Transport Committee on Oct. 3rd, 2022

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

I wonder if you have a view on the assertion we've heard from airports that they're viewed by the government as—I don't want to use the phrase “cash cows”—revenue centres for government. Does that bear out, and is it different depending on the size of the airport?

Mr. Gradek might have thoughts on this as well.

[John Lawford]

I think he will.

I actually do believe there is this strange situation where the government has, in effect, handed the control of the airports to these agencies and then turned around and asked them for fairly decent fees back, and provided these leases to have users, in effect, pay for it, which seems highly inefficient. But of course we're quite far down that road.

I'll let Mr. Gradek answer.

[John Gradek]

When you look at the whole rent model that we have, which Transport Canada has implemented, with NAS and non-NAS, you see that it really is inefficient. It's not something that has a vision for what airport infrastructure should look like. We've done a good job of doing that. It really is something that....

We can look at how other organizations and other governments have been able to do it. There has been a very successful series of models about managing investments required to support small airports. You basically give concessions to a large airport, and along with those concessions you say, “You also have responsibility for this basket of small airports.”

If I look at Vancouver as an example, and I look at the Vancouver authority, we could structure something saying, “Vancouver is responsible for all of B.C.'s airports.”

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Gradek.

Thank you very much, Mr. Bachrach.

Next we have Mr. Jeneroux.

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

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you, Mr. Chair.

Thank you to the witnesses for being with us today.

Mr. Gradek, I want to go back to some of the comments, echoing the question from my colleague Mr. Iacono.

When it comes to the chaos that travellers have been experiencing in Canada's major airports, you stated that it's the airlines' own doing, and then you highlighted the issue as being the tens of thousands of staff whom the airline industry had to lay off due to the industry's being forced to shut down during COVID. Many in the industry have stated that these layoffs were mostly due to little or no financial support by the government, strict COVID measures and long-lasting mandates.

Can you elaborate on how this chaos of the airlines is their own doing, and perhaps how they could have avoided the layoffs, given the hit the industry took?

[John Gradek]

I don't think I wanted to say that the airlines could have avoided the layoffs. The layoffs were an absolute knee-jerk reaction to revenue being dropped and people not being allowed to fly. If you have an infrastructure of 40,000 employees at Air Canada or 20,000 at WestJet and there's nobody flying, you have to cut your costs somehow. They parked hundreds of airplanes and laid off tens of thousands of people, which was a normal reaction to save their profit and loss statement.

The question now becomes this: What did they do to try to recover those positions when they decided to go back and have flights come back into play in the spring of 2022? That's where you had a situation where the airlines basically ran out of time and ran out of effort. The industry had all kinds of staff shortages, as they still have today, and they just overextended themselves in terms of putting out too much capacity, too many flight schedules, for the resources that were available either at the airlines or at the airports.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

There was an increase in demand from the consumer, though, as well. There were people who were ready and wanting to fly. Coming from the airlines' perspective, trying to figure out where that balance is and where your position lies within that.... This is an unprecedented pandemic that we all experienced, of course, but getting where that balance is....

[John Gradek]

I've used the term “revenge travel” quite a bit in my public statements over the last year. People were, in fact, waiting to get to travel, and there was a lot of pent-up demand. Then, when the airlines saw all of those vaccination requirements disappear and saw all of the requirements for quarantines disappear, they said, “Well, now people are going to want to travel, so let's just flood the market with flights and see what happens.” Guess what? The flights sold out really quickly. By the time we looked around in March or the beginning of April, the flights for July and August were full. The cat was already out of the bag. I think it was really that everybody was trying to scramble to put people in place to be able to handle that volume of passengers.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Getting back to the layoffs, the mandates and the restrictions obviously played a major role in where the industry was headed at that time. In hindsight now, was it too fast or too slow...some of the decisions of the government? What would be your recommendation so we can prepare for the potential next pandemic, if there is one?

[John Gradek]

Commercial aviation is a very complicated business. We have to be able to have coordination among all of the players in the game in order to make sure we deliver service to our customers. The issue has been one where the airlines jumped the gun. They put too much capacity out there and sold the capacity. They drove the passengers to the airport. Those passengers didn't show up at the airport because they felt like it.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Did they not have to make up for not getting government support, though? They had to do something. That's what I'm trying to say. There was an airline debt at the time. How did they react without the government support? That's a question for you.

[John Gradek]

You're looking at trying to understand how the airlines try to recoup the cash they lost during the shutdown. They're anxious to get the cash flows back. They're anxious to get profitability back. The answer to that question is to get flights out there.

I think that's what they did, but without really coming to grips with the reality that maybe they don't have enough resources to operate the flights that they've already sold to passengers across the system. That's where it got disconnected.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Jeneroux.

Ms. Koutrakis, you have the floor for five minutes.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

Welcome to our colleague Mr. Garon to this meeting of the Standing Committee on Transport, Infrastructure and Communities.

I want to thank all the witnesses for being here this afternoon.

Mr. Gradek, we have heard testimony from representatives of CATSA, the Canadian Air Transport Security Authority, about how difficult it was to accurately predict when air traffic would return to pre-pandemic levels, in order to deploy the right number of workers.

Can you tell us about the challenges of making such a forecast?

[John Gradek]

In February and March this year, everyone saw the Omicron variant spreading rapidly and wondered when travel might resume. Public health officials said the worst was over and that some of the constraints could be lifted.

At that point, the airlines began discussions with CATSA and the airports about the services and number of flights they would be offering. However, they had no idea of the volume of passengers they would have. To their surprise, the number of passengers increased in late March and early April.

When authorities and agencies became aware of the increase, they had to start hiring people. However, hiring and training takes time. You need 12 to 15 weeks to train someone and get them into the workforce.

Also, the speed at which airlines tickets were being sold really surprised everyone. We now realize that we really should have had a few weeks, if not months, to make sure we had the staffing to offer these services.

[Annie Koutrakis, Liberal, Vimy, QC]

How feasible is it for the airline industry and the government to come up with a detailed recovery plan, given all the uncertainty brought about by the pandemic of the past two years, including a number of times the reopening was interrupted by a new wave of COVID-19?

[John Gradek]

This summer, there was an obvious lack of coordination in the transport industry. Several industry organizations and some of their members have been singled out. There have been some questionable decisions made in terms of number of passengers and flights allowed in airports.

These questionable decisions and this lack of coordination have led to the situation we have seen in airports. It has gotten a bit better since then because there have been fewer passengers. We are trying to close the gap. However, during the crazy peaks of June, July and August, the airports were completely overwhelmed with passengers.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you.

I have one question for Mr. Lawford.

Some commentators have suggested that the air passenger rights regime in Europe is stronger than the Canadian one. In your view, is that the case, and how so, specifically? How are they different?

[John Lawford]

Thank you very much.

The European regulations are a bit stronger, in the sense that, whenever there's a junction point, if you will, where the airline position—which is more limited—or the consumer position comes before the regulator, they take the consumer position, and they're then backed up by the European courts.

For example, the entire regime was also attacked in Europe, in the same way that IATA is going after our airline passenger protection regulations. The European Court of Justice upheld the scheme in the face of the Montreal Convention in Europe; there's still a question whether our courts here will.

The regulator in Canada has tried to, most recently with the safety issue, take a harder line. They may not have as much authority as the regulator does in Europe, so—

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Lawford. Unfortunately, we're out of time.

Thank you very much, Ms. Koutrakis.

Mr. Garon, you have the floor for two and a half minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

I have another question for the mayor of Mirabel.

Mr. Charbonneau, can you give us an idea of the geographic scope of the servitude associated with the airport in Mirabel?

[Patrick Charbonneau]

It is hard to say. We are still unable to accurately pinpoint it on maps, but we know it is gigantic. At the time, 97,000 acres of land were expropriated, or roughly 70,000 football fields. That is the total area covered by the servitude.

[Jean-Denis Garon, Bloc, Mirabel, QC]

As a municipality, Mirabel is large enough to also have the powers of a regional county municipality. Can you explain how the existence of this very large servitude infringes on these powers and interferes with your work on a daily basis?

[Patrick Charbonneau]

This servitude infringes on one of our jurisdictions, namely land-use planning. As part of the Montreal Metropolitan Community, we have to meet a minimal density threshold.

The existence of the servitude prevents us from developing certain lots, which in turn keeps us from meeting the minimal density threshold on our entire territory. The lots in question are in non-agricultural zones, meaning that they are located inside the urban boundaries and connected to water and waste water services.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Mayor Charbonneau, Mirabel's territory is 80% agricultural. Its land is nevertheless very sought after for residential development.

If more development was allowed in non-agricultural zones where it is currently prohibited, could we reasonably conclude that it would disincentivize development in agricultural zones? Could that be a solution?