Evidence of meeting #112 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 market.
A recording is available from Parliament.
1:30 p.m.
Liberal
The Chair Liberal Peter Schiefke
Thank you.
Next, we'll go to Mr. Bachrach.
Mr. Bachrach, the floor is yours. You have six minutes, sir.
1:30 p.m.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Thank you, Mr. Chair, and thank you to both of our witnesses for being here.
I'm interested in this. You were mentioning, Mr. Jones, the Swoop effect, and how in certain markets where you were trying to compete, Swoop would come in, drive down the pricing, essentially chase you out of the market and then leave themselves. When they did that, when they came in with ultralow pricing as a form of anti-competitive behaviour, were they making any money? Or was this a money-losing venture that was part of a larger picture for the company?
1:35 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
We analyzed them closely—we're a very analytical company—and it's hard to imagine that they were making any money on that. No, absolutely not.
1:35 p.m.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
One of the policy approaches that's been suggested by some experts in this field is that the government should establish a pricing floor both for low-cost carriers and for larger airlines that are seeking to compete with them. That then would provide some breathing room, so that you don't get this sort of race to the bottom followed by the exit of certain airlines and the prices going back up. What do you think of this regulatory approach?
1:35 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
I disagree with it. I don't think it's going to work. I don't think regulating prices in airline markets works anywhere around the world, in fact. In many markets, it doesn't. It will only encourage inefficiency.
I think competition is good. Competition drives efficiency, but predatory behaviour needs to be monitored closely, and there needs to be a faster intervention mechanism for predatory behaviour. By the time we make a complaint, go through the process and submit our evidence, it's too late. You've burnt $10 million and you have to get out of there. The processes around regulating predatory behaviour, I think, are too slow.
1:35 p.m.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
In those cases, how would you define predatory behaviour, or how does the law define it?
1:35 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
Well, this is why it takes so long to get a ruling on it. It's a free market, and people can choose to fly where they want to fly, but when the evidence is that it hasn't been served forever in the market, we go and enter into it, someone comes and sits in on the same day of the week and same time of day a month after we start, we end up saying we can't live there, and we get out and then they get out, you can draw your own conclusions.
1:35 p.m.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
The NDP recently tabled Bill C-352, the lowering prices for Canadians act, which seeks to strengthen the Competition Act to avoid some of these anti-competitive behaviours. It was intended first and foremost for sectors like the grocery sector, where we're seeing some pretty extreme price gouging.
I wonder whether you're familiar with the bill and whether it would have an impact on the kind of thing you're talking about when it comes to predatory anti-competitive behaviour.
1:35 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
I'm sorry, Mr. Bachrach, I'm not familiar with it in detail, but being relatively new to Canada, I do hear a lot of complaints. There's almost an acceptance of the fact that you have these oligopolies that will control prices in different industries in Canada. There's an acceptance by Canadians that it's just the way it is in Canada, that it's the price we pay for living in this beautiful country. I'm here to disagree with that. I think we need more competition. It delivers better prices and more efficient companies. It's better for all Canadians.
1:35 p.m.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
There are some markets that simply aren't large enough to facilitate competition. You mentioned earlier that in a country like Canada we need certain measures for remote communities. I represent a region that is all rural and remote communities. We do see that behaviour, whereby you have mostly a single carrier in many of the markets, and some exorbitant pricing.
What regulatory approach do you think the government should take, if any, to ensure that rural Canadians have affordable air travel?
1:35 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
One approach might be to offer a revenue subsidy of some sort that is there to be bid on by other airlines. It's a very transparent subsidy that the most efficient airlines will be able to make the most of. That would be one mechanism.
1:35 p.m.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Is that similar to the provincial program in Quebec? There's also a program in the United States, I understand, that subsidizes some smaller markets.
1:35 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
Sure. You see it in parts of Europe as well, in Scandinavia and so on.
1:35 p.m.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Do you agree with the statement made earlier by our representative from Air Canada, that Canada has a dynamic and competitive airline market?
1:35 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
I would say that Canada's been a cozy duopoly for too long and Canadians have been paying too much for too long. Flair—and Lynx alongside us, until they exited the market—has disrupted that. It would certainly be in the best interest of the duopoly for Flair to fail, but we're not going to. Absent Flair, prices will go straight back up to where they used to be.
1:40 p.m.
Liberal
The Chair Liberal Peter Schiefke
Thank you, Mr. Jones.
Thank you, Mr. Bachrach.
Mr. Barsalou‑Duval, finally, the floor is yours for six minutes.
1:40 p.m.
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
Thank you, Mr. Chair.
Thanks to the witnesses for being here.
My questions are for Mr. Jones, the representative of Flair Airlines. My first question is similar to the one I put to the Air Transat representative earlier.
Earlier, some witnesses mentioned that access to airport gates and favourable time slots could be a challenge. However, that helps ensure healthy competition. I'd like to know if Flair Airlines has had any trouble accessing gates at an airport. Without a gate or time slot, you can't plan flights.
Is this a problem for you? What can we do to ensure healthy competition and access to gates and time slots?
1:40 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
I apologize, Chair and Monsieur Barsalou-Duval, but I did not get a translation.
1:40 p.m.
Liberal
The Chair Liberal Peter Schiefke
Mr. Jones, we'll look into that. We'll make sure the time is stopped for Mr. Barsalou-Duval.
I'm going to conduct a brief test to ensure the interpretation is working.
Can you hear me, Mr. Jones?
Good.
Mr. Barsalou‑Duval, I'll allow you time to ask your question again.
1:40 p.m.
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
All right.
I wanted to know if access to gates and time slots was a major factor in achieving a minimum level of competitiveness. Is this a problem for Flair Airlines? Has it been the case in the past, or do you think it could be?
How can we ensure that new carriers, or small carriers at least, have adequate access to gates and time slots? We know they can't offer flights without them.
1:40 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
It's an excellent question. The issue really is in Toronto Pearson airport. In other airports, the availability of slots is much less of a constraint, but it certainly is in Toronto Pearson, where the slots are controlled by the existing players. I think, for example, as Sunwing got folded into WestJet, WestJet got control of another big bundle of slots in there. Part of our submission in the public interest review there was that slots should have been distributed more generally. Access to slots in Pearson is a real issue.
1:40 p.m.
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
Unless I'm mistaken, you aren't in Montreal yet. Is there a reason why that's the case? Do you think you'll eventually be there?
1:40 p.m.
President and Chief Executive Officer, Flair Airlines Ltd.
We do operate to Montreal. We also looked a lot at Saint-Hubert as a potential port. It's one of the most high-cost airports in the country—there's no doubt about that—but there is a good market. We enjoy operating to Montreal, but it is a very expensive airport.
1:40 p.m.
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
I have another question for you.
Several witnesses mentioned foreign shareholders. Some of them said that the 25% rule wasn't necessary and that, if it were repealed, people outside the country could invest in Canada and the rule that the majority of shares must be held and controlled by Canadians would still be complied with.
Do you agree with them?