Transport Committee on June 13th, 2024

[Andy Fillmore, Liberal, Halifax, NS]

Thank you. I applaud you for looking elsewhere for solutions. If the wheel is already invented, that's great.

I'll turn back to Canada, our own experience and what we may have learned, for example, from the recent shutting down of Lynx Air, which clearly exposed the financial vulnerabilities of the smaller northern and remote carriers.

What lessons have we learned, would you say, from the Lynx Air case that we could change or do differently, moving forward, to better support the smaller carriers?

[Serge Bijimine]

There are a couple of things.

One, it was unfortunate that Lynx went out of business. Back in 2018, we did change the rules around foreign ownership. It went from 25% to 49%, with the caveat that no single entity could control more than 25% of a share. When we did that, we did see new entrants—Lynx and others—but we believe that the pandemic had a major impact on Lynx's ability to survive. They launched; the pandemic started, and as with all other airlines—but for a new entrant, even more so than for those already established—I think that proved to be quite a lot to take on in that period. When the recovery started, they were in the position of having to make a business decision to stay or to fold, and I guess they made the decision to fold.

There are a couple of key takeaways from us and from our perspective with respect to what we're hearing.

Definitely, on the foreign ownership side, we made changes in 2018. We're continuing to look and see, but as a footnote, in the U.S., the foreign ownership is at 25%. In Japan, it's at 33%, and in Europe, it's at 49% as well. Foreign ownership changes may not be the solution, so we're really looking at different ways and different things we could do to make sure we provide the environment for these ultra-low-cost carriers to survive.

[Andy Fillmore, Liberal, Halifax, NS]

Okay. Thank you. I have a feeling I'm out of time.

[The Chair, Liberal, Peter Schiefke]

You are indeed, Mr. Fillmore. Well done. Thank you very much.

Mr. Barsalou‑Duval, you have the floor for six minutes.

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

Thank you, Mr. Chair.

I would like to welcome the witnesses who are here today, starting with Mr. Bijimine, who I'd like to wish a happy birthday.

Mr. Bijimine, you said in your opening remarks that you think regional air transportation poses a complex problem for which there isn't necessarily an easy solution.

In this study and the previous one, we've heard from a lot of witnesses so far, and connections can be made between the two studies. The major point that came out of the testimony and that seems to be the consensus is the fact that the operating costs of air carriers in the regions are enormous and that this undermines their profitability.

The more costs are added to the operating costs, the more difficult it becomes for carriers to be profitable. Almost all the witnesses have said that regional air transportation is not a simple service whose problems can be solved only by following the user‑pay principle.

Is that how you see the situation at the department?

[Serge Bijimine]

Yes, we certainly understand that regional transportation and transportation in the north present unique challenges. It's different from flying between Toronto and Montreal, for example.

We have programs in place to deal with obvious problems, such as the remote air services program. This program often enables us to provide assistance to the communities.

We provide funding for airplane strips to allow planes to land.

It allows a number of communities to have access to flights in their region.

We also try to strike a balance between protecting passengers, by applying the air passenger protection regulations, and the burden on small carriers, which must not be undue.

When it comes to small carriers, booking changes and refunds, for example, fall into a new category. There are several ways in which we try to distinguish between large and small carriers.

We also have specific programs for the north and the regions.

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

There may be existing programs, but they don't seem to have been successful enough. It doesn't seem to be a success, since it seems that the situation in the north is still critical. I suppose more can be done.

The question I'd like to ask you was raised earlier by a colleague and has to do with why the minister isn't here. You're here representing the Department of Transport. However, Mr. Rodriguez didn't respond favourably to the committee's invitation.

Did the Minister of Transport tell you why he didn't want to testify before the committee?

[Serge Bijimine]

No, he didn't. I think it's because of his extremely busy schedule. I'm sure that if he had been able to come and testify before the committee, he would have done so. I can see how busy he is. He is also the political lieutenant for Quebec.

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

He is indeed the political lieutenant for Quebec. A task force on air transport has been set up by the Government of Quebec, and the federal government was invited to participate in its work. However, he's not at the table. Yet it's a federal responsibility.

Do you know why the minister's office decided not to participate in the Quebec initiative?

[Serge Bijimine]

What I can say on that is that there are two task forces.

First, there's the Council of Ministers, which brings together the ministers of transport of all the provinces and territories. They discuss all the issues you've raised. These issues are of great concern to Quebec, which shares solutions with other provinces. So there's a forum that brings other people together. Quebec is present at the Council of Ministers.

Second, deputy ministers meet quite often to discuss issues such as regional connectivity and the recovery of the air sector.

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

Whatever the case may be, all the people around the table, who represent, for example, the Alliance de l'industrie touristique du Québec, the Union des municipalités du Québec or Quebec airports, would like to be able to speak with federal representatives. If the federal government were at the table, it would help everyone better understand the limitations or challenges at the federal level. Just because the federal government is at the table doesn't necessarily mean that it's committed to doing exactly what some of the stakeholders are recommending. However, it allows for a dialogue.

I get the impression that Quebec is working on its own and that the federal government is somewhat interested in what's happening there. In any case, it's more or less present. This doesn't seem to show that the federal government is proactive in matters that affect Quebec.

[Serge Bijimine]

I think we're proactive on issues that affect Quebec. In addition to the forum, bilateral meetings are held with Quebec representatives to discuss problems in the airline industry. We meet not only with people from the province of Quebec, but also with stakeholders in the Quebec airline industry. The minister is in constant contact with airlines, such as Air Transat and Air Canada, as well as with representatives of the Montreal and Quebec City airports, and so on.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Barsalou‑Duval.

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

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

Thank you, Mr. Chair

Welcome back to the committee, Mr. Bijimine. Happy birthday.

Welcome to your colleagues as well.

This issues of regional connectivity and affordability are ones that really affect folks in the region I represent, as you well know. In your opening remarks, you talked a bit about the trend since the pandemic. Obviously, the pandemic was very challenging.

On the longer-term trend, when it comes to connectivity in Canada, does Transport Canada have a line of sight on what that trend has been, particularly since deregulation in the 1980s? Have rural communities in Canada received greater service from the air sector since deregulation?

[Serge Bijimine]

We could definitely come back to you with a paper that provides the specifics on what you've asked, which would be from the eighties to this point now. We could do that.

On connectivity, more recently—for the pandemic and postpandemic—we are tracking it. When we track it, we're looking at the number of flights from and to communities, the number of available seats to those communities and the number of new destinations from those communities. We're tracking all of those very closely, and reminding our air sector and air carriers that maintaining a reasonable amount of connectivity is key, especially in Canada.

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

My understanding is that since the pandemic, the recovery has been proceeding rather slowly. Some communities are doing better in the recovery than others, but I'm interested in whether Transport Canada even has a sense, looking at the past 10 years, if communities are seeing better connectivity in Canada, or are you working so hard on this because the trend is going in actually the opposite direction? Certainly, anecdotally, in the communities I represent, there are a lot of examples of communities that are seeing less service than they had 10 years ago.

In the community I live in, 10 years ago there were two airlines, each with two scheduled flights per day to Vancouver. Now there's one airline, and for parts of the year, there's only one scheduled flight per day to Vancouver. There's been a significant reduction in service. Other communities have seen the same thing. Overall, is the trend going in the wrong direction? Is that why Transport Canada is seized with this issue?

[Serge Bijimine]

We are seized with it. I think what you've just said—

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

It's more the previous question, Mr. Bijimine: In which direction is the trend going?

[Serge Bijimine]

What I was going to say is that we're seized with it.

The way you've described it basically is exactly what we're seeing. It's not a uniform connectivity happening. There are certain places that are experiencing more connectivity and other places that are experiencing less connectivity. It just hasn't been a balanced approach.

We would be happy to look at very specific communities in answering that question, but it hasn't been one size fits all. There have been some communities that have been, and are being, more connected, and there have been other communities that frankly have lost connections.

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

Is it a similar mixed story when it comes to affordability? I ask because of course that's the other aspect of this challenge. It's not just connectivity; can people afford the flights that are being offered?

[Serge Bijimine]

That's another good question as well.

I think the question you're asking here, if I understand, is whether the plane tickets have been going up or down in the last 10 years. We're happy to provide that specific as well. I don't have the numbers here with me, but I'm happy to provide you with that specific—

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

Mr. Chair, could we just note that this information would be super-valuable for this study? If Mr. Bijimine would be willing to provide it, that would be great.

Yes, certainly the observation is that in communities where a monopoly exists, the airlines seem to be able to charge whatever they figure the maximum is that people would be willing to pay, and we see that the cost of flights in small airplanes for short distances is exorbitant in many cases.

I'm curious. In Transport Canada's view, what is the main approach by which we can achieve affordability for air travellers in rural communities? There are different options, different tools and different approaches. After deregulation, I think the promise was that increased competition was going to deliver this panacea of affordable airfare. It hasn't really done that in very many places in rural Canada.

What are the other options?

[Serge Bijimine]

I think that through this committee and the witnesses you've heard.... We've read the witnesses' proposals, including interlining and various other potential solutions.

Our commitment, as I said, is that we're here to understand more and learn more, which will then allow us and help us to do our policy work to come up with some recommendations.

I totally agree. Connectivity and affordability in Canada are issues that need to be tackled. They're not easy ones. It's a complex solution, but we're committed to looking at it, we have been looking at it and we'll continue to do so.

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

What's the timeline for that work?

You've indicated that you're listening to the committee and then you're going to be making recommendations, presumably to the Minister of Transport. When can Canadians expect some sort of regulatory or policy change that will drive affordability and connectivity?

[Serge Bijimine]

I don't have a timeline per se at the moment, but I can commit that we're hard at work, and our hope is to get this work done as quickly as possible.