Transport Committee on June 6th, 2024

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

As a union representative, what can you do so the collective agreements meet the needs of employees who work in rural and remote areas?

[Sylvain Schetagne]

I think we have to create attractive working conditions, winning conditions. As I said briefly in my opening remarks, we are currently seeing a race to the lowest possible price. The goal is to beat the competition, to dominate the market, and to make as much money as possible. The race is not about offering the best services there are or the best possible working conditions.

In my opinion, decommodifying the air travel services offered in remote areas contributes to improving working conditions in those areas.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Schetagne.

Ms. Bento, with respect to innovative technology, what approach does Arctic Aviation explore in order to improve airline service in remote areas?

How can the government support those innovations?

[Gina Bento]

Right now, I'm working with a couple of cutting-edge technologies that I hope are able to help us.

Firstly, in terms of a surface, we are looking at whether or not aluminum surface runways have the track record necessary for us in Canada to feel comfortable to put this in as a potential solution in the north. We are working with the U.S. Department of Defense, as well as with FAUN Trackway, a U.K.-based company that has been manufacturing aluminum panels for various different militaries worldwide, including NATO countries. We believe that this very well could be a solution for some of the larger airports and some of the most remote airports.

Secondly, quickly, it's in terms of weather patterns. We're looking to see whether or not we can have the latest data available, so that our pilots can make better decisions to take off and land.

Thank you.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you, Ms. Bento.

I just want to point out that it's nothing personal, but I always seem to be waving the red flag at you. I'm sorry about that.

All right. We have two more four-minute slots.

Mr. Barsalou‑Duval, the floor is yours for four minutes.

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

Thank you, Mr. Chair.

Ms. Bento, in your opening remarks, you talked about the lack of investment in infrastructure. Other witnesses have also talked about that.

Last week, if memory serves, the representative of the Union des municipalités du Québec talked to us about the Airports Capital Assistance Program. In fact, it seems that the same amount of money has been provided to that program, year after year, for 20 years. That witness said it was possible to improve only one airport a year. If we do the calculation, we can see that it is impossible to get it done, given all the airports that need money. So the result is a decline in the condition of the infrastructure.

Are you seeing the same thing at your end?

[Gina Bento]

Thank you very much for this question. In fact, this is a point I wanted to bring up. Upon further analysis of all the programs available, in order to fund infrastructure development in airports specifically in Canada, I have found that the programs we have on hand are not conducive to helping Arctic aviation for structure building.

The airports capital assistance program does have small amounts. These small amounts are for our community airports, but they do not.... We cannot look at airports in our communities in the north as community airports. We must look at them as vital, fully functional airports that are necessary, like a Pierre Elliott Trudeau airport or a Pearson airport. They need a lot more capital investment in them than just a smaller regional airport functioning out of Thunder Bay or Saint-Hubert.

Second, we are also looking at a permafrost situation. Climate change is affecting airport infrastructures in a very drastic way. Asphalt, the typical building material that has been used to pave airports worldwide, including in our north, is no longer a possibility when you go very far north.

The airport at Iqaluit and the airport at Whitehorse are paved using asphalt, but when we're looking at airports such as Cambridge Bay or Resolute Bay and so on, the capital needs are much higher. If we look at aluminum, we're looking at costs of about $90 million.

I have the figures with me. An asphalt runway will cost about $35 million to lay today. An aluminum runway will cost about $90 million. However, at year 20, they break even. At year 40, we are looking at an $80 million savings if you were to put an aluminum runway in the north versus asphalt.

The key issue is not just in terms of the overall totality of the cost; it's also the yearly maintenance. If we lay asphalt, we need to maintain it on a yearly basis. If the cracking is worse as we go further north, we need to have a robust infrastructure program in place that has the capital necessary, perhaps in partnership with the Canada Infrastructure Bank and with other folks who have pockets of money for regional economic development and so on, to ensure that these airports are treated as vital pieces of infrastructure needed for the development of these regions, and not just as community airports.

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

Mr. Chair, how much time do I have left?

[The Chair, Liberal, Peter Schiefke]

You have one minute, Mr. Barsalou‑Duval.

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

Thank you, Mr. Chair.

Ms. Bento, this is the first I have heard about using aluminum on runways. I am impressed, and that technology intrigues me.

I would like to know how much testing has been done on this technology. I think gravel or asphalt runways offer a certain amount of friction for landings. I am not a physics expert, but it seems to me that an aluminum surface must be a lot more slippery, a lot smoother.

Does using aluminum on runways present problems in terms of physics for landing or takeoff?

[Gina Bento]

Very quickly, the U.S. military and others worldwide have been using this for the past 40 years. If you've gone to any air show, you'll know that the U.S. Air Force uses huge C-130Js on a regular basis to transport helicopters, fighter aircraft, tankers and so on. These aircraft have been landing and taking off on these surfaces safely for decades now. They were used in Afghanistan and in Iraq. I think our Boeings could very well land on them safely in the north. Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you, Ms. Bento. The third time's the charm, apparently.

May I ask a follow-up question on that before I turn it over to Mr. Bachrach?

Mr. Barsalou-Duval brought up an interesting point. For us lay people here who are not familiar with the layout of aluminum runways, we're talking about runways that are not just flat aluminum. They must have some form of grooves in there to provide....

Can you perhaps explain what you're talking about? I think we all have an image here of this shiny, flat aluminum runway, which, as Mr. Barsalou-Duval pointed out, would be very slippery.

[Gina Bento]

I would like to thank you, Mr. Chair. Essentially, we're looking at panels of aluminum snapped together to form a uniform piece of aluminum surface that planes can land on. These individual panels are treated on top in order to provide the friction necessary for any aircraft to be able to land safely.

[The Chair, Liberal, Peter Schiefke]

Thank you for the clarification, Ms. Bento.

I'll turn the floor over to you, Mr. Bachrach, for our final line of questioning. You have the floor for four minutes, please.

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

Thank you, Mr. Chair.

I have the same curiosity. Ms. Bento and I had a little sidebar conversation about these aluminum runways. It sounds like something that, over the long-term, holds a lot of promise.

This study is about affordability, particularly in rural and remote communities. It feels like a bit of a tough issue to get a real handle on, because we're talking about private companies that are operating in our communities and providing a vital service for people. We're talking about airports, which are often run by municipalities, that struggle to maintain their operations using the current revenue model. For the passengers, they feel like they're paying an exorbitant amount to fly in and out of rural communities.

Now, we've heard the argument about fees and charges, and the international comparisons, etc., but we're talking about a private market. In some cases, there's very little competition, which is one of the key mechanisms we rely on in a market-based economy to drive down prices. We also don't have a line of sight on how the airline sets its prices. This is not transparent to passengers, so passengers are getting on planes, paying exorbitant amounts and then seeing that the company they're flying with is making billions of dollars of profit. You can get rid of the fees and charges, but what's to prevent the company, in the absence of competition, from simply raising the price back up to what it used to be?

This is the question, I think, for a lot of people. How do they know that the affordability and the cost savings to airlines are being passed on to them in the price of the ticket, when they see that some of these companies are very profitable and are making that money on the backs of customers in rural areas, who are paying exorbitant ticket prices? How do we build that level of trust if the government were to consider the proposals that were brought forward? How should passengers trust that the airlines are passing on those savings?

I ask Mr. Morrison and Mr. McKenna. I think they're probably best positioned to respond to that.

[Jeff Morrison]

Very quickly, I have two points. First of all, as you can imagine, as a national association we can't discuss the individual pricing strategies of our individual airlines, especially on a study with respect to competition. You can understand that there are concerns there.

What I will say, first of all, though, just to the question of.... You used the term “profitability” of airlines. I'm sounding like a broken record here with this conference in Dubai, but as we were reminded by our international counterparts, the profit margins that airlines face are incredibly thin. The analogy used is that, on a per-passenger basis, profitability is roughly that of a cup of coffee, so roughly two to three dollars per passenger.

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

Air Canada made $2 billion last year.

[Jeff Morrison]

They also faced a loss in their last quarter, I believe.

Let's not forget that, of course, airlines, as one of the most, if not the most, hard-hit sectors during the pandemic, have taken on huge amounts of debt. I believe you heard that from one of our members, Air Transat. I would question the premise of your question. It would be—

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

I think, Mr. Morrison, it's a fair response. I accept that, first of all, some companies are more profitable than others, and that the airline sector as a whole went through an incredibly challenging period coming out of the pandemic, but the question still stands, because it's about transparency and the fact that you have private companies, in some cases publicly traded companies, but there's not a lot of transparency in terms of how pricing is set. I don't see where the incentive lies to lower prices in the absence of competition.

The challenge we're seeing in these regional and rural markets is that, first of all, the market isn't big enough to sustain two airlines. Secondly, when a little upstart local company comes on the scene, they face seemingly predatory behaviour from the bigger airlines. We have story after story of being forced out of these smaller markets.

Maybe it's a rhetorical question, because I'm not sure there's a clear answer, but there has to be a quid pro quo that, if the Canadian public subsidizes the sector and helps these companies become more viable and profitable, there has to be some assurance that those savings are passed on to customers in rural communities, like the ones I represent.

I bet the chair is telling me my time's up. I see red.

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Peter Schiefke]

If he doesn't look at me, it doesn't exist.

Mr. Morrison, I guess I'll turn it over to you for a response, or is there anybody in particular I can give 15 seconds to, Mr. Bachrach?

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

Sure, give them to Mr. Morrison, since we seem to be engaged in this back-and-forth.

[Jeff Morrison]

I repeat what was said before: Nobody wants to see airlines fail. When Lynx failed, nobody raised any champagne glasses. As I said in my opening remarks, we want a competitive system. We want to see regional carriers, such as those around this table, succeed in a system in which all entrants have that same opportunity to succeed. I would argue that, absolutely, we want to see greater competition, but in order to do that we need a system in which it's encouraged, and we don't set up airlines to fail if they're entering into a system that, as we all talked about, has certain uncompetitive elements to it.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Morrison.

Thank you to all of our witnesses for sharing your expertise and your testimony with us today, and above all, for your patience.

With that, this meeting is adjourned.