Transport Committee on May 9th, 2024

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

Thank you, Mr. Chair.

Mr. Lawford, it's good to have you back.

Thank you to our other witness, Dr. Prentice, as well.

My colleague Mr. Badawey touched on this. We've heard the recommendation that Canada allow the entry of foreign airlines in order to provide more competition in the air sector. I'm just curious about the unintended consequences of that. I'm assuming that there are much larger American airlines out there that would have some advantage. How do we avoid a situation where we look 10 years down the road and see that the entire air sector in Canada is dominated by foreign carriers that have their bases of operations outside the country?

[John Lawford]

That's obviously our concern, as well. I think that Canadians, along with successive governments, have all wanted to have the sovereignty and the control of the domestic airline industry with Canadian players, allowing limited landing rights for international flights from international carriers, obviously, but no cabotage, as was mentioned, and with foreign ownership limits in order to have control by Canadians so that they listen to the regulator or regulators.

We tend to agree with that, and it has to be studied very carefully. Obviously, if we did go with cabotage or more foreign entry, larger routes would be used, and smaller routes would likely be ignored, leaving us with a situation where.... Would the government, for example, have to subsidize all travel in the north or from the south to the north? I don't think Canadians would agree with that, but it should be studied in detail if we are going to go down that route.

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

Mr. Lawford, you heard the testimony earlier about the north and rural regions and the cost of air travel. I'm wondering what your views are on how we provide critical transportation service for communities where the size of the market doesn't really allow for competition.

[John Lawford]

We're back to the perpetual question of whether there are certain routes that have to be subsidized, because you're going to have one player who will then charge monopoly prices, or whether that should be regulated in the sense that it is the only carrier allowed in there and then the prices are regulated in return. That's going back to the 1980s. That's one way. Otherwise, a subsidy to customers, to airports or to airlines.... You can, as I believe one of the previous witnesses said, try to tender a reverse auction to get the lowest price. These are all ideas.

I agree, though, that the present cost, convenience and service in the north and to some rural and remote parts of Canada are somewhat shameful. That is holding back industry and people's social and economic life. We need to do more, because there are not a lot of other choices, such as rail or driving 16 hours to get to where you need to go.

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

We've heard from the airports that they would like to see government move away from the user-pay model and invest in the air sector and invest in air sector infrastructure as a public good.

I've raised questions about investment in the air sector versus other transportation sectors. We've lost bus service in our country. Our passenger rail system not only is a shadow of its former self but also doesn't stack up to what other countries are offering.

I'm curious if moving away from the user-pay model and investing more public money in, for instance, airports can deliver competition and lower prices for consumers. Do we see any evidence of that?

[John Lawford]

There have been some interesting developments on airports. Australia has a private model, private financing. It's something that should be looked at.

We said 35 years ago that airports should be privatized, believe it or not. It could be done with public money as well. The present PPP structures for larger airports have their problems and don't seem to be keeping up with the infrastructure needed and the building that's needed for the increase in air travel that we need in Canada.

As for other supports, I think sneaking in some direct taxpayer support of the airline industry is appropriate. It does benefit all Canadians. Whether you travel on a plane or not, it doesn't matter. Your doctor probably does, and your food probably comes in that way. There are all sorts of other benefits economically to having air connection across the country.

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

Yes, I think that's very clear, especially given there are communities that rely heavily on air transport.

Air travel is also a very difficult sector to decarbonize. There have been all sorts of claims made about sustainable aviation fuel, but I think there remains a huge gap between what is required in terms of production and supply and what is available on the market today. At the same time, more and more people are flying.

How do we allocate effort across the transportation sector to ensure not only that people have affordable transportation options but also that we're meeting emissions reduction targets and decarbonizing transportation?

[John Lawford]

I note that in Australia they're doing a couple of studies, and one of the large pillars of that is how to meet the other goals in an environmentally responsible fashion.

Our recommendation is that Transport should go back and do an air policy for Canada. It would be an opportunity to make sure that's in there. At the moment, that's not really a consideration and not in competition law. That's another place to try to centre that a bit more.

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

Thank you very much.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Bachrach.

On behalf of all members, I want to thank our witnesses for appearing before us today and contributing their testimony.

With that, this meeting is adjourned.