Transport Committee on May 30th, 2024

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

Thank you.

Earlier, you referred to the user-pay model. Previous witnesses have mentioned it as well.

Not so long ago, we carried out a study on the issue of high costs. In fact, our study focused on the state of airline competition. We weren't talking specifically about regional transportation, but rather about transportation in general. Witnesses told us about the model used in Canada. We were told about Nav Canada fees, which are included in the cost of the ticket, security charges, the goods and services tax, or GST, fuel taxes, airport improvement fees and airport rents.

Several fees are added to the cost of the ticket, so it ends up being quite expensive due to government policies. This explains why tickets are so expensive. It seems that completely different models are used elsewhere in the world. They don't necessarily use the user-pay model. In other countries, a portion of government funding is allocated to air travel.

The decision not to subsidize transportation and travel down south is a policy I clearly understand. But do you think it's right to tell people in the regions to fend for themselves?

[Daniel Côté]

It's fundamentally wrong. As other witnesses indicated earlier, regional air service is essential. In fact, it's what gives people in the regions access to service hubs, for example in health care or education, and so on. What's more, it's what brings the regions closer to the economic development and tourism the rest of the country enjoys. It's an essential service, and any essential service deserves at least some attention from the federal government.

In this case, regional air transportation, which is an essential service, is being used as a cash cow to fill government coffers, rather than supporting that sector. Passenger rail service gets $381 million a year in support. Via Rail is getting over $381 million a year from the federal government but zero dollars is invested in air transportation. On the contrary, some $400 million a year is taken from the carriers' coffers, through all the fees we mentioned earlier. That money goes into the government's consolidated revenue fund. So there's no benefit in terms of infrastructure or services to the public.

It's a paradigm shift away from rail service. We're not criticizing rail service. We understand that it's essential to support rail service, but trains don't go to every rural region in Canada. I can attest to that. Air service is so poor that I had to drive 13 hours to get here this morning.

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

I think you don't have rail service anymore. There used to be, if I'm not mistaken.

With regard to the user-pay model, there are direct charges for which the federal government is responsible, such as Nav Canada service charges, the air travellers security charge, the fuel tax and GST. To support regional air transportation and for the common good, the federal government could decide to change the way these charges are calculated or absorb the costs of eliminating them through an equalization system.

Have Quebec municipalities considered such solutions?

[Daniel Côté]

For several years now, the Union des municipalités du Québec has been suggesting that regional air service be regulated and that competition be promoted through a public bidding process for the awarding of regional routes. The regions would determine what services they need, and then there would be a bidding process to spur competition. Then we would establish routes with carriers.

I'm being told that our time is up.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Côté and Mr. Barsalou‑Duval.

Next we have Mr. Bachrach.

Mr. Bachrach, the floor is yours, sir. You have six minutes.

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

Thank you so much, Mr. Chair.

Thank you to all of the witnesses for joining this study.

This is something those of us who represent rural ridings have been looking forward to for some time. I want to especially thank my colleague, Mr. Hanley, for persisting on this study and ensuring we got to this very important topic.

It's wonderful that the mayor of my home community, Mayor Atrill, is here to join us. We're also joined in the room by Mayor Sarrah Storey from the village of Fraser Lake. Both of these rural mayors, like rural mayors all across Canada, know just how vital transportation is to the quality of life in our communities. That's why I've been so passionate about passenger transportation, whether it's buses, passenger rail or affordable air travel for northern citizens.

I'll start with Mayor Atrill.

You covered a lot of ground in your opening statement, but I'm curious about the competitors that have tried to enter the Smithers market. I know you've talked to these companies. We'd love to have them at committee to present their story and the challenges they face.

What have you heard in your conversations with smaller companies that have tried to compete head-to-head and serve the local market with affordable airfare?

[Gladys Atrill]

Thanks, MP Bachrach. I appreciate the question, and I'm sorry for dropping out of the meeting. I had a connectivity issue, so I'm happy to be back.

I think what we hear is that there is depth in the big carriers. We have had smaller regional airlines come in, and there have been very good ones. One is based in Smithers. Central Mountain Air has its head office here but is unable to maintain service in and out of this airport. It relates to matching schedules and sometimes deeper cuts to fares. When that is combined with the loyalty programs that the major carriers have, it becomes untenable for the local airlines. In our case, the regional carriers still provide charter service to industrial projects out of here. They are able to make use of the airport, but it doesn't involve scheduled passenger service.

I've heard others talk about the critical nature of these airports, and it is critical. In this day and age, people need to have access to travel. If smaller carriers can't make it, we suffer, because people will make those decisions. We have talked in a very limited way to another major carrier, but I'm not sure there's enough room for two major carriers into this airport. There is definitely room for a regional carrier.

Also, when the flights are here, they are full. I think that's the other piece. When there aren't flights available, people travel down the road, or they do when the savings are deep enough to attract them to drive down the road. However, the airplanes are full. If the airplanes weren't full, I would feel differently about it, but the flights are full.

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

Thank you, Mayor Atrill.

I wonder if you could expand on the impact of air travel on the local economy. I know you talk to existing local businesses as well as prospective investors. What are they telling you about the importance of affordable airfares into the Smithers airport?

[Gladys Atrill]

If the airfares aren't affordable, they're not going to be here. Those decisions are being made. Again, our closest airport is two and a half hours down the road.

In terms of access to industrial opportunity in northwestern British Columbia, one airport is the same as the other. We've spent a lot of time making this a very livable community. However, at the end of the day, if the costs are different enough, people will make those decisions, even tourism businesses that have made a decision to fly into a different airport because the prices are better for their customers.

Industrial companies make that decision as well. There is a cascade effect. If a large business chooses to move down the road, the services that go with that business also move down the road. I am told this is directly related to the services at our airport—frequency and fare.

The health of the community relies in significant part on the type of access we have to air seats and air prices. They have to be reasonable, or this community feels it across the board.

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

Thank you, Mayor Atrill.

How have your conversations with Air Canada gone? I know you meet with them periodically and have frequently brought up this issue, as I did when I was mayor of Smithers. How would you characterize those conversations?

[Gladys Atrill]

They are friendly but unmoved. I think they're willing to hear me. I don't think that we in any way affect the decision-making, so it's friendly and without result, I have to say. They're willing to pick up the phone, but there is no change in action. They explain the situation, that there is competition down the road. They have to meet that competition. Also, they know that Smithers' passengers are driving down the road, so they get the passengers anyway.

I think, from the perspective of the airline, they're having their needs met. They are still flying here, so I don't want to be too critical, but I don't think they're motivated to improve the service here unless there is a competitive airline, and then they'll come in and increase their service.

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

As my last question, Mayor Atrill—and I might get cut off—it seems like there are a number of different proposed solutions. One of the solutions is that the federal government invest more in regional airports and drives down the cost for the airlines, with the assumption that the airlines are going to pass those savings on to the passengers. The other proposal is the solution that's been pursued in Quebec, whereby the provincial government directly subsidizes rural routes and sets a cap on the amount of the airfare with a subsidy to the airlines. I'm just wondering which regulatory approach you recommend that the federal government pursue.

[Gladys Atrill]

I don't know, Mr. Bachrach, if I have my heart set on a type of regulation. I think, from a community perspective, the overriding concern is that there be fair and equitable access to air travel for residents and for those coming out of the business, industrial and emergency sectors. We need to know that the prices are fair and that people are not motivated to drive down the road.

Perhaps I should have thought about that more. I leave the decision on the type of regulation, but I encourage you to recommend a regulation that enables these small communities with smaller regional airports to survive and thrive. It is essential to maintaining good business in rural communities.

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

Thank you so much.

Thank you, Mr. Chair, for your forbearance there. You can take it off my next round if you feel—

[The Chair, Liberal, Peter Schiefke]

Mr. Bachrach, it is only because you have been so forceful in making sure that Timmins is well represented in this committee that we provided you with that extra 40 seconds.

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

It's Smithers.

[The Chair, Liberal, Peter Schiefke]

I'm sorry. It's Smithers—excuse me.

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

Timmins is also a great community.

[The Chair, Liberal, Peter Schiefke]

I just want to say this to the mayor who's watching—and I say this on behalf of all members here—you have somebody here who, on any given day, will bring up Smithers and make sure that there's some form of reference to Smithers.

Thank you very much, Mr. Bachrach.

I will turn the floor over now to Mr. Davidson. The floor is yours. You have five minutes, sir.

[Scot Davidson, Conservative, York—Simcoe, ON]

Thank you, Mr. Chair.

Now I have to talk about the “soup and salad bowl of Canada” and York—Simcoe.

To my colleague from Yukon, I can assure you that if you're eating carrots in the Yukon from the soup and salad bowl of Canada, you're paying the carbon tax all the way there, right through the supply chain.

I'm getting back to fuel because, next to labour costs, I think it is one of the largest costs that regional carriers face. I'm going to talk about Timmins because, obviously, I'm from Ontario, and maybe this relates to you—fuel shortages at airports and smaller airports not having fuel.

Why does that matter? Why does that matter to my colleagues now? It's because of the cost that we're seeing airports not selling fuel, and this relates to infrastructure. I know that now we have a variety of airports with NDBs, non-directional beacons, being decommissioned, with localizer back courses only and no instrument landing system approaches. Our minimums are 600 to 800 feet. GPS approaches aren't approved at some of these airports, so there are aircraft leaving with extra fuel now and not taking bags. I wonder if you can tell us about that.

[Shelly De Caria]

I'm going to use Qikiqtarjuaq as an example. The communities that you guys are talking about actually have road access. Mine don't, so it heavily impacts how many people and how much cargo we can bring into the community. Qikiqtarjuaq hasn't had fuel quality assurance since December, so we've had to take extra fuel from Iqaluit in order to land there, which bumps bags and passengers. We are an essential service, so this has heavily impacted not only.... I think there have been five times since December that we have had no fuel in those communities.

Do you want to add to that?

[Nicholas Purich]

In addition, you referenced some of the navigational infrastructure. Reliable access to air navigation is not consistent across the northern communities we serve. That may mean an alternative that is farther away has to be selected, which may mean more fuel is carried and fewer passengers and fewer bags are carried. All of those issues compound the lack of availability a community may face due to fuel and due to infrastructure unreliability.

[Scot Davidson, Conservative, York—Simcoe, ON]

Thanks for that.

I watch the federal government. Just to relate it to southern Ontario, Buttonville just closed. We should almost have a moment of silence for that airport closing. That was the fifth-busiest airport in Canada. As well as jets not being allowed into the island airport, Downsview is now closed. That relates back to Air Atlantic and Air BC, which was trying to be a regional carrier out of the Buttonville airport. Their alternate was Montreal. The minimums were down to 600 feet only, and there were no extensions.

To get back to, we'll say, pilot shortages, which I think everyone here would agree are affecting aviation now, and how about mechanics? I've talked to many airlines. There's now a shortage of mechanics. We have what we look at as a blue seal recognizing foreign credentials. I wonder if that would be something that would help your industry.

Mr. Sparling, you might as well get in on this.

[Joseph Sparling]

I'm sorry. We must have lost Internet service here.

Was your question about the shortage of maintenance personnel?

[Scot Davidson, Conservative, York—Simcoe, ON]

It was about maintenance and pilots and the red tape and lack of recognition of foreign credentials, and speeding things up.