Transport Committee on June 2nd, 2022

[Serge Larivière]

Mr. Godin, I'm going to tell you something that is already public knowledge. We did engage in civil disobedience. At Mont-Tremblant, we managed to nab direct flights from New York through Continental Airlines. Owing to the clearance service fees, the flights weren't economically viable. The airline didn't want to pay the bill.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

You said $1,200 per airplane, did you not?

[Serge Larivière]

That's right. For 50 seats, that's a welcome tax of $40 for 30 people. Thank you very much.

We refused to pay, so CBSA, with the help of the Canada Revenue Agency, seized our bank accounts. We said we were going to close the airport, and that led to an ad hoc settlement agreement, but the airport lost its international flights because of it, among other things.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

What year was that, Mr. Larivière?

[Serge Larivière]

That was in 2008 or 2009.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I see.

This week, the Quebec government announced $500 flights. Does that affect you?

[Serge Larivière]

It doesn't really affect us, because the subsidy applies to flights within the province. All of our flights come from outside Quebec, places like Toronto and New York. Our private customers come from Europe and the U.S.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

How much time do I have left, Mr. Chair?

[The Chair, Liberal, Peter Schiefke]

You have 10 seconds, Mr. Godin.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

I have more questions for you, Mr. Larivière, but I'll give my fellow committee members a chance to ask you their questions.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Godin.

We now go to Ms. Koutrakis for six minutes.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

Thank you to Ms. Atrill and Mr. Larivière for their remarks.

My questions are for Mr. Larivière.

I'm trying to gain a better understanding of how your model works. Is your co-operative already in business, or are you still at the proposal stage?

[Serge Larivière]

It's still at the proposal stage. Certain market conditions in the air network are needed before the co-operative can be put in place. That hasn't happened yet. We are still in talks with both the provincial government and the federal government to set up the new air service.

[Annie Koutrakis, Liberal, Vimy, QC]

Is the model for your co-operative based on what exists in other regions, or is it based on Quebec co-operatives that operate in the transportation sector?

[Serge Larivière]

I have to tell you that I'm not aware of any airline company that runs on a co‑operative model. The idea behind the Coopérative de transport régional du Québec is rooted in all the regions of Quebec where stakeholders in a given sector came together to rectify the situation. Airline ticket prices aside, air services in Quebec are lacking, and that puts the province way behind Ontario and the rest of Canada.

Here, in Quebec, we tend towards co-operative models, perhaps because of Desjardins. When we have a collective problem, we naturally come together in a co-operative way to solve it. What makes our co-operative different is that it was designed for the airline sector. Co-operatives have been formed in the agriculture, forestry and financial services sectors, but it's never been done in the airline sector. It's a model with a lot of potential.

[Annie Koutrakis, Liberal, Vimy, QC]

What do you need for long-term viability? Do you need a certain number of members or a certain passenger volume every year?

[Serge Larivière]

I think the thing that is most essential is a fair marketplace. It's no secret that some players in Canada engage in aggressive competition, so that needs to be addressed to ensure healthy competition. We've seen that in other industries, for example, oil and gas, where large monopolies dropped their prices to get rid of smaller players. That is the kind of market protection or correction we need in Canada, so that new carriers can capture a share of the market and weather those first few rocky years in business.

[Annie Koutrakis, Liberal, Vimy, QC]

Do you think a co-operative like yours could work all over Canada? Do you think Quebec could teach the rest of Canada a thing or two about co-operatives?

[Serge Larivière]

I heard one of the MPs from British Columbia say he has this discrepancy in the pricing of airfares between two destinations with the same aircraft over the same distance. Guess what? This is what we have across Quebec. It's a question of competition. The minute you introduce competition, suddenly the prices go down.

How do we enable more competition? How do we make sure that competition can get in place and thrive and exist and perform? You guys are there for that, right?

[Annie Koutrakis, Liberal, Vimy, QC]

I'm not going to let you off—

[Serge Larivière]

When you see a market that doesn't behave correctly, you have to go in and make it work in the right way, or get something that operates right.

[Annie Koutrakis, Liberal, Vimy, QC]

Then I will put it to you this way. What would you do if you were in government? What kind of recommendations can you give this government to ensure that the small regional airports are competitive?

[Serge Larivière]

The first thing is to put in a floor price. You put in a floor price across destinations and say you cannot go below that price, Mr. Airline X, because we know that below that price, you're doing it to kill the other guy.

They did it in the gas industry. Floor prices exist in milk. Floor prices exist in gasoline, so could we apply a floor price to airfares? Absolutely. The minute you establish the fact that nobody can kill you except just by providing good quality and efficient air service, you'll see a bunch of investors showing up at the table. Investors are not coming to the table for regional service. Why? Nobody has $20 million to lose in a price war with a guy who could put $20 million on his balance sheet without even noticing.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Larivière.

[The Chair, Liberal, Peter Schiefke]

Thank you, Ms. Koutrakis.

Mr. Barsalou-Duval, the floor is yours for six minutes.