare, affordable travel for all Canadians and being true to that model. It's a model that's worked in jurisdictions around the world. We believe there's nothing about Canada that makes it so different that an ultra-low-cost model shouldn't work here.

I hear a lot about how it's different in Canada. I'm here to tell you it's not. Every country is nuanced, but Australia is a big country, like Canada. It has 28 million people. Most of the people live within 100 miles of the coastline. It has half a dozen big cities, and it has 53 aircraft and Jetstar as an ultra-low-cost carrier. Chile is a long, thin country. It has four or five big cities. It has 17 million people, and it has three airlines. Two of them are low-cost carriers.

There's nothing specific about Canada or Canadians to say that they don't deserve affordable travel. They do deserve affordable travel, and Flair's here to deliver it.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Jones. I give you that credit. That integrity you're bringing to the sector is very much appreciated. As well, I'm a big fan of the Flair effect. Well done.

I guess I'm going to pivot over in my last question in a broader sense as it relates to what we're trying to do to ensure and strengthen our supply chain. Although a lot of people think supply chain is all about moving trade, I think supply chain is also about moving people as well, sometimes even with trade.

We are moving forward with HFR. We are looking at other different methods of transportation, marine being a part of that, especially in the west end and the east end of the country, both on the ocean and on the Great Lakes. How do you see the airline sector fitting into that multimodal capacity, to give not only more of a choice but also more connectivity to the traveller, especially in some of the remote areas?

[Stephen Jones]

I think air travel is fundamental to that. It's actually with a free market for air travel that we'll see the connectivity come. This is a big country that will require certain measures taken for more remote communities—there's no doubt about that—but for the big connections, air travel is the most logical way. It's fast. The assets are actually relatively cheap relative to a long-term rail build or anything like that.

I think air travel should actually be at the forefront of the policy around connectivity for communities.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Jones. Well done.