Transport Committee on Dec. 13th, 2024

[Annick Guérard]

I was just saying that, depending on the routes, people will travel with different baggage patterns, which is totally normal. Since we operate mostly long-haul flights, half of the time people will bring a carry-on and half of the time they will register their baggage in cargo.

[Leila Dance, NDP, Elmwood—Transcona, MB]

Perfect. Thank you very much.

Porter, have you had a chance to give a number on how many people fly without carry-on?

[Michael Deluce]

I've provided a number, which is that of the people who purchase basic fares with Porter, 8% bring a carry-on bag.

[Leila Dance, NDP, Elmwood—Transcona, MB]

I'm just trying to understand here what that actually looks like. The way I see it, more people will end up buying the basic amount or the baseline, whatever the baseline is for each—I know everybody has kind of a different name—and then will be paying for those add-ons.

What does that look like when we pay the base amount and then start adding in the cost for carry-on, the cost for checked bags and the cost for seat selection?

Does it end up costing travellers more once we start adding all those fees on?

[Alexis von Hoensbroech]

It's a bit like when you buy a meal at McDonald's. If you buy a cheeseburger, fries and a Coke separately, it's going to cost more than if you buy all the three as a value fare. It's the same here. If you buy an ultrabasic and then add everything you could potentially add, it will cost more than if you just upsell to the next higher fare class, which is an economy fare.

That's what many do. If they want to bring this, then they buy the economy fare and they get it all as part of it.

[Leila Dance, NDP, Elmwood—Transcona, MB]

You told us that a lot of airlines are making money on add-ons. If you're making the vast majority of your money on these add-ons, then isn't that encouraging airlines to just create more add-ons, so that passengers end up paying more in the long run?

[Alexis von Hoensbroech]

If airlines didn't receive revenues in optional add-ons, they would have to raise their base fare, which would be mandatory for all passengers, so again, it's all about choice. We want to offer the lowest price to those who care about the lowest price, and we offer a higher service set at a higher price for those who can afford it, and that's the right thing to do.

You want those people who are ready and willing to pay more to subsidize those who can afford the least. By the way, that's exactly what you do in your tax system. You tax those who can afford it more than those who cannot afford it. That's the right thing to do, and that's exactly what we are doing as an airline.

[Leila Dance, NDP, Elmwood—Transcona, MB]

Again, I'm going back to WestJet, unfortunately, just because he provided this information.

Let us talk about getting rid of the user-pay model. Who ends up paying for the fees, like security screening and any of those things? As a taxpayer, where does that money come from?

[Alexis von Hoensbroech]

I didn't say to get rid of the user-pay model; I said to reform it.

I worked in Europe for many years, and Europe also has a user-pay system, but interestingly, the fee per passenger is about half of what it is in Canada, and the infrastructure is better.

I think it's good to think about how this entire sector is being governed because the way it's being governed actually has created a sky-high cost structure for a below-average infrastructure, and that's a problem.

I'm not saying this for any reason other than because I believe that there is a great opportunity to improve air travel for Canadians, to have better infrastructure, better service and at least a portion of the market that receives lower ticket prices.

[Leila Dance, NDP, Elmwood—Transcona, MB]

What would be the one thing that the government has to change that would lower these fees for the average Canadian?

[Alexis von Hoensbroech]

We have made a few policy proposals. First, the government should stop collecting airport rents from the airports. They pay almost half a billion dollars in airport rents. The airports should keep this money to lower the airport improvement fees, repay their debt or invest in infrastructure, but not to fund the federal budget—that's number one.

Second, the government should do a proper review of how to properly set up a user-pay system or, potentially, like in the U.S., a partly taxpayer-supported system. That's a choice for the government. Either way is good, and either way would be better than what we have.

Third, until such a review has been completed, there should be no additional financial burden added to the sector because every burden that's being added to the sector will end up in the ticket price.

[Leila Dance, NDP, Elmwood—Transcona, MB]

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Dance.

Next, we'll go to Mr. Vis.

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

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Mr. Chair. I'll be directing my questions to WestJet to begin.

I'll give an example about the sky-high user fees and charges. I parked my car at the Vancouver airport on December 8, and I picked it up on December 12 at the parkade adjacent to the departures area. The Vancouver airport authority charged me $325 to park my car, they doubled those costs without telling anyone. Previously, I was paying $177 to park my car there, now it's $325, and they did that during the holiday season, so I take your comments about sky-high user fees very seriously.

How much business do we lose to the United States because of the sky-high airport fees that we're paying in Canada?

[Alexis von Hoensbroech]

There are a couple of airports that are very close to the U.S. border, in Buffalo and Bellingham, just to name two. We estimate that about seven million Canadians go across the border and fly from U.S. airports close to the border to enjoy the lower fees and charges that those airports offer. That's a border leakage that is detrimental to Canada because those people just go to the United States. They improve business in the U.S., and they are a loss for Canada.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Is it safe to say that there would be a positive economic impact in the Fraser Valley if the Government of Canada reformed its user fee model and reduced its airport rents to encourage Canadians to use Canadian companies and Canadian airports?

[Alexis von Hoensbroech]

Yes, 100%. That's a correct assumption. There would be significantly more....

By the way, it's also interesting that almost no low-cost carriers from the U.S. fly into Canada because they want to avoid the high cost in Canada and the high regulatory risk that comes from flying into Canada.

We estimate that if the government-controlled fees and third party fees and charges were half of what they are, which would be more in line with other countries, this would stimulate enough demand to fuel another airline the size of WestJet. To reframe it, there are more than 10 million Canadians who are currently fenced off from using airplanes because of this high price hurdle that's imposed from third party fees and government-controlled fees and charges. That's the reality in this country, and that's what we collectively need to work on.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

High taxes and high user fees have a negative impact on the airport sector in Canada, both in terms of passengers and the offshoots in our broader economy where we have those key airports like in my community of Abbotsford.

[Alexis von Hoensbroech]

Exactly, and they fence off low-income Canadians who cannot afford a ticket because this price is just too high.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you.

My second question to WestJet is regarding the carbon tax. When a future Conservative government axes the carbon tax, can WestJet assure that the ticket costs will go down as a result?

[Alexis von Hoensbroech]

Yes, we will. So far, though, the carbon tax is $10 million, because it's only confined to intraprovincial flying. As I said before, this is going up by more than tenfold over the years to come with all the provincial, national and international efforts to reduce carbon emissions, so it will become a very big burden for airlines and therefore for passengers if this trend continues.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Can I safely say to my constituents who fly regularly for business to Edmonton and Calgary from Abbotsford that, by axing the carbon tax, they will see a reduction in the cost they're paying on their airline ticket?

[Alexis von Hoensbroech]

There's no carbon tax between Abbotsford and Edmonton, because this is an interprovincial flight.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

My apologies, thank you.

[Alexis von Hoensbroech]

It applies from Prince George to Vancouver, yes.