Transport Committee on May 2nd, 2024

[The Chair, Liberal, Peter Schiefke]

Mr. Barsalou‑Duval, you have the floor for two and a half minutes.

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

Thank you, Mr. Chair.

Thanks to the witnesses for being here.

Mr. Rheault, at the last meeting, which you no doubt watched, one of the things we discussed was regional air transportation, in which Air Canada plays a certain role. Today, as at the last meeting, virtually everyone has discussed user taxes and fees, which restrict consumer use of those services by increasing prices.

As I previously pointed out, if we subsidized air travel for people travelling south to enjoy the sun, that might be less acceptable to ordinary people than partially subsidizing air travel in certain remote regions where it's essential.

I'd like to know what Air Canada thinks about that. It might even help you play a larger role in regional air travel.

[David Rheault]

Thank you, Mr. Barsalou‑Duval.

First of all, you're correct: We are present in the regions of Quebec. Air Canada is there in Sept-Îles, at Saguenay-Bagotville airport, in Rouyn-Noranda and the Magdalen Islands, in particular.

The Quebec government is also active in this area and has introduced a program to assist users by providing access to discounted fares and allowing them to choose their carrier. Carriers fix the ticket price at $500. These are initiatives that can be introduced to try to reduce prices, but this lets individuals choose the carrier they want to travel with.

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

Mr. Gibbons seems to want to add something.

[Andrew Gibbons]

Yes, thank you.

I think, first and foremost, I would submit that we have to stop going in the other direction on fees before we start talking about subsidies. This is partially what happened in Europe. Europe created this massive industry around EU261, whereby billions and billions of dollars went into that program. The result was that regional travel became so expensive and unprofitable that the state had to begin subsidizing regional routes.

I don't think we want to follow that route in Canada—

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

I'm going to have to stop you there because the chair will be interrupting me soon.

Regarding the issue of taxes and fees that you raised, you say that a portion of those revenues isn't reinvested. Apart from airport rents, what are these taxes and fees that aren't being reinvested?

You may submit your answer in writing if you don't have enough time.

[Andrew Gibbons]

Airport rents is the most obvious one. It has been talked about for decades, even at this committee, and you were part of the group that made recommendations to make sure that rent goes back into the industry. The excise tax on jet fuel is a tax that is not reinvested into the industry. That is something in the United States that is—

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Gibbons.

Mr. Bachrach, the floor is yours for two and a half minutes, please.

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

Thank you, Mr. Chair. I would like to switch gears for a brief moment to address an issue that emerged recently with Air Canada.

Mr. Rheault, I know you will be familiar with this.

There was a challenge faced by Grand Chief Woodhouse on her flight with Air Canada, in which, I believe, her regalia was taken away from her, or the carrying container was removed from her possession.

Could you talk a little about how Air Canada will be addressing that situation, what policy changes will be forthcoming and how your company has responded?

[David Rheault]

Thank you for your question, Mr. Bachrach.

Yes, I'm aware of that incident, which occurred last week. The case containing Chief Woodhouse Nepinak's traditional headdress was put in checked baggage. We apologized for that situation. Our president spoke to the chief, and we committed to reviewing the training we give our employees concerning the transportation of sacred objects such as the chief's headdress.

So we will be increasing awareness, as I said, but we'll also establish a procedure for the transportation of these kinds of objects. People will be able to contact us in advance so we can make the necessary arrangements to ensure those objects are transported without incident.

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

I appreciate that those steps are being taken.

Can you provide the committee with a sense of when that review and that training will be completed? Would you be willing to report back to the committee and inform its members of what changes your company is going to make as a result?

[David Rheault]

We're already reviewing our procedures, as I explained, so we can put a system in place for people to inform us in advance of religious or sacred objects that will be travelling with them.

I can of course follow up with the committee regarding next steps.

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

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Bachrach.

Next, we have Mr. Strahl.

Mr. Strahl, the floor is yours for five minutes, please.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you very much, Mr. Chair.

Mr. Gibbons, I want to continue our conversation. We have seen Nav Canada fees, since the pandemic, go up 29%. You mentioned that CATSA fees in the last budget were raised 29%. We have seen that the airport rents paid to the government have increased by 42.5% in the last decade.

As the government keeps layering on fees, which they impose on customers who are trying to fly, driving up the costs for Canadian travellers, it appears to me that the government really has no interest in increasing air travel across the country. Through increasing taxes and fees, it may in fact want to decrease air travel in the country.

Do you have any opinion on that? Have you seen any indication from the government that its goal is actually to increase air travel in this country, or does it want to decrease it?

[Andrew Gibbons]

I'm going to drive right by that one. I think that's a question for the minister when he's here.

What I can tell you is that in communities—

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

He won't come. He has indicated that he won't come.

[Andrew Gibbons]

In communities across the country, the response to what we're doing is very positive, Mr. Strahl.

This is what the experts have said. Canada has a high tax and regulatory burden, and reorienting and modernizing those policies is going to help competition.

The motion before the committee is in light of Lynx Air's failure. Lynx cited the reasons, in their opinion, for their failure. I think this was a very well capitalized airline. They had ownership from one of the most savvy airline owner-operators in the world, and they failed.

There are challenges. You went through CATSA, Nav Canada, rents and AIFs, and I think the common denominator with all of them is that there is a lot of debt to dig out of from the pandemic. That debt, whether it's airlines or whether it's those organizations, is all being felt by the traveller. We're in an affordability crisis.

Again, back to the APPR, every community, every small airline, every small region and everyone across the country has said that this is not the time to increase the cost of travel. We can protect Canadian travellers, but we also should not be increasing costs at this time.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you, Mr. Gibbons.

I'm sorry to interrupt you. The Minister of Transport was invited, and we have no indication that he has accepted that invitation to talk about this with us.

I want to discuss, as well, something you talked about in your remarks about intermodal equity in terms of how the government supports different modes of transport in the country. We just had a lengthy study on high-frequency rail in Canada.

Do you believe that we need to address issues of lack of competition or the competitive environment in the aerospace sector in air travel in this country before we look at massively investing in a mode of transport that won't be available? I know you're focused on the west. I can tell you that none of my constituents would ever use HFR. They'd have to fly 3,000 kilometres on one of your jets to get onto the start of that.

Do you believe we need to look at the competitiveness and investments in the air sector before we can have a fulsome look at things like high-speed rail or bus service, as has been mentioned before? Do you believe the government has done that work to look at how we can improve connectivity via the airspace before investing $10 billion, $20 billion or $30 billion in a new HFR?

[Andrew Gibbons]

Well, I wouldn't comment on the before or after of the sequencing. I would just observe that there is a high.... This comes from our conversations with provinces and premiers. If you look at Newfoundland and Labrador, just as an example, the citizens of Newfoundland and Labrador pay for all of their infrastructure and all of their security, and they overpay for those services while we have outdated transportation policies that subsidize rail.

I'm not saying that rail shouldn't be subsidized or should be subsidized. I'm just observing that if the issue is how the regions of this country can all be connected properly and affordably, that is an issue that should be looked at, naturally and logically, because your citizens in Chilliwack do not benefit from that. It is air that is needed for your community and for remote regions of British Columbia.

I think that's an issue, and we've put it in our submission and in our recommendations to say, as part of the review of fees, that there should be comparisons made with how other modes of transport are treated. It's a basic fairness question.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Gibbons, and thank you, Mr. Strahl.

Next, I'll turn it over to Mr. Badawey. Mr. Badawey, the floor is yours for five minutes, please.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chair.

This has been a very enlightening conversation. I'm not going to start speaking about the politics of what we're trying to discuss today or, of course, some of the answers that some of the people around us are trying to get out of you to further that agenda. I am going to concentrate my questions on the business at hand, and that is to deal with the state of airline competition here in Canada and ultimately the ability that we have as partners to make it better for the consumer, whether it be through cost or through connectivity.

I'm really going to concentrate on this session with you, Mr. Liebman, with respect to Air Transat, and the following session with Mr. Jones from Flair, specifically on the “how” to the “what”. I just basically underline and bold what the “what” is. Now it's the “how”.

I'm going to give you the floor, because you will not actually be answering to me but to this young lady over here with testimony that is going to be contained within the final report to be presented to this committee, which will go to the department for a response and then, hopefully, from there to a strategy to actually get it done.

With that, I have a very simple question: How did you do it? Specifically, how do we learn from you with respect to encouraging further competition? How did you stay afloat? What investments did you make on the operating and capital sides? How can we learn from you to ensure that from that level or foundation we can move forward with a strategy we can embark upon?

[Howard Liebman]

I want to reiterate that Air Transat and the 5,000 employees of Air Transat are here to work with Parliament and with government to protect and enhance competition in Canada.

For 37 years, Air Transat has been taking Canadians on their, mostly, leisure trips, on their international trips, and sometimes on their trips back home. We've also been bringing hundreds of thousands of visitors to this country, primarily from Europe, every year as well. We've grown from one plane to, today, almost 40, with 5,000 employees.

We have kept in our lane. We've focused on the business. It's a testament to the professionalism of my colleagues. We had a very major challenge, a very major upset in the pandemic. When the borders are closed, there are just no operations; there are just no revenues. Obviously, that was the biggest challenge we've had in our 37-year history.

Thankfully, and thanks to the government's emergency support, we're still here. We intend to keep doing what we've been doing for the past 37 years in a bigger and better way, and in a new way with new partners, reaching out to the likes of Porter and others. We have a code-sharing agreement with WestJet as well. We're here to work with anyone and everyone, with a view to delivering reliable air service and competing in the marketplace.

[Vance Badawey, Liberal, Niagara Centre, ON]

On that, this may not be a question you can answer now, but I'd be very interested in knowing this if you can send it to me. What is your debt to operating ratio right now?

[Howard Liebman]

I'll get that for you, but remember, we never had a penny of debt up until—