Transport Committee on May 16th, 2022

[The Chair, Liberal, Peter Schiefke]

I call this meeting to order.

Welcome to meeting number 19 of the Standing Committee on Transport, Infrastructure and Communities.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, February 3, 2022, the committee is meeting to study reducing red tape and costs on rural and urban Canadian airports.

Today's meeting is taking place in a hybrid format, pursuant to the House Order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application.

Per the directive of the Board of Internal Economy on March 10, 2022, all those attending the meeting in person must wear a mask, except for members who are at their place during the proceedings.

Before beginning, I'd like to make a few comments for the benefit of the witnesses and members.

Please wait until I recognize you by name before speaking. For those of you participating by video conference, click on the microphone icon to activate your mike. Please mute it when you are not speaking. Interpretation is available for those of you joining us on Zoom. You have the choice at the bottom of your screen of floor, English or French audio. For those in the room, you can use the earpiece and select the desired channel.

As a reminder, all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can, and we appreciate your patience and understanding in this regard.

Appearing before our committee today are Joseph Sparling, president of Air North; Monette Pasher, interim president of the Canadian Airports Council; Anthony Norejko, president and chief executive officer of the Canadian Business Aviation Association; and Robin Guy, senior director of transportation, infrastructure and regulatory policy from the Canadian Chamber of Commerce. Hopefully, from the Northern Air Transport Association, we have Mr. Glenn Priestley, executive director. We're having some trouble getting him on the line right now. We also have Julian Roberts, president and chief executive officer of Pascan Inc.

Witnesses, I would like to welcome you before the committee today. We very much appreciate your time and the testimony that you will be providing us today.

We will now begin with the opening remarks, starting with Air North for five minutes.

The floor is yours.

[Joseph Sparling, President, Air North]

Good afternoon, and thank you for giving me this opportunity to speak with you today.

I'm Joe Sparling, president of Air North, Yukon's airline. We are a regional airline based in Whitehorse, Yukon. We currently provide scheduled air service between Whitehorse and Dawson City, Old Crow, Inuvik, Vancouver, Victoria, Kelowna, Edmonton, Calgary, and seasonally, Yellowknife, Ottawa and Toronto.

Because people like to travel, airfares are a popular topic for conversation, and more often than not, the conversation involves some unhappiness with what are perceived as high airfares in Canada, this notwithstanding that the individual who is unhappy with the cost of an air ticket might easily spend an equivalent amount on dinner and entertainment without batting an eye. There's simply no comparison in terms of the complexity or cost of the two products, yet airfares seem to take all the heat.

Having said that, Canada seems to have acquired a reputation for high domestic airfares, and I'm pleased to see that your study seems to be directed toward seeing what responsibility the government might take for this.

Airfares in Canada are often compared with those in the United States, and there's plenty of evidence to suggest that domestic airfares are lower in the U.S. than in Canada simply because the U.S. provides a lower-cost operating environment for airlines than does Canada.

A 2017 study showed that, between airport land rents, the air traveller security charge and the excise tax on jet fuel, the federal government directly or indirectly collects close to $1 billion from air travellers in Canada each year. This amounts to almost $15 per passenger and compares with annual subsidies paid to Via Rail of about $500 million and annual subsidies of about $400 million paid by the U.S. government to the nine largest U.S. airports.

Higher federal costs and fees in Canada are a major contributor to average operating costs for Canadian air carriers, which are more than 30% higher than average costs for the 11 largest U.S. carriers, according to a 2016 Oliver Wyman study. This naturally results in higher airfares for Canadian carriers, which, in turn, makes it more difficult for Canada to be competitive as a visitor destination. This also results in more than 5% of Canadian travellers choosing to drive across the border to a U.S. airport for their travel. Clearly, a major problem in Canada is not lack of a low-cost airline but rather lack of a low-cost environment for airlines.

A transportation network is very capital-intensive, and, clearly, somebody needs to pay for the infrastructure and operating costs, but it seems that, with respect to aviation, Canada has taken a different approach than the U.S., and a different approach than with rail, highway and water transportation. This may be because air transportation is viewed as more of a luxury than a necessity, but I think that our experience with COVID has shown us otherwise, particularly in northern and other rural areas.

Yukon represents about 5% of Canada's land mass, but with a population of just over 40,000 people, we represent only about 0.1% of Canada's population, which means that we average about one person in every four square miles. With a large land mass, a small population, a limited highway network and the nearest major centre almost 1,000 miles away, Yukoners rely heavily on air transportation for the essential movement of passengers and cargo and for economic development initiatives, primarily in the mining and tourism sectors. Other rural Canadians are similarly dependent on safe, affordable and seamless air transportation networks for quality of life and economic prosperity.

Because of this, it would be more appropriate to consider air transportation networks, particularly in the north, as essential infrastructure much like highways, ferry systems and railroads and to fund airport and navigation services from general revenues rather than directly or indirectly from the users of these services. While, to a large extent, this ship sailed long ago, it's not too late for the government to address the problem by providing flow-through concessions to airports and to Nav Canada and by providing tax concessions to airlines.

Finally, in today's environment, an air travel cost discussion would not be complete without addressing fuel costs, which have almost doubled during the past year, with the largest increases occurring in the last few months. It's disappointing that, as Canadians, we've allowed our plentiful natural resources to be controlled by foreign interests. High fuel costs are driving inflation and stifling economic recovery, and we have, over many years, done this to ourselves. I hope we learn from it.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Sparling.

From the Canadian Airports Council, we have Monette Pasher.

Ms. Pasher, the floor is yours.

[Monette Pasher, Interim President, Canadian Airports Council]

Thank you, Mr. Chair.

Members of the committee, on behalf of the Canadian Airports Council, thanks for the opportunity to join you today. It's a pleasure to speak with you about the ways in which our sector could benefit from reduced red tape and the steps that could be taken to ensure that Canadians, in both rural and urban parts of the country, will have access to affordable, competitive and modern air transportation into the future.

I'd like to start my remarks by putting the sector into perspective and providing a snapshot of where we stand. Canada's airports are crucial transportation hubs that drive economic development in communities across the country. They are gateways to trade, bridges for connecting people with colleagues or loved ones, and engines of economic activity in cities and towns in all corners of Canada.

It is also important to consider our model. Airports have paid more than $4 billion in rent to the federal government since our structure was created back in 1992. That rent is a significant contribution to government, but only a fraction of those funds contributed to government are going back into the aviation system.

In many ways, Canada's model empowers airports with the tools to chart their own paths. By operating as not-for-profits and relying on passenger traffic for 90% of our revenue, airports can create cash flow tailor-based on the users, reflecting the services that are needed and the travellers who use them the most. Our corporate structure also means that, as opposed to delivering dividends to investors, airports reinvest their profits directly into the communities where they operate. This means that, in more ways than one might think, airports serve as the engines of the local communities they call home.

The pandemic has been very hard on our sector. It has been for everyone, of course, but because airports are the hubs in an ecosystem of smaller businesses, there's been a cascading effect. For months the number of commercial flights was tightly constrained. The economic benefits airports typically deliver to their surrounding communities virtually disappeared. As a sector, we lost out on more than $4.6 billion in revenue and took on an additional $3 billion in new debt just to get throughout the pandemic.

We are starting to climb back, but the disappearance of so many routes during the pandemic and the pressure of new debt means that airports of all sizes will need to carefully weigh which services they can support to reinstate as we move forward. The federal government can play a critical role in helping airports navigate that path ahead by making refinements to the tools they've already created.

Two of those stand out for us. One is the airports capital assistance program, ACAP, which was designed to help Canada's 200 smaller airports. The other is the regional air transportation initiative, RATI, which is a newer program delivered by the regional development agencies across the country. These are essential programs, but they need refinements if they're going to deliver on their respective purposes.

In the case of ACAP, for 20 years of the program's 27-year lifespan, its annual funding has been frozen at $38 million annually. We estimate that, before the pandemic, ACAP would have needed $95 million more annually just to keep pace with inflation and the regulatory requirements at small airports. The 2020 fall economic statement injected an additional $186 million in this program over two years starting in 2021. It also expanded that program eligibility to support the NAS airports with fewer than one million passengers.

With respect to RATI, the program was created for COVID recovery, with $206 million over two years. It was distributed from the six RDAs across the country. We propose that the program be reinstated, capitalized and extended for five years so it will have a meaningful impact and achieve its goal of helping the sector recover with regional connections.

Canada's economy and people need a competitive and economically resilient aviation sector.

I hope this gives committee members a helpful perspective. We're grateful for the opportunity to discuss it further today.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Pasher.

From the Canadian Business Aviation Association, we have Mr. Anthony Norejko.

Mr. Norejko, the floor is yours.

[Anthony Norejko, President and Chief Executive Officer, Canadian Business Aviation Association]

Good morning.

Thank you, Mr. Chair, for your invitation to appear before you to discuss ways to reduce red tape at urban and rural Canadian airports. I'd like to begin by telling you a bit about business aviation and how our sector aligns with and supports the larger aviation community.

The Canadian Business Aviation Association was founded in 1961 and represents Canada's $12.1-billion business aviation sector. It has over 400 members across the country, including corporate flight departments, flight management companies and entrepreneurs who use over 1,100 aircraft to conduct and grow their businesses.

Given Canada's vast size, complex geography and small population, business aircraft have been a competitive advantage for many Canadian companies. These corporate aircraft move at the speed of business, allowing Canadian companies to compete on the world stage, while serving the local needs of their communities. I know this from personal experience. As a pilot for a major Canadian retailer, I flew personnel to locations in smaller Canadian communities like Yorkton, Saskatchewan, Campbell River, B.C., Summerside, P.E.I.; and all the places in between. Flying commercially would have added hours and, most often, days to our itinerary.

COVID-19 has forced more travellers to reconsider how they go about their business. The litmus test for these time-cost benefit exercises revolve around three key themes: customer experience, access and price.

In fact, recent studies and media reports have confirmed what we already suspected, which is that Canadian businesses are increasingly looking to business aviation, whether as charters, fractional or full ownership, as a permanent part of their travel needs. Because business aviation is becoming even more embedded in Canadian transportation, efficiencies at the airports and the integrity of the entire aviation system is of paramount importance.

I recently published an article in The Hill Times stating that Canada requires a whole-of-industry, strategic aviation policy focusing on six key areas. These are the role that governments play, our airports, the airlines, all air operators, air navigation service providers, and manufacturing and maintenance. It is within this context that I would like to address cost and red tape at airports.

As you know, airports are an essential part of a community's well-being. Not only do they enable passenger and cargo flights, but they also deploy services such as medevac, organ donations, police services, military search and rescue, firefighting and other lifesaving activities.

COVID-19 exposed a fundamental weakness of our air user-pay system: It only works if there are revenue streams. With demand down by over 90% for the better part of two years, every partner in the airport ecosystem—including the airports themselves, Nav Canada, CBSA and CATSA—is struggling to rebuild capacity. Rural and urban communities face increased pressure for service restoration, because of the aircraft upgauging decisions taken by the airlines.

We have a long way to go before we really recover. For example, it may surprise you to learn that not all CBSA airport stations are open. Since we are only a few weeks away from peak summer holiday travel, this can and will have negative implications for local tourism and trade. After two years of painful shutdowns, we cannot afford to lose even one room night for anyone who wants to travel to and within Canada.

International business aircraft arrivals are handled differently from commercial, but are even more problematic. Business and charter flights are processed through the telephone reporting centre, known as the TRC. Our members are reporting system-wide difficulties of reaching anyone through TRC, causing delays that stretch into hours. Combined with the delays we are seeing at some of the international arrival halls at airports, CBSA has to move quickly or we risk harming Canada's international reputation as a place to do business.

Another issue affecting the entire sector is downloading yesterday's costs on today's passengers. For example, New Brunswick did not have a single airport opened for international arrivals, even as Canada began to open other destinations, such as Ottawa. Now, those New Brunswick airports, like others in Canada, are scrambling to make up lost revenue and repay COVID-related debts.

Even with the welcome government programs, such as the airport relief fund, the regional air transportation initiative and the increased funding of the airports capital assistance program, the greatest burden of cost recovery is still falling to the current airport users, including the business aviation community, which is still trying to recover.

Getting rid of red tape and unnecessary and outdated regulations would free up limited resources, reduce costs and allow us to move forward. I look forward to finding ways to make that happen.

Thanks again for the opportunity to appear before you. I welcome your questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Norejko.

Next, from the Canadian Chamber of Commerce, we have Robin Guy.

The floor is yours. You have five minutes.

[Robin Guy, Senior Director, Transportation, Infrastructure and Regulatory Policy, Canadian Chamber of Commerce]

Chair and honourable members, it's a pleasure to be appearing at this committee for the first time.

The Canadian Chamber of Commerce welcomes the opportunity to provide comment on the committee's study on ways to reduce red tape and costs in Canadian airports to make travel more affordable and accessible.

The Canadian aviation and tourism industries have been particularly hard hit by the COVID-19 pandemic. The myriad public measures taken to dramatically stem the transmission of the virus have resulted in a decline in travel by approximately 95% from 2019 levels. The protracted pandemic will result in Canada's airports losing more than $4.6 billion in revenue in 2020-21. It will add $3 billion in debt to stay open and maintain safe and secure operations. The impact of the pandemic on travel and tourism is greater than 9/11, SARS and the 2008 financial crisis combined.

Prior to the pandemic, the impact of Canada's airports on a national scale was major economic development of communities and regions across Canada. In 2016, Canadian airports directly contributed $48 billion in economic output, $19 billion in GDP, 194,000 jobs and $13 billion in wages. Airports' economic contributions are impressive, but even more impressive is their importance in supporting and enhancing opportunities for all Canadians and Canadian businesses.

As one of the most impacted sectors, the government's support to the sector during the pandemic was a lifeline that was much needed. As restrictions have eased, many challenges highlighted by the pandemic must be carefully examined to ensure the sector can continue to contribute to growing Canada's economy. The government must work with industry to address the challenges the sector faces as it rebuilds itself postpandemic.

In the time available, allow me to focus on a few points in the areas the committee has identified as points of interest.

First, on regulation, the government must review all regulations introduced during the pandemic. Throughout the pandemic, many new regulations were introduced in the spirit of public health. However, with high vaccination rates and an easing of many public health measures, some of these legacy pandemic regulations are outdated and are no longer required.

Our airports across the country, especially in major hubs like Toronto and Vancouver, are currently facing security staff shortages. We are also seeing massive delays in processing passports and NEXUS, which are being felt across our transportation system. These are costing our economy deeply and hurting our international reputation as a top destination for tourism, international conferences and sporting events.

The responsible thing to do is for the government to undertake a full review of these regulations and remove those that are no longer required.

Secondly, we need to ensure that our airports are able to operate in a postpandemic world, which means investing in their health. More specifically, this means investments in our airport infrastructure, technology and innovation. Low traffic volumes over the last two years have meant airports have had to delay much-needed capital projects as revenues have declined.

Programs including the airports capital assistance program and the airport critical infrastructure program have been extremely important and critical for Canada's airports during the pandemic. As the sector looks to come out of the pandemic, it's imperative that these programs are renewed.

The Government of Canada should reconsider its decision to merely defer 2021 airport rent paid by all airports. Instead, it should provide a full waiver of rent until travel numbers have stabilized, given the declining circumstances faced by airports. By agreeing to this, the government would allow airports to re-examine key infrastructure upgrades and focus on capital investments in much-needed new infrastructure and innovation.

Lastly, while our airports have started to open, the sector is far from recovered. Recognizing the importance of the travel and tourism sector to the national economy, the government must work with the sector on a vision towards recovery. We must look to creative and better ways to increase the passenger experience and make travel more affordable and accessible.

We need to ensure, as best possible, that passengers have a seamless experience from couch to cabin and from check-in to arrival at Canada's airports. The committee should examine what other jurisdictions, such as the United Kingdom, European Union and Australia, are doing in this regard, to ensure that Canada's rules and regulations are strengthening our transportation system. For example, the trusted traveller program has been successful at facilitating faster travel for low-risk individuals. Canada has not taken advantage of this program to the same degree as our partners to the south. In the U.S., TSA PreCheck is a way for pre-cleared travellers can navigate security faster, which reduces bottlenecks at security checkpoints while continuing to keep our country safe.

These simple methods are ways to better promote better experiences for all users. There are opportunities to grow these programs at the different airports across Canada.

Thank you again for the opportunity to address the committee. I look forward to your questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Guy.

Next, from the Northern Air Transport Association, we have Glenn Priestley.

The floor is yours. You have five minutes.

[Glenn Priestley, Executive Director, Northern Air Transport Association]

Thank you, Mr. Chairman.

I'd like to start by complimenting the committee for taking on this extremely important study. At NATA, we're gratified that parliamentarians are going to dig into such complex issues, and we wish you success.

NATA is certainly not the largest aviation organization you'll hear from, but we're probably the most colourful. I was reflecting on this last week during our safety forum in Yellowknife, when one of our members described the rather detailed requirements to report to Transport Canada when an aircraft collides with a caribou. I do not think you will hear this from any other association.

Our members fly over forbidding and spectacular landscapes in conditions that most Canadian aviators will never face, serving communities with no other means of transportation.

I'd like to address the issue of red tape in the terms of reference. For us, that's regulation—mostly safety regulation—but as you parliamentarians know very well, there needs to be balance.

While every safety issue is critical to our industry, every year you vote on a national budget that divides the government spending among hundreds of very important priorities, and I'm sure you'd often like to give more money to every one of them, but you have to prioritize. In recent years, the aviation sector has been wrestling with regulatory organizations that seem to have forgotten how to do that.

Notwithstanding the terrible impact of COVID on our industry and employees, we face a cascade of new regulatory measures all imposed at once. Quite often, these rules result in diminished system safety. Let me give you a couple of examples.

Revised rules for flight and duty times will reduce a pilot's duty day by one hour. This may seem like a good idea, except it means that a flight from Yellowknife to Eureka and return cannot be done in one day as it has been done daily for years safely. This means that crews will have to overnight in Resolute Bay, with minimum facilities both for aircraft and for crew, and a huge increase in costs.

Another example is TP 312, part five, which lists the rules for aerodromes and runway standards. Many northern airports in Canada were built in the 1970s and no longer meet the revised standards that are referenced in the international standards. While supposedly performance-based, these new rules restrict safety improvements on any form of performance-based alternate means of compliance because of the very rigid prescriptive-based standards.

I've spent my entire career in aviation and I've never seen operators so distressed. At last week's NATA 45, the northern and remote aviation conference, 200 industry stakeholders identified a severe workforce shortage, yet red tape is preventing operators from attracting and training northerners for flight crew as well as maintenance personnel.

We recognize that politicians have to be very careful when they comment on highly technical matters, especially when public safety is involved. You might be inclined to turn away, but we need you, as the elected representatives, to reaffirm the need for bureaucratic judgment and balance. Not all safety issues are equally important, and not all can be solved at once. This cascade of regulatory impositions needs to be moderated. I hope this committee will forcefully remind the public service of that need for balance.

I will now comment on costs to passengers. Air travel is very price sensitive, so we all have a motivation to control passenger costs. There are some factors that you are familiar with, such as rising inflation and increases in insurance premiums caused by the Ukrainian war, and the cost of fuel has effectively doubled in a few months. These are not new to you, and perhaps there isn't much you can suggest to fight these factors. I will point to two issues where the Canadian government might be able to help control costs.

The first is the very large amount of debt that was assumed during the pandemic as air carriers, airports and Nav Canada maintained services despite disastrous declines in traffic. We urge this committee to look into this. The levels of debt will drive prices for years to come and, with rising interest rates, the impact may be significant.

However, the other issue I want to emphasize, a huge, urgent issue, is worker shortages across airports and aircraft operators. We realize that every industry is suffering from this problem, but in the north we will soon be grounding aircraft and depriving communities of service, as we can't find more qualified personnel. This has happened in the States and has happened in places in Canada already.

We have a double frustration because we're often the training ground for pilots and maintenance specialists, who are recruited away to work for the larger airlines in the south after we have spent money and time training them. Federal employment funding programs or sector council support does not apply to northern and remote Canada in most cases. The problem will drive prices and services in wrong directions.

We need to engage with the government on a northern aviation skills strategy, and we urge this committee to add your voices in support of this critical priority.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Priestley.

Next, from Pascan Inc., we have Mr. Julian Roberts.

Mr. Roberts, the floor is yours. You have five minutes.

[Julian Roberts, President and Chief Executive Officer, Pascan Inc.]

Hello, everybody. Thank you so much for having us today.

A lot of what I'm going to say is really going to echo Mr. Priestley and Mr. Sparling, as they are also airline operators.

Pascan is a regional airline out of Quebec. We serve 11 destinations, a bit remote in the province of Quebec. Canada is a big, vast territory, the populations are very small and the distances are very vast.

The problems that we've been seeing a lot lately are really towards the fees. Airport fees in Quebec have been spiralling out of control over the last years. Right now, landing fees, terminal fees, airport improvement fees and security fees are things we see increasing all the time and the passengers aren't willing to pick up the bill. For de-icing, for example, at a lot of the airports we find ourselves paying the same amount monthly as the bigger operators flying 737s. We fly small turboprop aircraft and we end up paying the same monthly bill to be a part of the consortium. These are things that are really unbalancing regional aviation compared to the bigger national carriers, and something needs to be done to help level that playing field.

For landing and terminal fees, if you get, for example, a small turboprop under 40 seats, we're paying $240, versus a jet carrying over 100 passengers at $306. It's really hard to allocate that extra cost over so few seats, which is driving the ticket up quite a bit. The Nav Canada fees are pretty much the same thing. We operate small, regional aircraft, and basically we pay per seat quite a bit more than a jet flying in other parts of Canada. These are things that we would really like to have looked at to try to be more competitive as a regional carrier versus the mainline transporters.

A lot of the red tape we're faced with today is with the airport security exemptions. We're a carrier that provides a lot of critical cargo to a lot of remote regions in Quebec and we had different exemptions over the years. During the pandemic, Transport Canada took the decision to take away a lot of these exemptions, and we cannot get a real, clear reason as to why. Critical cargo that we were flying to the regions previously is now very difficult to do. We've had to put infrastructure in place and additional personnel. Time-sensitive cargo is something that we're dealing with and it's affecting the regions directly. It's not affecting the big city centres, but people living in the remote areas are really suffering due to this.

In the same token on the exemptions, we used to have a security exemption allowing us to fly passengers who were flying out of non-designated airports to designated airports, and now those passengers have to get off a plane each time they arrive in a designated airport, pass through security and pick up their bags just to take the same flight to their final destination, making things really difficult and costly for people in the regions to fly.

Again, like Mr. Priestley and Mr. Sparling spoke about, the flight and duty regulations for us are catastrophic. We've had to increase our pilots by 30% in the last year since the new flight and duty regulations came out. The problem we're facing is that there aren't 30% more pilots. There are almost no pilots, and we don't see this situation improving anywhere in the short term. The flight and duty requirements are going to be added to the 703 and 704 licences as of December 17, 2022, adding an additional pressure to the industry. We require more and more pilots, and there are fewer and fewer pilots out there. We're already having to reduce some of our flying going forward to certain regions of Quebec because we can't find the staff to do the flights.

Again, there's the fuel. As everybody says, it's coming as no surprise. One day last week, we had an increase of 50¢ per litre, which is representing about $30 per ticket, not counting the 60¢ that we had the weeks prior. We really need to do something to take control of the fuel prices, as they're adding directly to the tickets. We would have a normal round-trip ticket to the regions at about $300 one-way, and today we would have to charge $450 just to cover the fuel.

That's pretty much it. It's very technical, but that's what we're dealing with.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Roberts.

We'll begin our first round of questions today with Ms. Lantsman.

Ms. Lantsman, the floor is yours. You have six minutes.

[Melissa Lantsman, Conservative, Thornhill, ON]

Thanks very much, Mr. Chair.

Thank you to the witnesses, whose morning news reports, I'm sure have no shortage of stories on airports in the last number of days and weeks.

I want to focus on Ms. Pasher from the Canadian Airports Council, and then I'll get to the others.

I want to start with a simple question. Fundamentally, does the Canadian Airports Council believe that Canadian airports are competitive in comparison to the rest of the world?

[Monette Pasher]

Thanks for the question.

After two years of restrictions, demand is starting to bounce back, and that is good to see. However, certainly in terms of what we faced throughout the pandemic, competitiveness is an issue for aviation in Canada.

We only need to look as far as what's happened in the U.S. and how they were supported. U.S. airports received $40 billion in COVID support and infrastructure support; whereas, our airports in Canada received about $1.4 billion in direct support for COVID recovery and infrastructure. When you look at the U.S. and their population to Canada's, it would be about a 10:1 ratio, but support for aviation does not match that. I think competitiveness is an issue.

If you look at AIF increases for airport improvement fees over the pandemic, some airports have gone up $4, up to $10. Really, this is about being able to afford our infrastructure for the future. Our airports have taken on an additional $3 billion in debt—that's billion—and that is not to invest in infrastructure. That was just to get through the pandemic and stay operational so that we could deliver vaccines from coast to coast.

Competitiveness is a challenge.

[Melissa Lantsman, Conservative, Thornhill, ON]

I wonder if we can step aside from the pandemic.

While I understand that it's been difficult on airports, places like Minneapolis, Charlotte and Atlanta are massive hubs. I don't think Canadians would think of those cities as anything akin to, let's say Toronto, where we have the centre of banking and media and the largest population, certainly larger than all three of those cities individually.

What would make you more competitive? What would make something like Toronto Pearson more competitive, so that we have hubs like Minneapolis, Charlotte or Atlanta? What's so different, aside from the pandemic, because they were hubs before that.

[Monette Pasher]

It's our cost structure. Airports are required to pay federal rent. In a good year, up to $412 million was the highest we paid annually. That investment that our airports are contributing to the Government of Canada is going back into federal coffers.

I think we should be looking at aviation as an economic enabler. We know that Pearson is a global hub and could be even better. It plays an important role in our supply chain as well. We need to look at ways we can encourage that and keep costs as low as we can. Our airports are essentially not-for-profits. They're non-share capital corporations.

It's a closed-loop system. The more debt we take on and the more debt that's coming back to the passenger and the more expensive we are for aviation in Canada, the more expensive it is for Canadians. It's really quite that simple.

[Melissa Lantsman, Conservative, Thornhill, ON]

I have a couple of quick questions, because I know that I'm going to run out of time.

You mentioned that the airport structure we have was brought to Canada in 1992 or in the early nineties. Would you support that model today if we were to do that again?

[Monette Pasher]

Yes. I think there are so many great things about our Canadian aviation model, and I would support it. Do I think there need to be tweaks? Absolutely. I think there could be tweaks to make it less expensive for Canadians, and government is a partner in delivering that. Our national airports are on federal government land, and we've paid over $4 billion in terms of lease payments to the federal government over that time.

I think of how we can move forward and say, “Okay, we're partners in aviation. We're partners in creating a global hub for Canada and getting our goods to market. How can we make this less expensive for Canadians moving forward?” I do believe our not-for-profit model has a lot of value.

[Melissa Lantsman, Conservative, Thornhill, ON]

Does anybody else in the world have the same model as Canada?

[Monette Pasher]

That's a good question.

I think lots of places started with our model, and some have slowly evolved. We've done a lot of work in looking at this. Sometimes they've evolved into forms of privatization, moving forward to fully privatize. When we've looked at this in the last few years we've noticed that a fully privatized model will actually be more expensive. Because we already are a high-cost place to travel in Canada, it would be a challenging way to go.

We need to look at ways within our own model for how we can make it better, more efficient, and how government can be a partner in doing that.

[Melissa Lantsman, Conservative, Thornhill, ON]

I have one more question.

You mentioned that it's governed like a not-for-profit. There is a board, and I understand there's a federal rep, a provincial rep, a municipal rep and air interests. Do you think the board is accountable to anybody?

[Monette Pasher]

Yes, absolutely.

I think our boards are accountable to our communities. When you look from coast to coast they really are representative of our communities. I think our boards do a great job in governing Canada's airports and looking to the future with best practices at how we can grow aviation here.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Pasher.

Mr. Iacono, you have the floor for six minutes.

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

Thank you, Mr. Chair.

I'd like to welcome the witnesses.

My first questions are for Robin Guy and Yani Gagnon.

How have your member companies fared through the pandemic, and what are the key lessons you've learned from the pandemic?