Transport Committee on May 30th, 2024

[Nicholas Purich, Chief Financial Officer, Canadian North Inc.]

No, we don't have a specific number available for the committee for the spend on carbon tax.

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

Fuel prices from carriers that I've talked to have become very concerning for the north. The prices of getting up.... I think it's important for people on this committee to understand that fuel is even transported by plane, if I'm correct. I think Air Creebec might have just retired two ATR-72s. They're trying to get a Hawker online with bladder tanks to transport fuel.

It becomes a huge barrier to companies that want an answer. The carbon tax right through the supply chain is driving up the price of Jet A. Why does that matter to rural Canadians? They are bearing the brunt of that and paying more money.

I wonder if you could talk about the effects of fuel prices on your business.

[Nicholas Purich]

I certainly can.

Fuel is one of the most significant expenses that we face in our operation on a day-to-day basis. Similar to the comments from Mr. Sparling, I acknowledge it's a very low-margin business, so any cost that's imposed on the airline, whether it's a tax on fuel or otherwise, ultimately does have to be borne by the consumer or the travelling public.

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

Okay, thanks.

I have another concern. Something that big carriers didn't face but that smaller carriers and flight schools faced, especially throughout the pandemic, and it's still going on now, is that even with a 40% increase in the public service by this Liberal government, Transport Canada couldn't provide medicals. I had flight schools closing.

I wonder if you could talk about the pilot shortages that we're facing now and the inefficiencies of Transport Canada to turn those medicals. How might that have affected pilot training?

[Nicholas Purich]

As I understand it at this point, the issue with medicals has improved. However, pilot shortage does remain a significant issue in our industry. We face about four times higher turnover than we would have prepandemic. Our vice-president of flight operations consistently indicates that the new normal is four times the training, all of the cost of which must be borne by the traveller.

I see my red flag.

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

That's to vote no.

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Peter Schiefke]

This is newly introduced, to give everybody a heads-up that the time is up, colleagues.

Thank you, sir.

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

[Brendan Hanley, Liberal, Yukon, YT]

Thank you so much.

First of all, I want to thank my committee colleagues from all around the table for allowing this important study to happen. I'm grateful for the chance also to sit temporarily in this chair on your committee, not being a permanent member. I'm very grateful for the opportunity to highlight some of the important aspects of northern and remote air travel, and how we can assist, as a federal government, to continue to ensure that northern air carriers thrive.

I'm going to concentrate my questions with you, Mr. Sparling—Joe, not surprisingly.

Mayor Atrill just spoke very eloquently about the connection between community well-being and regional air travel. Air North is a significant local employer in the Yukon. With the growth of Air North over the last couple of decades, I wonder if you could talk about how important it is as a local employer and how important that is to the community.

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

I have a point of order, Mr. Chair.

[The Chair, Liberal, Peter Schiefke]

My sincere apologies, Mr. Sparling and Mr. Hanley. I have a point of order here, so we're going to stop the clock.

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

I believe Mayor Atrill has lost her connection and I notice that her video has frozen. I wonder if we could take a moment to see if she was able to reconnect.

My apologies to Mr. Hanley.

[The Chair, Liberal, Peter Schiefke]

If it's okay with colleagues here, we'll just hold it there.

Mr. Hanley, you're only at one minute and 21 seconds, so you have four minutes, 40 seconds left, sir.

We'll turn it over to you, Mr. Sparling, in just a second. I'm going to let the clerk work with our AV team here to ensure we can reconnect the mayor.

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

My apologies, Mr. Chair. I thought maybe Mr. Hanley's question was going to be through you to Mayor Atrill.

My apologies for interrupting there, Brendan.

[The Chair, Liberal, Peter Schiefke]

No, not at all. Thank you for pointing that out. We'll try to get her back on as quickly as possible.

Mr. Hanley, we're going to let you decide whether or not you'd like to proceed in the absence of the mayor for the time being.

[Brendan Hanley, Liberal, Yukon, YT]

Given the overall time that we have, I would be happy to proceed.

[The Chair, Liberal, Peter Schiefke]

Okay. I know you're going up again in the second round. We'll make sure to try to get the mayor back before you're up again.

We'll let you continue, Mr. Sparling. I'll turn the floor back over to you, sir, if you want to answer Mr. Hanley's question.

[Joseph Sparling]

Okay.

While we're talking about local economic development, in the past, most northern communities, using the territorial capitals as an example—in our market, Whitehorse—served as northern outposts at the end of a typical hub-and-spoke route network. In a hub-and-spoke network, the cash flows from the spoke into the hub. In our operation, we've been able to turn that around by making Whitehorse a hub. That's produced significant local economic benefits, the most significant of which is employment. We employ between 12 and 14 full-time equivalent northerners per 100 scheduled service departures. Our mainline competitors employ one to two, so the employment payback is about tenfold.

By making Whitehorse a hub, we share overhead costs between our regional routes that go north of Whitehorse and our gateway routes that go south of Whitehorse. As I mentioned in my paper, we estimate that this has allowed us to keep regional airfares about 20% lower than they otherwise would be.

The other observation is price-stimulated travel. I think that providing affordable airfares to Yukoners to travel in and out of the territory makes the Yukon a better place to live and work. The year before we started our jet service, the total market size was about 100,000 emplanements and deplanements. Last year, it was better than 400,000. Airfares were over $300 before we started. They were closer to $200 per sector last year.

Using our own kids as an example, for sports travel, it used to be a bus trip up or down the Alaska Highway in the middle of winter. Now we see Yukon kids every weekend going south— Vancouver, Edmonton, Calgary, Kelowna—to play hockey. We have one Yukon kid in the NHL, and we have more Yukon kids going to university because they can come back and forth affordably. All of these things add up to make the northern communities better places to live and work, and I think that affordable air travel is a big piece of that.

[Brendan Hanley, Liberal, Yukon, YT]

Joe, thanks for that. I'm going to interrupt.

There's one point I wanted to make on my colleague Mr. Davidson's previous intervention about carbon pricing. Carbon pricing, at least in the Yukon and, I believe, in Nunavut—I'm not sure about other areas of Canada—does not apply to aviation. We recognize that there are many factors that are escalating fuel costs in the Yukon. Carbon pricing is not one of them.

Joe, to come back to you, I want to talk about reconciliation. Air North is actually 49% owned by a Vuntut Gwichin First Nation from Old Crow. That's been a really important element of providing service to northern first nations communities and enhancing that connectedness in a spirit of reconciliation.

I wonder if you can talk about how important the stability of Air North as a regional carrier is to promoting reconciliation.

[Joseph Sparling]

Well, reconciliation is a mandate of both levels of government. I think there's the investment by the Vuntut Gwichin in Air North, and certainly Canadian North is first nation-owned as well. That's a reality of business in the north now. First nations are an emerging force in the northern economy. I think the partnership with the Vuntut Gwichin First Nation—for more than 20 years now—has been very successful. I regard it as a bit of a showcase example of how first nations can and will participate in northern economies.

The logic behind the first nations investment—I remember it well—was not entirely about returns on their investment; it was about preserving service for their community of Old Crow. It was about investing for future generations, having some say and control in the airline, sharing in the success if there was success, and I think that logic has now applied to many first nations investments across the north.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Hanley, and thank you, Mr. Sparling.

Mr. Barsalou‑Duval for six minutes.

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

Thank you very much, Mr. Chair.

I want to thank the witnesses for being with us.

Our study deals with regional air transportation, which is a very important issue for me. It took the committee a long time to move forward with this study. Yet it's a subject we've been talking about for ages, and we should have tackled it sooner.

I'll start by apologizing to all the witnesses. Since I don't necessarily have a lot of speaking time and there are many of them, I may not be able to ask each witness a question.

I'm going to start with Mr. Côté, president of the Union des municipalités du Québec and the mayor of Gaspé.

Mr. Côté, in 2020, the Quebec government created a regional air transportation working group. To some extent, it was a kind of crisis unit. The group includes representatives from the Fédération québécoise des municipalités, the Union des muncipalités du Québec, the Réseau québécois des aéroports and the Association québécoise du transport aérien as well as other players. Ultimately, absolutely everyone in Quebec's air transportation sector has a seat at the table. Unless I'm mistaken, the federal government isn't one of the participants.

On April 28, 2023, Radio-Canada published an article entitled “L'UMQ dénonce l'absence d'Ottawa dans le dossier du transport aérien régional”. When the Minister of Transport, who was new at the time, took office last fall, I told him that the municipalities and Quebec wanted his government to sit at the table and address the challenge that everyone in Quebec is concerned about.

Has the problem been resolved since that article was published in April 2023 and since my discussion last fall with the ministers?

[Daniel Côté]

I met with the minister last week, but there were very few commitments. In fact, I don't really sense any interest on the part of the federal government in dealing with the issue of regional air transportation in Quebec. I don't have a clue about the rest of the country but at least in Quebec, I don't sense the federal government has any interest in this essential service, which falls under federal jurisdiction.

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

I see.

If I understand correctly, you weren't given a specific reason for the absence of the federal government. I believe it was invited to take part in the discussions. The UMQ is not alone in condemning its absence.

Is that correct?

[Daniel Côté]

I don't know whether it was invited.

That said, we note its absence, as well as the lack of debate. To date, the only thing I've heard from the federal government regarding air transportation is criticism of what the Quebec government is trying to do and what the municipalities, as airport authorities, are doing.

Regional air transportation is neither a municipal nor a provincial responsibility, except in terms of economic development, which is Quebec's responsibility. This is a federal jurisdiction, but the federal government is totally absent from the debate, which concerns us.