Transport Committee on June 11th, 2024

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Okay.

I'm going to ask Mr. Kendall, who talked about the 737-200 series plane from Boeing, essentially 10 years ago now, no longer being supported for gravel kits. That's obviously the workhorse in the north.

What is the anticipated service gap between when that airframe is no longer going to be viable and when the new runway materials might come online? Are we looking at a crisis here where we're going to hit a major service gap for the north?

[Robert Kendall]

At this point, there are certainly enough.... I won't say “enough”, but there are runways that have asphalt, and they will operate aircraft that do not have gravel kits. So, Iqaluit, Inuvik, Whitehorse, Yellowknife, places of that nature.... Cargo will come in there. It will be off-loaded onto aircraft that can go to gravel runways. It's just that, with the pilot shortages and things and the crew-hour problems that exist, flights are reduced, and service is reduced. Some of the communities rely on air service 12 months of the year. If you get above 60° latitude, 12 months of the year everything comes in by air: passengers, cargo or what have you.

[The Chair, Liberal, Peter Schiefke]

Thank you.

[Robert Kendall]

If you're running with an aircraft that carries one-quarter of the load of a jet, then you need four aircraft.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Kendall. Thank you so much.

Thank you, Mr. Strahl.

Next we have Mr. Rogers.

Mr. Rogers, the floor is yours. You have five minutes, sir.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Thank you, Chair.

Welcome to all of our guests today.

This study is, as we say, focused on competition in the airline industry and what that might do in terms of improving services to rural and remote communities. Of course, we all know that the state of the airline industry across the country was impacted immensely by some of the challenges posed during the COVID era.

My questions will be directed to Mr. Wright.

Welcome, Reg, and thank you for being here today.

Gander, of course, was known as the crossroads of the world in a different era. It was probably the most important airport in eastern Canada for a long, extended period of time. International flights would be in and out of there regularly to refuel. The show Come From Away, which now plays in Gander on a regular basis, highlights the 9/11 period. Gander is well-known because of that.

The challenge, which you might want to talk about, Mr. Wright, and what I want to ask you about today is that I hear constantly from people in central Newfoundland about the difficulty of travelling in and out of Gander because of limited flights. The cost of tickets is astronomical at times. To fly from Halifax to Gander return costs over $1,000, for example. People say to me on a regular basis, “We need more competition. We need more competition for Air Canada as they fly in and out of Gander.” Kudos to Air Canada for keeping their services alive and keeping the airport operating.

Reg, what are the things that need to be done for an airport like Gander and all the regional airports across the country, if these airports are to survive? What needs to be done to improve the services to the people you serve and to address the complaints around competition? What are the things you would suggest to this committee that we include in a report to the federal government?

[Reg Wright]

That is an excellent point and those are excellent questions.

A broad assessment of airfares in markets that are considered monopolistic or don't have many of the nation's airlines there would be helpful. I do know that in our market there are a host of challenges, which you outlined, not the least of which can be pricing. Pricing can be an issue. That said, for the summer there's some good pricing in the market.

In a free market, the largest contributor to pricing is not going to be the stage length of the flight or any of those things. It's going to be the level of competition. It's not unlike a town with only one grocery store, where I expect that a head of lettuce is going to come at a premium. Really, it becomes incumbent upon these smaller communities to attract and retain competition in the market, which is really down to consumer preference and choice.

Some have been successful. We had competition in the market too. When WestJet had a presence here, I think the airfares came down almost 35%. Porter has the same effect. The issue right now is there are too many small airports courting and chasing carriers with a finite capacity for expansion. In some cases, too few pilots or airplanes are actually coming into new markets.

It's very much a tricky situation. I think it goes back to a point made previously around incentive or subsidy. That would be a shared effort among, perhaps, the province, country and airport authority, which can help de-risk airlines coming to new markets. Ultimately, a lot of them don't make money in the first year in a new market. If we could take some of the risk out of it and allow them to build traffic, I think they can become a fixture in the market. Certainly, that's what needs to happen. If we want to talk about ticket pricing, certainly fees and ancillary things are contributory, but competition is ultimately what will bring down airfare.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Reg, you made a comment about a renewed national aviation strategy. Do you want to elaborate on that?

[Reg Wright]

Yes, we were talking among peers, and it just seems overdue. I think we keep going back to the biblical age, but with some of these policies we view, profound things have happened in travel, aviation and technology over 30 years.

I think that part of any review of competition, looking at the blue sky agreement in particular informs competition and access to the nation. Those things need updating. I think it really needs to be a tail-to-nose review of what aviation means and all that, including things like pilot recruitment among young people.

It seems antiquated at this juncture, and I think it would be a great use of our collective time if we got all stakeholders around and articulated a north star for what the next 30 years should look like.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Wright.

Thank you, Mr. Rogers.

Mr. Lemire, you have the floor for two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Mr. Benedict, airport financing in Canada is heavily concentrated in the airports of the country's major cities. However, some regional airports play a key role in the economic and tourism development of remote regions.

I want to discuss the airports capital assistance program. We've met with various stakeholders who have told us that increasing the program's budget and reviewing its financing criteria would help develop and reinforce regional airports.

This program was introduced in 1995 and has operated on a $38 million budget that, according to the Canadian Airports Council, hasn't been increased and has remained at the same level for 30 years. Funding from the program is used to refurbish runway facilities, purchase life-saving equipment, fight aircraft fires, purchase heavy mobile equipment and improve airport security. In the council's view, it would cost at least $95 million to improve the small regional airports. The Union des municipalités du Québec believes that might help improve one airport a year.

Could the capacity to invest those amounts of money help your industry and lower costs to consumers?

[Sébastien Benedict]

Yes, definitely.

I'd like to point out something that people don't consider: International tourists don't travel to remote regions because it's complicated. However, an international tourist spends twice as much as a local tourist. In Quebec, we want tourists to leave the urban areas and travel to our remote regions.

It's essential that we invest in regional airport infrastructure, obviously, but everything related to this sector is just as important. The problem in the regions isn't just the airports. When an aircraft lands, that's all well and good, but there are no taxis, no rental cars, no shuttles and no buses to take passengers to their destination. There's no local or regional transportation for travellers, unless they've bought a specific package that provides for businesses to pick them up. That ecosystem will have to develop if we increase the number of tourists travelling to the regions.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Daniel Côté, the mayor of Gaspé and chair of the air transport committee at the Union des municipalités du Québec, appeared before this committee and suggested that the regions should be allowed to set up and administer mandatory tendering in order to serve more remote communities.

Should we decentralize the management of regional airports, hand it over to a community and let that community select an air carrier and even negotiate the services it could provide in the region? Do you think that might help our regional airports?

[Sébastien Benedict]

To be honest, I don't really have any expertise in that area.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Benedict.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Lemire.

Next is Mr. Bachrach.

You have two and a half minutes, sir.

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

Thank you, Mr. Chair.

I have another question for Mayor Pond. It's about the price of air travel out of Prince Rupert.

I just looked at flights this Friday from Prince Rupert to Vancouver, and the price is $594. From Vancouver to Toronto, it's $625. The cost of a one and a half hour flight in a turboprop is approximately the same as a flight across the country which takes four and a half hours.

I'm wondering if that is relatively normal in terms of what people are paying to fly to Vancouver from Prince Rupert.

[Herbert Pond]

Yes. You're familiar with any coffee conversation, and it sounds very familiar to what I'm hearing from my colleagues on this committee here. People compare that they could have gone to Switzerland for the price of a round trip to Vancouver. Yes, absolutely.

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

Because the operation of a municipal airport really depends on airline traffic—both landing and airport improvement fees are done on a per passenger basis—how do the current service levels affect the financial viability of the Prince Rupert airport?

[Herbert Pond]

It places the burden on the taxpayer. We have a life-saving requirement to keep that airport operating, so that burden that's been shifted over the years from other levels of government down has only one place to land and that's on the local 12,000 people who are trying to do the Lord's work here on the north coast in terms of building Canada's great gateway.

I'm a fan of a lot of what's taken place but, at the margins, we have to recognize that it is not a great model for how you keep these essential services operating. If it depends on user fees and traffic, you're now fighting amongst communities for that traffic, and it's a race to the bottom. In the end, it is not good public policy.

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

Mayor Pond, are you saying property taxpayers currently have to subsidize the airport operations on account of the low traffic volumes?

[Herbert Pond]

That's correct, absolutely.

I think we are probably into it for about a million dollars a year right now. I don't even want to think about what would happen if we lost the one remaining flight—and we've seen it. When you get to one flight a day, we've seen in other communities that it becomes unsustainable, because now you're distributing the cost of operating that airport across those few users that are available.

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

Thank you very much.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Bachrach.

Thank you, Mayor Pond.

Next we have Mr. Davidson.

Mr. Davidson, the floor is yours for five minutes, sir.

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

Thank you, Mr. Chair.

I want to thank our witnesses, and especially Mr. Benedict, on behalf of tourism from coast to coast to coast, and in the great province of Quebec, and obviously in the province of Ontario.

Do you consider it's both the Province of Quebec's and the federal government's job to promote tourism?