Transport Committee on Dec. 13th, 2024

[Michael Rousseau]

They pay a $35 fee to check it in, yes, that's correct.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Okay, thank you.

Your predecessors at WestJet made an excellent point of unbundling the various elements, and that makes sense to me, but my fear is that, instead of those dollars going back to those folks who want to travel without a carry-on, they will just go to Air Canada's bottom line.

I hope that you could assure Canadians and assure the transport committee members that the difference, that delta, that $35 difference in fee, will result in your fees dropping on your basic tickets to North American and sun destinations by $35 on average. If not, why not?

[Michael Rousseau]

That's going to be a function of the competitive marketplace that we operate in. As I mentioned in my opening comments, we have three very good competitors in Flair, WestJet and Porter, so the basic fares, now that they're completely comparable, will be also priced probably comparably as well.

Again, we'll see how the market reacts with four competitors offering the same product in a very transparent fashion. I cannot put forward any type of potential price changes, because it's against the law for me to do that, frankly, but the market will determine that now that the market is more competitive.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Clearly you have done internal work that would show the revenue that will be generated by charging basic ticket fares $35 to check a carry-on item.

I would remind you, sir, that this is not just a kangaroo court; this is Parliament here, and we have the ability to compel any document that we require. I would ask you again: What will be the revenue generated—and you've done these calculations—by the carry-on fee?

[Michael Rousseau]

I don't have that information. I can certainly refer it to Mark Galardo, our EVP of network and revenue management, to provide a little more detail.

Certainly some of the information that you may ask for will be confidential and commercially sensitive, but we are certainly willing to work with the committee to provide the information if it's not commercially sensitive, if not today, certainly shortly after the meeting.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you, and I appreciate that.

This committee does have the ability to keep information confidential if it deems it so, so that might be a solution, and we would definitely like that.

I'd like to just flip back to pricing again.

I know as well that, as a major corporation, a billion-dollar corporation, you would have done pricing analysis, economic analysis, as to what the introduction of a carry-on fee would do to pricing. I don't think you just wake up in the morning and decide the price of a flight from Vancouver to Winnipeg.

WestJet told us that the difference between their ultrabasic and their basic was 14%. What will be the difference between the flight costs on average on January 2 and January 3?

[Michael Rousseau]

It's going to be a function of the competitive forces, but possibly Mark Galardo can provide a little more detail on that type of question, if I can refer that to him.

[Mark Galardo, Executive Vice-President, Revenue and Network Planning and President, Cargo, Air Canada]

The work that we did was to assess how to make sure that Air Canada is very competitive in the domestic market. Our view was that offering this product would make Air Canada competitive and would, therefore, obviously help its revenue streams be competitive. That's the assessment that we did, and we deemed that being uncompetitive was not a good outcome for Air Canada.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Mr. Galardo, I think you might have given away the plot a little bit there. You just said that the reason you put in a fee, or removed carry-on baggage as part of a basic fare, was to increase revenue. That's why you've done this...?

[Mark Galardo]

No, I said we did that to remain competitive with changing market forces in domestic Canada.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I think if we checked the Hansard, it might say it a little bit different than that. But that's fine.

I would, then, ask for unanimous consent for a motion asking Air Canada for documents with respect to the revenue increase from the removal of carry-on items from their basic fare as well as their impact on pricing.

Do I have UC for that, Mr. Chair?

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Lawrence.

We'll stop the time.

Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

If he's going to ask for that from Air Canada, he has to ask for that from all the carriers.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

So I don't have UC.

[Vance Badawey, Liberal, Niagara Centre, ON]

You don't for that one, but if you include all the air carriers, you can have all the UC you want.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Sure.

[The Chair, Liberal, Peter Schiefke]

We have a motion on the floor to ask for all documentation relating to the revenues generated from the payment of carry-on baggage or the projected income calculated....

Do I have unanimous consent?

Seeing no objection, that is so carried.

Thank you very much, Mr. Lawrence. Your time is up.

Next we will go to Mr. van Koeverden, who is online.

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

[Adam van Koeverden, Liberal, Milton, ON]

Thank you very much, Mr. Chair. I appreciate the opportunity to address the transport committee today.

My questions will be for the CEO of Air Canada, Mr. Rousseau.

Mr. Rousseau, thank you for coming to committee today. I understand that in 2023, Air Canada reported a profit of $2.28 billion, a 32% increase from 2022. Is that more or less correct?

[Michael Rousseau]

I believe that's correct. Those were two totally different years, one just after the pandemic.

[Adam van Koeverden, Liberal, Milton, ON]

Of course. Congratulations on the profits.

I understand that your executive compensation was over $12 million last year. Is that correct?

[Michael Rousseau]

It is public record that my compensation, both variable and fixed, primarily variable, was roughly $12 million.

[Adam van Koeverden, Liberal, Milton, ON]

Did that include your bonus?

[Michael Rousseau]

That included my bonus.

[Adam van Koeverden, Liberal, Milton, ON]

Quick math tells me that in the first week of January in 2024, you earned more than the average Canadian will in all of 2024. Considering the current cost of living crisis that Canadians are experiencing and the necessity of air travel in Canada, do you think that's fair?

[Michael Rousseau]

That's a difficult question to answer from a personal perspective. I'm paid a competitive rate versus other CEOs who have similar roles and responsibilities.