Transport Committee on May 7th, 2024

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

Thank you. I'll be very quick, then.

Mr. Sidhu, I note your success story with your small airport. When we look at competition, we need to be helping our small airports and our smaller or emerging airlines.

This government has a one-size-fits-all approach to aviation policy and looks at large airports in one hat and smaller airports in another. You mentioned that you're successful and you have no debt. However, if we look at airports like Kelowna, Charlottetown, yours and Billy Bishop, which right now hasn't allowed jets to come in, what can we do as a government to ensure that we're looking after small airports? Dublin has a policy, for instance, that gives incentives for new routes to ensure it gets emerging airlines there. How do we ensure that small airports are being looked after to create more competition in Canada with the emerging airlines?

[Parm Sidhu]

Mr. Williams, that's a great question.

Airports are economic enablers. If you can't move it, you can't sell it. We're no different than a highway.

A retention of our current airlines is critical. They will provide the lift that the marketplace needs, but if we lose another carrier or two, we're heading to smaller volumes, and airfare may become something that you plan a budget for. It may not be as stimulatory.

Let's continue to use our airports and aviation as an enabler to the larger economy, as the rest of the world does—like the Middle East.

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

The government right now has a one-size-fits-all policy, so it doesn't really look at small airports or it clumps them in with the larger ones. Do we need to have a policy that looks at the smaller airports to see how we can help increase air traffic and passengers at those airports?

[Parm Sidhu]

I think anything we can do, Mr. Williams, to make our airlines more viable and make the viability of our airlines and airports simpler and easier for the domestic passenger helps all Canadians.

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

Porter Airlines was one airline we looked at. It's trying to get into Saint-Hubert, but it's finding a lot of limitations. Are you finding the same, that there are limitations from the government? Their aspect was that the government drew up a list years ago of what was big and what was small and refused to revise it. Do we need the government to look at small airports more routinely?

[Parm Sidhu]

Yes. These are assets that are like economic enablers.

We work with our airline partners, WestJet and Flair, and then we work within the parameters they need. We lobby for the things they need.

As a whole, if you move it, you will sell it. I think we can grow the volumes in Canada to make—

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Sidhu.

Next we'll go to Mr. Badawey.

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

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chair.

Mr. Morrison, you were here in the gallery while we were speaking earlier and heard the question that I asked. I have two and a half minutes. I'm not going to go into the question because you heard it already. It concentrates on integrating the transportation network to create more fluidity within supply chains, including people—not just trade, but also individuals.

Can you speak a bit about that?

[Jeff Morrison]

First, let me thank you for raising the notion of airlines as a key component of the supply chain. That's one of their key roles and is often forgotten. We're all sitting here in person because airlines transported vaccines a couple of years ago. Otherwise, we'd all still be at home.

How we integrate the various modes is an absolutely fundamental question. In fact, just a few weeks ago, all of the transportation modes met with the Governor of the Bank of Canada to discuss issues we had in common and where we could work together as a collective body—as shippers, as rail, as airlines, etc.—to better serve the market and to strengthen the entire sector. Some of those common issues included, as I mentioned earlier, not just airlines but also other sectors talking about the regulatory burdens they face. Some of the other panellists talked about the labour constraints. There are a number of things we need to do in common to better integrate the modes.

One thing I will say—and my take on this is slightly different from Mr. Bachrach's interpretation—is that we, of course, don't oppose other modes. We believe there is a fairly significant subsidization of those other modes. That's where we're talking about rebalancing the user-pay system within air travel.

[Vance Badawey, Liberal, Niagara Centre, ON]

Do you find that the customer will benefit from that? When I say the “customer”, I mean not just the person who's going end to end as an individual, but also the business that's a part of that supply chain.

[Jeff Morrison]

Absolutely. Again, it's about anything we can do to better integrate the modes. We're seeing, even here in Ottawa, for example, the need for rail and bus modes in order to access other airports. That better integration, I think, will serve not only businesses but passengers as well. That's absolutely the next step we need to consider.

[Vance Badawey, Liberal, Niagara Centre, ON]

Do you find, not only with integrating the transportation system and creating more fluidity, but also with respect to the supply chains themselves, especially on the economic side, that when regional hubs are integrated, they change? Those do change depending on where production and sales are. It's the same for people, depending on where they're flying from and to. Do you find that we can pivot more quickly by having that integration and communication between the different methods of transportation?

[Jeff Morrison]

I absolutely do, and I would say, as you well know, that the supply chain in Canada is very fragile. We may be facing, within a couple of days or weeks, a strike in one of the major transportation modes. We all hope that does not happen, but if it does, it will underscore the fragility of the system. The more options we have to better differentiate our supply chain, the better it is for consumers.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Morrison.

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.

Mr. Morrison, you mentioned a concern about the fairly high user fees associated with the user-pay model. You say that it works differently elsewhere in the world and that, for those reasons, there are people who use U.S. airports rather than Canadian ones. You said that you didn't want to come out against the user-pay model. I assume, then, that you'd like to see lower fees under the current model.

Do you have any suggestions for better controlling the costs associated with the user-pay model, other than changing passenger rights, which has already been raised?

[Jeff Morrison]

Thank you for the question.

Absolutely. Again, airlines don't oppose user-pay. What I have said, and I think what you heard from the academics last week, is that the Canadian model, compared to other jurisdictions, is heavily skewed on the user-pay side of the equation. In the United States, during the pandemic, the federal government invested $40 billion of public monies in airports, whereas in Canada we had $400 million come out of the system.

Again, we are calling for a rebalancing. What we have called for and what you have heard from others is for us to take a step back and look at the system holistically so we can identify where efficiencies can be found in it and create a more balanced system. That is where we stand.

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

Thank you.

Mr. Lukács, you said that it was important for airlines and airports to provide information and data.

Do you know exactly what data is being collected and shared?

[Dr. Gábor Lukács]

Right now, there is a monthly survey that shows only the total number of passengers moved and a very small amount of information, and even that has to be kept confidential. If you go to Statistics Canada's website, you, as an average Canadian, cannot even access what is being reported.

If you go to the U.S., in comparison, you are able to see information on a route-by-route basis. You can see the number of passenger seats available, the number of passengers transported and the type of aircraft that is being used. Essentially, if tomorrow you decided to be a minister of transport, you would know exactly what transportation network you are getting. It is available for any citizen.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Dr. Lukács.

Mr. Bachrach, the floor is yours. You have two and a half minutes, sir.

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

Thank you, Mr. Chair.

Dr. Lukács, you've been an outspoken and fierce advocate for air passengers. Today we heard some proposals to weaken the air passenger regulations that are about to come into effect. I'm curious to hear your thoughts on that proposal, particularly with an emphasis on the premiers' letter and this issue around safety and how it relates to the European model.

[Dr. Gábor Lukács]

I'm familiar with the premiers' letter. I actually have it right on my screen. The premiers were objecting to certain aspects of the APPR that have been in place since 2019. When I was reading the letter, I was wondering if they actually read the APPR and understood what letter they were signing. It made no sense in any way.

In terms of the safety concerns, in Europe, passengers have compensation and safety—both. They don't have to choose between one or the other. We just simply have to adopt the European model.

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

I spoke earlier about the social contract that used to exist in government regulations, where large companies, whether bus companies or airlines, were given access to very profitable markets in exchange for providing basic service in rural regions like the one I represent. Air Canada last year made $2 billion. It seems they're doing pretty well under the current system.

Could you speak to this social contract and whether it still exists in Canada?

[Dr. Gábor Lukács]

In my view, social contracts no longer work. Social contracts are still a form of taxpayer subsidy, because taxpayers pay higher fares on profitable routes, which are being protected by limiting competition. Social contracts cannot be economically quantified. They're not legally enforceable obligations. They leave the government and taxpayers vulnerable to pressure from airlines if they threaten to cut rural routes.

In my view, clear and transparent subsidies for certain routes that are deemed to be essential or important, and for small airports that are deemed to be economic enablers, are far more efficient and transparent, and they leverage competitive forces to deliver service.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Dr. Lukács and Mr. Bachrach.

That concludes our meeting for today. I want to thank our witnesses for sharing their expertise and their time with us.

This meeting is adjourned.