Transport Committee on May 30th, 2024

[Joseph Sparling]

Well, I think the labour shortage is industry-wide, and it really goes across multiple industries. We've been relatively fortunate on the pilot front, and we are fully staffed on the maintenance front, but we're seeing that when we tender for jobs, we're not getting a lot of résumés.

I think one of the issues that have been cited is that the changes made to the foreign worker program, perhaps with the best of intentions, have produced some unintended consequences, which are impacting aviation directly on the maintenance front. We hear that from our MRO service provider.

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

It is a highly technical and traceable qualification. Speeding that up by having less red tape and by recognizing foreign credentials in a more expedient manner would definitely help relieve some of the stresses we see on that, I would tend to think. Would you agree with that?

[Joseph Sparling]

That's correct, yes.

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

Okay.

Getting back to municipal—is that a red flag?

[The Chair, Liberal, Peter Schiefke]

It is a red flag.

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

That's unbelievable. I have so much to say, Mr. Chair.

[The Chair, Liberal, Peter Schiefke]

I'm sure you'll have another opportunity, sir.

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

It is a red card.

[The Chair, Liberal, Peter Schiefke]

It is a red card.

Thank you very much, Mr. Davidson.

Next, we'll go back to Mr. Hanley. Mr. Hanley, the floor is yours. You have five minutes, sir.

[Brendan Hanley, Liberal, Yukon, YT]

Thank you very much. I will go back to Mr. Sparling.

I really want to use this time to focus on the Competition Act as it applies to regional airlines and to really try to get into some policy recommendations.

Now, Joe, you did submit an accompanying paper by Fred Lazar. It's pretty long and pretty technical, but it really goes into some of the issues around competition with mainline carriers and the potential benefits of interline agreements.

I wonder if you could maybe summarize where we should or could be going in terms of fostering or supporting interline agreements to support the viability of smaller regional airlines.

[Joseph Sparling]

Well, I think the key to success for regional service is not bringing in more big guys but rather making sure the little guys can compete. Interline agreements are just one way of accomplishing that. That was recommended in the 2000 TRAN report, in which consolidation was foreseen. One of the ways to alleviate that or to address that would be to have mandatory interline agreements, which would let the little guys compete better.

With regard to Mayor Atrill's situation in Smithers, if CMA had an ability to better compete with Air Canada through interline agreements, use of frequent flyer programs and all of those things, that would probably create an optimum situation for your community—not to replace Air Canada, but to augment it and to provide the level of competitive service you're looking for. Those things have already been addressed in telecommunications and the railroad industry. I think aviation needs to look at policies and/or regulation that can somehow make it easier for small players to survive.

I reviewed what the Competition Act is all about, and creating an opportunity for equitable, competitive participation by small and medium-sized entities is one of the four mandates. I think that's the direction we have to move in.

[Brendan Hanley, Liberal, Yukon, YT]

What you said reminds me of a conversation that we've had. I know you've mentioned the win-win possibility before, the idea that this is not necessarily taking away from Air Canada's opportunities. I think the pandemic illustrated some of that during that experience. There is the ability to keep both airlines full and complementing each other in terms of service.

I wonder if you could maybe talk about that.

[Joseph Sparling]

Absolutely. As Shelly pointed out, the big carriers have no interest in going to the smallest of communities, but they do have an interest in going to what we'll call the northern hubs. That's probably where we're at a little bit of disagreement with them. I think there's a win-win situation for the regional carriers to be feeding the mainline carriers, but more so in the southern gateways than in the northern hubs.

I can certainly understand why they're perhaps reticent to welcome new competitors, if you want to call them that, because throughout their history, every time there's a new competitor start-up, it's “I have two airplanes this year, and I'm going to have 20 next year”, and the only place they're going to get business is out of the prime east-west routes.

I think what we have to do is a better job of convincing the big guys that we're not out to cut their grass. If growth were a priority for Air North, we would not be based in the Yukon; we'd be based in the south. There absolutely is a win-win scenario out there, but we haven't been able to make a good case for it.

That's where some cleverly crafted policy may be helpful in that regard, and it would create a better situation for regional air service, as well as for all of the carriers. It wouldn't be to anybody's detriment.

[Brendan Hanley, Liberal, Yukon, YT]

Yes. Thank you for that.

I only have a few seconds left. However, if there is one sort of take-home point that you'd like this committee to remember in recommendations, I'll give you 10 seconds to do that.

[Joseph Sparling]

In general, the thought is that we have to have more competition, but bringing in more big players—and, in the big scheme, some of them are international players—does not always produce optimal results.

Look at Canadians right now. Consumers are paying too much for groceries, too much for fuel, too much for cell service, yet the providers of those goods and services, which are often large and multinational corporations, are making record profits. There's a role for the smaller players in Canada.

[The Chair, Liberal, Peter Schiefke]

Thank you.

[Joseph Sparling]

We're a small market, and the small players need to survive.

Thanks.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Sparling.

Thank you, Mr. Hanley.

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.

I'm going to continue the discussion from earlier.

I'd like to go back up a bit to talk about the programs put in place during the pandemic. People who are watching will then understand why I'm bringing this up.

During the pandemic, the Government of Quebec set up the regional air service assistance program. The program no longer exists today, but it made it possible to continue providing air service in the regions.

In a press release on August 6, 2020, the federal government announced another program to provide essential air transportation for remote communities. The backgrounder that accompanied the release provided a definition of sorts for “remote communities”. In any case, it was estimated that 182 communities were considered remote. A look at the list of communities obviously showed that many of them were in Quebec. In fact, when I looked at the list, I saw that these are essentially places with no road access.

I'm very pleased to know that an unserved area is being considered a remote community and has been made a priority. However, it also meant that all areas with road access were no longer eligible for the program. Fortunately, we had the proverbial regional air access program, which nevertheless delivered assistance people could count on.

The Deputy Minister of Transport appeared before the committee a few weeks ago. I asked him whether, in his opinion, air transportation service in the regions was an essential service. I couldn't get him to say it was. As part of our study in committee today, we also voted on a budget to visit the regions. We haven't talked about areas of Quebec that may not have road access.

Having made this long aside, my question is for the representatives of the Union des municipalités du Québec.

Do people still need air transportation service, even if they're 10 hours away or 900 km from a city like Montreal?

Is it an essential service, or do people no longer need it once their town has road access?

[Daniel Côté]

It's an essential service. Even if there is a road, even if there is a train that can get there, air service is still essential. Let me explain why.

I'm the mayor of Gaspé, which is 700 km from Quebec City and nearly 1,000 km from Montreal. As I said earlier, I drove 13 hours to get here today. Why did I drive here? Because there's no train from Gaspé and the bus service is totally inadequate. In any case, on a bus, it might have taken me 48 hours to get here, which makes no sense.

Air service is not available. That's why people have to drive. It's an essential service for people in the regions to get to urban centres and for our economic players so that they can develop the economy in our regions. It's an essential service that makes it possible for our people to receive services.

It's an essential service when people live a certain distance from urban centres.

[The Chair, Liberal, Peter Schiefke]

Thank you very much.

Next we have Mr. Bachrach.

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

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

Thank you, Mr. Chair.

Again, this is a really important conversation, and it's great to see everyone so engaged.

I was going to ask a policy question of Mr. Sparling, but first I'll just note that I've had a chance to fly with your airline a couple of times, because the northernmost communities in Skeena—Bulkley Valley are accessed most efficiently through Whitehorse. I chatted to passengers on board Air North, and it's amazing just how passionate Yukoners are about your service. They're great ambassadors for Air North. I hope to fly with you again in a few weeks when I visit Lower Post for the opening of their new community building.

On the policy front, you've been really articulate around interline agreements and code shares and how that can benefit the affordability of northern air service.

I wonder about these other policies that other jurisdictions are pursuing. In the United States, my understanding is that the government essentially puts rural routes or regional routes up for auction, and airlines bid on them based on what they feel they can provide the service for. We also have the situation in Quebec, which I understand involves a cap on fares to regional airports as well as a federal subsidy. Then there's the option that the federal government invests heavily in airports in the hope that airlines pass those savings on to consumers.

Do you feel like these policies are complementary, or are there other policies that, in addition to interline agreements, would add to the benefit for rural air passengers?

[Joseph Sparling]

Well, I think you're referring to the essential air services program in the States, and I believe that is a subsidy program.

I've never been a big advocate of subsidies. I think that there are other ways to accomplish what you want to accomplish. I think that the policy front and the regulatory front have steps that can be taken to allow regional carriers to compete. Steps of investments in infrastructure may be bigger priorities.

Certainly, subsidies were absolutely essential during COVID. We would have run out of cash were it not for subsidies, and we're very thankful for those, but a lot of the subsidy dollars, in effect, funded empty seats flying around on the gateway routes. That wasn't super-productive. The market reverted to a pre-deregulation level of economic activity.

In my mind, it would have been a good opportunity for the government to use the subsidies with conditions. It would have produced dollars better spent. I don't think anybody likes to see operations subsidized. You never seem to get the type of efficiency that you should in that regard. I would lean towards focusing on ways that small carriers can be competitive rather than the subsidy route.

[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. You have five minutes, sir.