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House of Commons Hansard #76 of the 36th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was airlines.

Topics

Business Of The HouseOral Question Period

Noon

Liberal

Bob Kilger Liberal Stormont—Dundas, ON

Mr. Speaker, discussions have taken place between all parties and the member for Winnipeg Centre concerning the taking of the division on Bill C-238 scheduled at the conclusion of Private Members' Business today, and I believe you would find consent for the following motion. I move:

That at the conclusion of today's debate on Bill C-238, all questions necessary to dispose of the motion for second reading of this bill be deemed put, a recorded division deemed requested and deferred until Tuesday, April 4, 2000 at the expiry of the time provided for Government Orders.

Business Of The HouseOral Question Period

Noon

The Speaker

Does the hon. member have permission to put the motion?

Business Of The HouseOral Question Period

Noon

Some hon. members

Agreed.

Business Of The HouseOral Question Period

Noon

The Speaker

Is it the pleasure of the House to adopt the motion?

Business Of The HouseOral Question Period

Noon

Some hon. members

Agreed.

(Motion agreed to)

Government Response To PetitionsRoutine Proceedings

March 31st, 2000 / noon

Winnipeg South Manitoba

Liberal

Reg Alcock LiberalParliamentary Secretary to President of the Queen's Privy Council for Canada and Minister of Intergovernmental Affairs

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to 17 petitions.

PetitionsRoutine Proceedings

12:05 p.m.

Liberal

Mac Harb Liberal Ottawa Centre, ON

Mr. Speaker, I have a petition signed by many Canadian constituents who would like to see an amendment to the Divorce Act so that the grandparents of children will be able to have custody of and/or access to their grandchildren.

PetitionsRoutine Proceedings

12:05 p.m.

Bloc

Odina Desrochers Bloc Lotbinière, QC

Mr. Speaker, it is my pleasure today to present a petition signed by 1,050 inhabitants of the riding of Lotbinière who are calling on parliament to review the provisions of the Employment Insurance Act concerning the determination of regional employment insurance rates so as to include the federal riding of Lotbinière in Economic Region No. 40, Central Quebec.

PetitionsRoutine Proceedings

12:05 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, I have the honour to table a petition today signed by people all the way from Toronto to Kelliher and Leross, Saskatchewan.

The petition calls on the House of Commons to take note that the Senate of Canada is undemocratic, unelected and unaccountable to the people of this country.

Because of that, and because of the fact that it costs around $50 million a year, the Senate of this country should be abolished.

PetitionsRoutine Proceedings

12:05 p.m.

Reform

Derrek Konrad Reform Prince Albert, SK

Mr. Speaker, I have the honour to present petitions bearing the signatures of more than 1,000 people from my riding and elsewhere in Saskatchewan who wish to draw the attention of the government to the importance of marriage as the union of one man and one woman, to the exclusion of all others.

They note that the government has invoked time allocation on Bill C-23 and will not allow a free vote on this fundamental issue.

They therefore call on the government to withdraw Bill C-23, affirm the opposite sex definition of marriage in law and affirm its uniqueness.

Questions On The Order PaperRoutine Proceedings

12:05 p.m.

Winnipeg South Manitoba

Liberal

Reg Alcock LiberalParliamentary Secretary to President of the Queen's Privy Council for Canada and Minister of Intergovernmental Affairs

Mr. Speaker, I have a response to Question No. 46 today. .[Text]

Question No. 46—

Questions On The Order PaperRoutine Proceedings

12:05 p.m.

Progressive Conservative

Rick Borotsik Progressive Conservative Brandon—Souris, MB

What is the total cost to taxpayers of the Prime Minister's task force on the four western provinces announced on January 7, 1999, including, but not limited to, costs for staff, travel, advertising, room rentals and per diems for members?

Questions On The Order PaperRoutine Proceedings

12:05 p.m.

Elgin—Middlesex—London Ontario

Liberal

Gar Knutson LiberalParliamentary Secretary to the Prime Minister

The western task force was primarily funded by the Liberal Party of Canada. Some expenses were also paid through the budgets of individual MPs and senators. Some staff support was also offered by the Liberal caucus research bureau.

The administration of these budgets is not the responsibility of the Government of Canada.

Questions On The Order PaperRoutine Proceedings

12:05 p.m.

Liberal

Reg Alcock Liberal Winnipeg South, MB

Mr. Speaker, I ask that the remaining questions be allowed to stand.

Questions On The Order PaperRoutine Proceedings

12:05 p.m.

The Speaker

Is that agreed?

Questions On The Order PaperRoutine Proceedings

12:05 p.m.

Some hon. members

Agreed.

The House resumed consideration of the motion that Bill C-26, an act to amend the Canada Transportation Act, the Competition Act, the Competition Tribunal Act and the Air Canada Public Participation Act and to amend another act in consequence, be read the second time and referred to a committee.

Canada Transportation ActGovernment Orders

12:05 p.m.

Bloc

René Laurin Bloc Joliette, QC

Mr. Speaker, I am pleased to speak to Bill C-26 and to tell the members of the House the few reservations the Bloc Quebecois has with respect to this bill.

We will, of course, support the principle of this bill at second reading. This bill amends the Canada Transportation Act, the Competition Act, the Competition Tribunal Act and the Air Canada Public Participation Act and amends another act in consequence.

When we look at the context of the bill, we realize that it follows on a series of federal government disasters in air transportation. After putting the entire industry at risk and leaving the regions to their own devices and after showing political favouritism toward its Onex friends, Canadian Airlines and American Airlines, the Minister of Transport was obliged to accept the opinion of the Bloc Quebecois. It was high time and we were very pleased at that.

Why will we support this? Essentially, it is because, since 1993, the Bloc Quebecois has been asking the government to stop artificially buoying up Canadian Airlines International at the expense of Air Canada, to the tune of hundreds of millions of dollars. For six years, the Bloc Quebecois has been saying Canada could not support two international carriers.

The federal government's attitude has blocked the expansion of Air Canada, and thus the economy and employment situation in the Montreal region, out of political opportunism. We are therefore in favour of the bill, because its purpose is to provide a framework for the merger of Air Canada and Canadian International Airlines.

Another reason is that the Bloc Quebecois has been involved throughout its whole existence in decrying the lax manner in which the Official Languages Act is applied by the federal government. The fact that this government was heavily subsidizing Canadian International Airlines, which was not subject to the Official Languages Act, was insulting. By allowing the merger of two carriers under the Air Canada banner, this bill will ensure that the new carrier is subject to the Official Languages Act.

This represents some progress, particularly since the bill picks up the main thrust of the recommendations in the Bloc Quebecois dissenting opinion, rather than those of the Standing Committee on Transport. Compliance with the Official Languages Act, however, requires more than merely making this carrier subject to the act. It needs to be enforced, and it is the federal government's responsibility to see that it is. We all know that its record in this area is none too good. A careful eye must therefore be kept on the situation. The Bloc Quebecois will make itself the Official Languages Act watchdog.

Another reason why we approve in principle of this bill on second reading is that it also contains a whole series of measures aimed at reinforcing competition. This is particularly important because Air Canada will become the dominant carrier in Canada and in Quebec.

Where international connections are concerned, there is not much risk of a monopoly developing, because Air Canada will have to compete with the other international carriers. Where the regions are concerned, however, particularly isolated ones, competition is far from assured.

The bill contains some worthwhile measures, but is far from guaranteeing that these measures will be sufficient to provide decent service at decent prices in the regions. I will get back to this a little later on. It is one of the reservations I alluded to a few minutes ago.

Finally, this bill contains provisions relating to the effective control of air carriers in Canada. We know that, last fall, the Minister of Transport, the minister responsible for carriers, was prepared to sell both air carriers to American Airlines, through Gerry Schwartz, a Liberal friend. It took a superior court ruling to put an end to this folly.

The minister seems to have returned to a better frame of mind with this bill, but it is difficult to understand why he wants to increase the individual share ownership limit from 10% to 15% in the case of Air Canada. We think that the existing limit of 10% has served Canadians and Quebecers very well. To increase that limit to 15% seems to be a futile measure on the part of the minister, who probably just wants to save face. But the fact is that he could once again lose face instead.

With this bill, the minister maintains his power to unilaterally amend by order in council the 25% limit on an air carrier's capital fund that can be owned by foreign interests. This provision is totally unacceptable and constitutes a denial of our parliamentary institution.

If, some day, the minister decided that he wanted to change this provision, why would he not introduce an amendment in the House? The fact is the minister is giving himself or maintaining this arbitrary power, because he knows full well that he has lost the confidence of this House, of the air transportation industry and of Quebecers and Canadians at large.

The purpose of the bill is to provide a framework for the restructuring of the airline industry following Air Canada's acquisition of Canadian Airlines International and its subsidiaries.

The bill is therefore necessary, but is flawed as it now stands. Several problems remain, especially those having to do with regional service.

First of all, let us take another look at the Bloc Quebecois' dissenting opinion in committee. In December, the Bloc Quebecois decided to present a dissenting opinion to the Standing Committee on Transport in order to express its disagreement with the majority report on the following points: Air Canada's share ownership, foreign ownership in Canadian carriers, airline safety, compliance with the Official Languages Act, airfares, service to outlying regions and, finally, the future of regional carriers.

I would like to take a brief look at each of the points in the dissenting opinion. I will add one thing, however. When I mentioned airline safety, I should point out that this is not addressed in the bill.

First, there is Air Canada's share ownership. In its dissenting opinion, the Bloc Quebecois recommended that the rule limiting to 10% the volume of voting shares in Air Canada that may be held by a single individual or group be kept. The bill proposes raising this limit to 15%. The Bloc Quebecois does not agree that this change is necessary. A 5% increase in this limit, however, would not present an obvious risk of control in fact being taken of Air Canada. A 5% increase is clearly not huge.

However, if it is not a huge percentage, why is any increase at all needed if the bill's definition of control in fact is not amended?

The Carriage by Air Act contains a definition of control in fact but it was not helpful in the case of American Airlines' takeover of Canadian. In the bill before us, the definition is strictly limited to 25% of voting shares. This is not enough, because some recent cases have shown that such a limit is not sufficient to prevent foreign control.

The Bloc Quebecois is of the opinion that this definition must include a reference to control of operations and investments. For example, AMR held only 25% of voting shares in Canadian Airlines International, and yet it controlled the company through a service contract and a right of veto on important decisions by Canadian Airlines International, which gave AMR de facto control over the company.

Sadly, we must keep reminding the government, a nationalist government that shows its colours everywhere, of this. It is sad that the government has to be reminded of the Nagano games with regard to its desire to be nationalist and to show it.

Just think about the ultranationalist speeches the Liberals made when we wanted to discuss the possibility of a continental currency. Just think about the tens of millions of dollars spent each year by the Liberal government to promote Canada in a way that, more often than not, looks like crude propaganda. In that context, is control of an international air carrier not of the utmost importance?

Jobs in that industry are, for the most part, strategic, good paying jobs that bring valuable knowledge. A healthy air transport industry is essential to an advanced economy. Rhetoric seems to be enough for this government. But it is not for the Bloc Quebecois.

Last fall, we found ourselves in the rather ironical situation of bearing, as the Quebec sovereignty party, the standard of Quebec's interests of course, but also of Canada's interests, against the Government of Canada, which was prepared to hand over control of the industry to Americans. Ridicule does not kill. That illustrates our basic positions. We are sovereignists and we are proposing partnership with Canada.

This example illustrates our position perfectly, because in the Onex-Air Canada matter, Quebec's and Canada's economic interests were mixed. We got calls from Toronto, Ottawa, the Maritimes and elsewhere in Canada. Canadians wanted us to continue our fight. They were ashamed of their federal government and they were right. The minister has to understand that and not start this business all over again.

With Bill C-26, the minister continues to give himself the right to amend the 25% limit by order. As I said earlier, this is totally unacceptable. If the minister wants to amend the rule sometime, let him do so in the House. Let him introduce an amendment to the laws concerned and allow it to be debated where it must, where the representatives of the people sit to debate it.

I also want to return to the Official Languages Act. The government adopted the Bloc Quebecois's position on official languages. Our position essentially reiterated the opinion expressed by the commissioner before the Standing Committee on Transport.

We are satisfied with these legislative measures, but the Bloc Quebecois remains somewhat concerned about the application of these principles. Although, Air Canada has long been bound by the Official Languages Act, its affiliated regional carriers have frequently been lax in their application of this law. It is not enough to pass legislation. Legislation also has to be enforced. On that, this government's record is none too good.

I would now like to say a few words on the price of airline tickets. These prices are often out of line, particularly in smaller communities. To counter this practice, the bill establishes some measures, based on competition and price monitoring.

The two organizations responsible for enforcing these measures, the Commissioner of Competition and the Canadian Transportation Agency, have seen an increase in their powers and in the means at their disposal. However, the bill should provide that an assessment be made every year in the first three years after its passage, to validate the results obtained through these measures and to ensure that the commitments made by Air Canada management have been honoured. Fine promises have to be kept, and that requires regular checks.

As far as the service to remote areas is concerned, the bill deals neither with services provided or not provided by the airline companies nor with the quality or diversity of these services, except to require carriers to consult with elected officials in the region before abandoning a regional route and to inform them of their intention to do so. As well, the minister reserves the right to reduce the 120 day period that the airline companies have to abide by before abandoning a route.

It is completely unacceptable, because it leaves to much room to arbitrary decisions. In this case also, the bill should provide that an assessment be made every year in the first three years after its passage, to validate the results obtained through these measures and to ensure that the commitments made by Air Canada management have been honoured.

When one feels one is being watched, one is always more careful to comply with self-imposed policies and directives.

Canada is huge, and so is Quebec. People living in remote areas need an efficient, affordable and well maintained transportation network. This government's policy goes in the opposite way. For this government, it would appear that regions are not financially viable.

This is an inept way of dealing with the issue of regional transportation. It is certainly not a coincidence that the government has serious political problems in the regions. The government has abandoned the regions, and this is best exemplified by transportation.

Let us talk also about the future of regional carriers. This issue is tackled only indirectly in the bill through the provisions dealing with competition, mainly. The Bloc Quebecois, in its dissenting opinion, was against the creation of a new regional carrier under the control of a dominant carrier.

Since Air Canada has given up that project, we are satisfied with the measures dealing with competition. However, the bill should provide that an assessment be made every year in the first three years after its passage, to validate the results obtained through these measures and to ensure that the commitments made by Air Canada management have been honoured.

The Bloc Quebecois is consistent in its positions. On three occasions we asked that an assessment take place every year to make sure the goals are being met.

I also would like to speak about the problems of service to remote areas. The two main problems faced by people in remote areas are high air fares and lack of frequency of flights. Moreover the quality of aircraft and the use of French might also be a problem.

The possible solutions, apart from strict regulation, all involve increased competition.

Access to adequate air service must be looked at in the context of the deterioration of the transportation infrastructure in remote areas. These areas are increasingly isolated, which hampers their economic development. As we know, safety has been compromised by the minister. I would like to say a couple of words on this topic to illustrate my point.

The crash of the Air Satellite plane, which killed seven people on December 7 last year, only minutes after take off from the Baie-Comeau airport, and the crash in Gaspé, which took the lives of four people on April 13 last year, have brought back to the fore the issue of air transportation safety, an issue the Bloc Quebecois had already started examining.

It should also be pointed out that the air traffic control system was privatized and sold to Nav Canada in December 1995 for $1.5 billion. The auditor general underlined in his report of October 1997 that the value of this monopoly had been estimated at $2.4 billion by Transports Canada's financial advisers, while the Department of Finance estimated it at $2.6 billion. Yet, it was sold for $1.5 billion.

Before November 1, 1996, air navigation services were provided by Transports Canada and mainly financed through the air transportation tax paid by airline passengers. These services are now provided by Nav Canada. Since November 1, 1998, they are exclusively financed through fees paid by the airlines. The air transportation tax has therefore been eliminated pursuant to the Civil Air Navigation Services Commercialisation Act.

For Nav Canada, the customers or users are not the passengers but the airline companies. Therefore, Nav Canada's concerns are based on those of its clients, whose natural imperative remains net profit. I would not go as far as to say that passenger safety has become a secondary issue, but the fact that Nav Canada is not directly responsible to voters but to its corporate clients has an impact on the way it perceives its role. This is why we fear that this agency, in its decisions, might not fulfil its primary responsibility, which is to ensure passenger safety with the greatest prudence, diligence and even zeal.

Yet, a quote from Nav Canada's Internet site suggests that this is not the case. I quote:

The corporation will be all the more successful in serving its customers if it is able to allocate its resources where they are the most needed. This is why it has undertaken a review of the levels of service provided in all its facilities, so that they will match the volume and type of traffic in each location.

Here is another quote from Nav Canada found on Internet:

As a matter of fact, under the Civil Air Navigation Services Commercialisation Act, we are only allowed to collect revenues necessary for the provision of services, including the reserves necessary to make investments and to maintain a stable financial structure. This is what we have done. Any surplus has to be given back to customers , in this case as deferments.

Consequently, Nav Canada last year returned $65 million to the users of its services, mainly Canadian Airline Internationals and Air Canada. It is clear that Nav Canada's interest lies not with the passenger-user, but with its customers.

Considering that Air Canada and Canadian Airline Internationals recorded losses in 1998 of $16 million and $137 million respectively, one can well imagine what happened, with the airlines wishing to pay less, Nav Canada adopting a cost-benefit approach, and the government being concerned about a company disappearing.

Need I remind hon. members that Canadian Airline Internationals could not have survived without the $20 million annual fuel tax reduction, without the heavy dose of favouritism in awarding it the most lucrative air links, without a great deal of flexibility as far as the repayment of interest-free loans are concerned?

By allowing the establishment of less costly standards for the airlines, Transport Canada has played along with Nav Canada's priorities. What are these priorities? Are they the right priorities?

In a press release on September 30, 1997, Nav Canada stated the following:

The company aims to reduce annual expenses by approximately $135 million, in constant dollars, by August 31, 2000.

Last August, Nav Canada returned $65 million, as I have already said, to users of these services, mainly to Canadian International Airlines and Air Canada. Would it not have been preferable to reinvest these amounts in passenger safety? But the question is whether the right priorities were selected.

Eliminating the Baie-Comeau airport control centre on April 1, 1995, which was not even replaced by a flight information station, is not an example of promotion of air transportation safety in the region, nor is the elimination of the flight information station at the Gaspé airport in 1998 and the threatened elimination of the flight information station in Roberval.

Indeed, the presence on site of air traffic control specialists or professional skywatchers, and take off and landing runways help lower the risks.

On the subject of risks, we are focussing particularly on the risks of being unable to detect quickly that an aircraft is in difficulty or to locate quickly a crash site near an airport.

We are also focussing on the fact that, without a flight information station at an airport, it is impossible to provide pilots with precise weather information, in real time.

We note that the Minister of Transport wrote the following on June 15 to our leader, Gilles Duceppe:

Nav Canada's aeronautical study must prove to me that interruption or reduction in levels of service would not unacceptably increase risks to air safety.

It would appear that the minister believes that there can be an acceptable increase in safety risks. That is what he believes.

I would also like to say a few words about high prices. The regular plane fare from Sept-Îles to Montreal is about $800. This creates a vicious circle in that higher prices lead to decreases in the number of travellers, and decreases in the number of travellers lead to ever higher prices, until the route is not longer profitable.

What are the possible solutions?

The great majority of those surveyed believe the only viable solution is increased competition. WestJet and, to a lesser extent, Air Montreal, have shown that it is possible to offer interregional services at low prices.

For example, Air Montreal offers a one way ticket from Québec to Îles-de-la-Madeleine for $170 or from Québec to Mont-Joli for $125.

Most people believe that the solution lies in increased competition. However, the various decision makers may consider different solutions.

Among the other solutions being considered there is of course the abandonment of regional subsidiaries by Air Canada. Others believe that all regional carriers should have access to Air Canada's network for reservations, transfers and airport terminals. Some are looking at regulating airfares instead, while others, including the Bloc Quebecois, are looking at a tax reduction for regional carriers. Others yet are considering allowing foreign carriers, including American operators, to do cabotage.

On the issue of frequency, few solutions have been proposed so far. However, the lower the airfares, the more people will fly, thus making it profitable for air carriers to maintain a line.

I want to say a word on the duopoly of Air Canada and Canadian Airlines International. This duopoly had flights at the same times, with planes that were half empty. We are of course talking about regional transportation. Many of these lines were not profitable but the two carriers could put up with some losses because they would make up for them by transferring regional travellers onto their international flights.

Let us take an example. As I mentioned earlier, a traveller from Sept-Îles can buy a ticket to fly from Sept-Îles to Quebec City to Paris for about $800. A company such as Canadian Airlines could afford to lose $100 on the Sept-Îles to Quebec City flight, since it was making $150 on the one between Quebec City and Paris. This makes a difference of at least $50. The two companies had an interest in losing money between Sept-Îles and Quebec City, since the planes were full between Quebec City and Paris, thus allowing them to make up the loss incurred during the first leg of the trip.

If the two companies had merged, the planes would have been full from the start in Sept-Îles and travellers could have enjoyed even lower airfares. That is why the two carriers were ready to run the domestic flight in order to be able to take passengers on international flights and make the passenger who only wants a domestic flight pay a hefty price. This sort of passenger is not desirable.

The same logic applied when the two carriers dropped their fares in order to maintain their duopoly over certain domestic markets. The logic of the international market therefore played against the logic of the domestic market.

We can hope that profits will enable Air Canada to lower its fares but other measures will undoubtedly be necessary to resolve this problem. The Bloc Quebecois will suggest some solutions in committee.

That concludes my remarks on Bill C-26 at second reading. We hope that the government will be receptive to any future amendments the Bloc Quebecois may wish to move during committee deliberations, so that insofar as possible we can find a long term solution to this transportation problem, which is not new in Canada.

Canada Transportation ActGovernment Orders

12:45 p.m.

NDP

Bev Desjarlais NDP Churchill, MB

Madam Speaker, today I am speaking on behalf of the New Democratic Party in opposition to the bill as it is. We have agreed that we will do what we can to get the bill to committee as quickly as possible, recognizing the seriousness of addressing the issues concerned with the merger of our two major airlines and the reality of there being one dominant carrier in Canada.

I must say that I was disappointed with the Liberal government on this bill. As the New Democratic Party representative on the transport committee I worked very hard on this issue as did all the committee members from all the parties. Last fall the committee heard from literally dozens of expert witnesses on this issue.

I was disappointed but not surprised that the Liberal government and the transport minister ignored what Canadians had been saying all these months. Instead it came up with a bill that fails to address the key concerns of Canadians. Even the minister, I know, recognized that the bill is far from perfect, but I do not think there is anything wrong with our looking for that perfection when we get to committee and fixing the bill where it has fallen short.

The government still does not understand the basic problem facing Canada's airline industry. Our airline industry has gone from crisis to crisis since the Mulroney government deregulated it in 1987.

Deregulation has been a disaster for Canadians. The cost of flying in Canada has gone up massively since deregulation began. Ticket price increases have been rising faster than inflation. The overall cost of flying has gone up a whopping 76% since 1992.

That is not what was supposed to happen under deregulation. Bay Street lobbyists said that deregulation would bring competition which would drive prices down, not up. They said there would be more airlines flying to more destinations than ever before. So where is the competition?

It has been almost 13 years since deregulation began and we have fewer airlines, not more. Deregulation has resulted in fewer airlines flying to fewer destinations and Canadians are being charged more for those tickets. This is what happens when we let market forces take the place of smart public policy.

The New Democratic Party is not against markets. Often when we criticize the government for pandering to the market, people say we are against the market. That is not the case. We are not. We recognize to have a strong country we need a strong market economy, but a healthy market is not the only thing we need for a healthy country. We need to balance a strong market with sensible public policy.

That is not the ideology of the Liberal government. Call it corporatism, call it laziness, call it lack of vision, call it whatever we will. The Liberal government refuses to accept that the market alone cannot solve every problem. When it comes to the airline industry the government cannot see the forest for the trees. This is what happens when we are dealing strictly with that ideology. The Liberal government's uncritical faith in the free market blinds it to that reality.

This is the reality. Under deregulation Canadians have less choice and are paying more for flying. The airlines have cut service to small and medium size communities across the country. The government had to spend millions of dollars to bail out Canadian Airlines and then it wound up collapsing anyway. There have been job cuts and wage cuts for airline employees. By anyone's standards deregulation has been a public policy disaster. Yet the Liberal government still clings to this policy with the blind faith of ideology.

I want to talk about the effect of deregulation on my own riding of Churchill. Few areas of the country are more expensive to fly to than rural and northern Manitoba. It costs more to fly from Thompson to Winnipeg than it does to fly from Halifax to Vancouver. Airfares have skyrocketed and passengers are not satisfied with the service quality and availability. What this demonstrates is the Liberal government's short-sightedness in letting market forces replace public policy.

Under the logic of the market, the airlines have made decisions to maximize their profits by charging the highest fares they can get away with without concentrating on service. This makes perfect sense from a narrow market point of view but makes no sense at all from a public policy point of view.

Market driven decisions in remote areas kill economic growth. They deter people from moving to rural and northern areas and setting up businesses there. If the Liberal government was looking at the big economic picture, it would see this and do what it could to keep airfares and the cost of doing business in remote areas down. But the Liberal government is not looking at the big picture. It is ignoring the fact that deregulation is killing jobs and businesses in rural and northern Canada.

It gets worse. Not only has deregulation nailed ordinary Canadians with higher airfares and less service, not only has it killed jobs and hurt rural and northern Canada, it has not been good for the airlines. From the minute deregulation kicked in, Air Canada and Canadian Airlines were in a death match that has taken a huge toll on both companies.

Competition can be a good part of the market economy or it can be destructive. We have to distinguish between healthy competition and destructive competition. Healthy competition delivers low prices and better services to the consumers. Destructive competition does the opposite and leads to monopolies. Need I say more?

The competition between Air Canada and Canadian Airlines was the destructive kind. As we have seen, it led to higher prices, not lower prices. It resulted in less service to communities, not more.

Healthy competition thrives in a stable market with rules and boundaries. Under deregulation there are no rules and competition turns destructive.

New Democrats want to see healthy competition in Canada's airline industry. That is why in the minority report I called for modern regulations to promote competition and protect the Canadian public. I do not want to see a return to the kind of regulation we had 20 years ago. Over-regulation is as bad for competition as is deregulation. What Canada's airline industry needs is the balanced approach. This bill does not provide the balanced approach to Canada's airline industry needs.

The government's approach once again is selling Canadians short. At best this bill is a baby step. We are facing a monopoly in our airline industry, a monopoly caused by deregulation, and the Liberal government will not let go of the very cause of the monopoly. This monopoly is an unprecedented threat to Canadian consumers. If there was ever a time to protect the public interest, now is that time, yet the Liberal government has to be dragged away from regulation kicking and screaming.

The transport minister has said that this bill would protect the Canadian public. Sometimes something is so ridiculous that it seems funny. This was one of those times. Saying this bill as it is will protect the public from a monopoly is like giving someone one boot when it is 40 below and saying it will keep his feet warm.

That is not to say that this bill is all bad. Before I talk about what is wrong with it, I am going to talk about what is good about it. The bill implements four recommendations from the transport committee that I supported and fought to have included in the report.

First, it doubles the amount of notice an airline has to give the community before it abandons it.

Second, it improves the official languages section of the Air Canada Act.

Third, it gives travel agents the right to negotiate their commissions collectively with the dominant airline. This will help keep travel agents in business and continue to provide affordable service to the public. One message which was loud and clear was that travel agents are a critical and valuable link to the air transportation system. As a committee, I was extremely pleased that we all agreed and that the government implemented this within the bill.

Fourth, the bill gives the Competition Bureau expanded power to stop predatory pricing. I want to talk a bit about this fourth point because I like to give credit where credit is due.

One of the big problems with a monopoly is the dominant airline can crush any small competitors that come along and try to compete with it. With broader powers to prevent predatory competition, the Competition Bureau should be able to prevent this from happening. This will eventually make it possible for the market to correct itself and bring a return to some form of competition.

I recognize the minister in his statement indicated that if there had been intervention earlier on, we might not have been in the situation we are in right now. I commend the government for this part of the legislation.

I also want to talk about the extended notice period for community abandonment. This is also something I fought for in committee and I am glad to see the government has accepted this recommendation. However, extending the notice period alone does not go nearly far enough to protect small communities. All it does is give communities more warning before an airline pulls out.

It is important that there be a mechanism to make sure small and medium size communities in Canada have decent service. This needs to be done in a way that balances the public interest with the market. It is not reasonable to expect an airline to lose money hand over fist serving a community.

At the same time, airlines have a public trust to make sure all Canadians have reasonable service. The government has a responsibility to make sure the airlines live up to that trust. Operating an airline in our country is a privilege. The airlines have a responsibility to serve small and medium size communities even if they do not make quite as much profit as they do from serving Montreal and Toronto for example.

The Liberal government is not making Air Canada live up to its public trust with this bill. All it does is force Air Canada not to abandon any communities for three years. After that it will be open season for community abandonment. There is no review mechanism to make sure these abandonments are justified. This is another example of putting blind faith in a market.

The other area the Liberal government has bungled is that of airfares. This is an area that most Canadians are concerned about as a result of a monopoly. The anti price gouging measures in this bill, if we can call them that, will only be in effect for two years, possibly four. These measures are not even that strong. The Liberal government is relying on the Canadian Transportation Agency to regulate fares and is giving it slightly wider powers to do it. This is not going to work. The CTA is already mandated to control fares. It has been completely ineffective until now.

Does the Minister of Transport think he can just wave his magic wand and overnight the CTA will become effective? All this bill does is it broadens the CTA mandate slightly and gives it the ability to be a bit proactive for the next two years. Expecting the CTA to stop this new airline monopoly from price gouging is like sending one person with a shovel to stop the avalanche. There must be ongoing measures in the bill to prevent price gouging.

The third major flaw with the bill is in the area of labour relations. I have often wondered if the government has had any respect for unions or the democratic right of collective bargaining. This government has used back to work legislation to stop legal work stoppages more than any other government. This is the government that fought like mad to keep from giving pay equity, simple equality, to its own employees. It is no wonder it has completely ignored the thorny issues that this bill represents in the area of labour issues.

The bill needs to ensure that labour disputes, including the issues relating to seniority, can be dealt with in a timely manner. We need to ensure that airline unions are in a position to bargain effectively during this restructuring. We need to ensure that disruption in service with this new dominant carrier does not bring the country to a standstill.

The Reform Party would suggest that we do not allow the airline employees to have the right to collective bargaining or the right to strike. We need to ensure that the present Canada Industrial Relations Board has enough resources to give any disputes resulting from this merger top priority without it affecting any of its other cases. That is what we need to do to make sure that this works.

At the end of the day this all comes down to priorities. All that Canadians want from their airline industry is safety, affordability and decent service to communities. If the Liberal government shared these priorities, it would have done something meaningful to address them in this bill. Instead the Liberal government is turning an airline monopoly loose on Canadians with little protection for consumers, workers and communities.

I cannot help but make a point of commenting on some of the thoughts that came from one of my opposition colleagues and that would be the Reform member.

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12:55 p.m.

An hon. member

There are no Reform members.

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12:55 p.m.

NDP

Bev Desjarlais NDP Churchill, MB

My apologies. I do recognize there are no longer any Reform members. In all fairness, Reform has been somewhat critical of the people in the House but it has been some time that things have been up in the air about that party's name. It may take some time before people realize that they finally have come up with a finalized name.

In all fairness to Canadians, they voted for certain people at election time and they voted for them as belonging to a certain party. When that party saw the need to change in midstream, one wonders if perhaps people should have the right to change their vote.

The member from the Canadian Alliance commented on the airport authorities having too much power. I cannot help but reflect on everything that has happened in the last number of years with that party pushing the government to get out of regulating transportation and to turn over the airports to someone else. Now those airports have some authority and want to do things to try to make things work. That party was hand-in-hand with the government in divesting itself of authority over airports, but now it is complaining, perhaps because some of its friends are not making quite what they thought they would because the airports are operating independently, trying to survive.

My hon. colleague as well mentioned that her party did not want to see only one airline. Had it not wanted to see only one airline in Canada, where the heck was the official opposition for the past number of years as Canadian and Air Canada struggled? Why was it not saying “Put some regulations in and get some kind of capacity controls to make sure that these airlines can survive”? Then we might have been able to see more than one airline operate in Canada. We might still have Canadian and Air Canada, ensuring competition.

There is the issue of increased foreign ownership. Is that the answer to everything? American Airlines increased its investment in Canadian Airlines. Did that save it? I do not see it here. Has increased foreign ownership helped western farmers? Tell western farmers how selling off the railways and increased foreign ownership has improved producers' profitability. It sure improved the profits for the rail lines.

The member also mentioned that passengers have to sit and wait at the airlines because of overbooking. Some people do not get on the plane if everybody shows up. The business argument is, that is good business. They do not want to leave if the seats are not filled.

Does anyone here want to reflect on all of the times the Canadian Alliance members have commented that we have to do whatever is best for business and that businesses should be able to do whatever they want to make a profit? Sometimes we have to eat our words and recognize that it was not the right way to make things better for Canadians.

If my Canadian Alliance colleague is truly concerned about passenger rights, I look forward to that party's support for a passenger bill of rights and amendments to this bill which will reflect those concerns.

Despite our opposition to this bill, the New Democratic Party will make an honest effort to improve it. Canadians deserve no less than for us to do our best to improve this bill in whatever way we can.

I will be proposing a number of amendments to fix some of the shortcomings I have identified to make this bill address the very real concerns of Canadians.

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1 p.m.

Don Valley East Ontario

Liberal

David Collenette LiberalMinister of Transport

Madam Speaker, I welcome the comments made by the hon. member for Churchill. She is not happy with the bill and she wants to bring forward some constructive amendments.

I would hope that she could show us a better way to deal with price gouging than what is already in the bill. If she is advocating a return to total regulation, then I would say that the consumers would not benefit in the long run because prices would be higher.

I will be looking very carefully at suggestions and amendments that come from her party, because I think the best way to deal with price gouging is that which is provided in the bill.

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1 p.m.

NDP

Bev Desjarlais NDP Churchill, MB

Madam Speaker, I think I made it quite clear that I do not think the answer is to return to a totally regulated system, but I think there has been recognition through all of the committee meetings we had, 156 hours of meetings, meeting with numerous witnesses and numerous people, that there needs to be some regulation. Quite frankly, there was no question that what was going on between Canadian and Air Canada was not the answer to provide a stable airline industry in Canada.

These regulations could possibly be in the area of capacity, the same way we regulate internationally. We have a very strong international air service. Those things could have happened. Then we would have competition.

Competition for the sake of competition is not the answer. If that is the case, what we end up with is like the street markets in Tijuana, where the competition is to get the item down to the last penny. Canadians do not mind paying for a service, but they want to pay fairly.

What appears to be happening now, and the CTA has not been able to address it, is that costs have been going up. People have to say that they are not getting the service. We know that wages have not gone up. We know the workers took numerous cuts, right, left and centre, to make things work. They still were not able to bring down the prices. Part of that was because the foreign investment of American Airlines had a stranglehold on Canadian Airlines, which could not make some of the changes it should have been able to make.

As well, Air Canada, in a cutthroat type of approach, did not make any effort, so everyone dropped prices just to survive. No one survived and ultimately we were left with a dominant carrier that will be in a position to gouge the heck out of Canadians.

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1:05 p.m.

Progressive Conservative

Bill Casey Progressive Conservative Cumberland—Colchester, NS

Madam Speaker, it is certainly a pleasure to take part in this debate. I am going to focus on the impact on consumers. Many of my colleagues have discussed several aspects of the bill and referred to the committee work that we spent so much time on, but I want to focus on consumers.

I feel that the bill has left out the interests of consumers, considering that now there is a dominant carrier structure in Canada, whereby consumers have no choice in most of their airline service. It is not like it was a year ago when, if they were not happy with one of the main airlines, they could go to another. Now if they are not happy with the airline, it is just too bad.

I think that consumers need help to reach the parties that can effect change and deal with their protection.

Recommendation No. 42 of the standing committee stated that an ombudsman be appointed by the government to deal strictly with consumer issues. That recommendation was completely ignored in the bill and I believe that was a mistake. That recommendation definitely should be followed and I intend to bring it to committee. In fact, I have already submitted to committee that the recommendation be made part of the bill, that the bill be amended to reflect it.

My focus on consumerism stems from several issues that have happened lately, from several observations I have made and from constituents in my riding who have been affected by changes in the airline since the amalgamation of the two main airlines. Calls have been made to my office, as I am the transport critic. I have spoken with other MPs and travellers who have experienced new problems which they had not experienced before. I myself have experienced a significant increase in problems, delays and things of that nature, in the airline industry. I believe that the appointment of an ombudsman is important.

As the vice-chair of the committee, the member for Thunder Bay—Superior North said in his report on the committee report that the Competition Act and the Canada Transportation Act, through their regulatory agencies, are not accessible to the average Canadian.

There is nothing accessible to the average Canadian without an ombudsman. I strongly support the proposal to have an ombudsman.

I have a short term plan and a long term plan that I would like to talk about today. The long term plan is the amendment to the bill to make the appointment of an ombudsman law and a part of the airline industry. I believe that has to be a part of it, considering that there is no longer any competition to protect consumers.

The short term plan is that I am inviting people to write to my office through e-mail, fax or regular mail to tell me about the problems they are experiencing now, especially if there is an increase in problems. Some of those problems are delays with no explanation, the cancellation of flights, technical difficulties, overbooking, as mentioned by some of my other colleagues here today, abrupt service changes, luggage problems and communication problems.

I invite any consumer in Canada to write to my office. Contact me and we will assemble these complaints and take them to the appropriate party, whether it is airline management, the Transportation Safety Board if it is a safety problem, or the Canadian Transportation Agency if it is a ticketing or scheduling problem. We would be pleased to take them all to the minister's office. We will do whatever is the appropriate thing to ensure that customers' complaints are addressed.

This is a short term, interim service that we will provide until the legislation is complete. I will provide the addresses further on in my remarks if anybody is interested.

The amendment I have proposed is exactly the same amendment which was already passed in committee. It was passed by an all party committee and all parties supported it. The proposal to establish the ombudsman simply states:

Thus, the committee recommends that:—

  1. The government appoint an independent ombudsperson to monitor the commitments of a dominant carrier, to oversee a public complaints process and report annually to Parliament and to the appropriate committees of Parliament on the state of the airline industry. This person must be selected in accordance with a public and transparent selection process, and must possess expertise in such areas as airline policy, public interest advocacy, and regulatory legislative processes.

That is my long term goal and I believe that would address the problems with consumers in the long term. But again, in the short term I am making my office available to receive complaints on any issue. Again, if it is a company policy issue or a specific problem, we will take it to the airline. I feel confident that they will address it, as they have with me in the past on any issue we have brought to their attention. With respect to safety issues, we will take those to the Canadian Transportation Safety Board, and so on.

If anyone wants to contact my office with a complaint with respect to the airline service they are experiencing now or have recently, they can write a letter to Bill Casey, MP, House of Commons, Ottawa, K1A 0A6. They can e-mail me at caseyb@parl.gc.ca. They can fax me at 613-943-2295. Or they can check our website at www.pcparty.ca.

Air Canada is not the only company that is involved with aviation. One thing we learned at the committee is that there are dozens of airlines in Canada. They are smaller airlines, but there are dozens of them and they are all aggressive and all entrepreneurial. Really, it is an exciting industry.

Air Canada has the vast majority of business now and any time I have brought a problem to the attention of Air Canada it has been addressed very quickly, and I appreciate that. In fact when I called the offices of Air Canada yesterday to tell them that I would be proposing this interim ombudsman office just to get us through until the legislation is passed, to my surprise their reaction was that it was a great idea. They were very positive and they agreed to work with us. If there are problems, with that company at least, they have agreed to address them and work with us to solve the problems.

Some of the typical issues that we get in our office concern the increased delays in flights. That is only part of the problem. The other part is that the consumers who are victims of the increased delays are given information which is wrong, delayed or incremental. They say that the flight is delayed 15 minutes, and then after 15 minutes it is delayed another half hour, and then it is delayed another half hour. Instead of saying at the beginning that the flight will be delayed two hours, or whatever, and give the consumer a choice of whether to go home or take a different mode of transportation, they seem to keep consumers at the airport by giving these incremental news briefs and information in little pieces, which I do not think is correct. That should be addressed and it should be changed.

There are inconsistent explanations as to why planes are delayed. In one case I was given three different explanations. I was told it was an equipment problem, then I was told there was a crew shortage and then I was told there was a storm. I do not know what the truth was, but I was given three different explanations. I believe that consumers are entitled to an explanation if their travel is delayed or interrupted. If the airline knows what the problem is, it owes it to consumers to tell them exactly what is the problem.

On Monday I was at the Montreal airport and I met a constituent of mine. When I asked him what he was doing there, he told me that his flight had been cancelled. When I asked him why it had been cancelled, he told me that he had no idea because they would not tell him. He told me there was hardly anybody on the plane and he thought they had cancelled it because there were not enough people. As there was another plane at 5 o'clock and there would not be many people on that flight, they just cancelled my constituent's flight and made him wait four hours. I believe that consumer is entitled to an explanation. I would like to have an answer too, and we will be seeking an explanation.

Another thing happened to me this week. After flying into Montreal, I went down to get my luggage. Before I even got to the luggage carousel, I was paged to go to the luggage counter where I was told that my luggage had not arrived, that it was not on the plane. I could not go to Ottawa because I did not have any clothes, other than the jeans and the sweater I had on, so I went home. I was told to call the Moncton airport the next day to find out the status of my luggage.

The next morning I tried to call information for the phone number of the Moncton airport and I was told that it was an unlisted number. I did not know what to do so I called the 1-800 number. I could not get through that number so I called my local travel agent. My travel agent said that there was a special number for luggage and she gave me the number. I called that number and had to go through the code business. I got a neat recording which said “We are sorry, but this call will take longer than we anticipated, but do not hang up because you will lose your place in the line”. That was all right. I waited for awhile and got another recording to that effect. I then got a recording saying “If you hang up and go to the Internet you can check on your luggage there, but do not hang up because you will lose your place in line”. The point I am making is that I waited 25 minutes before I was able to speak to a person.

The person finally came on the line and I explained that I had lost my luggage in Montreal and that it was supposed to go to Moncton. He said “No, I do not think you have lost your luggage because it is not on the computer”. Anyway, this went on and on and on. The system and the service just was not good enough.

I challenge the president of Air Canada, Mr. Milton, to apply his standards to his own company and to pretend that he is a consumer of Air Canada. Would he go on hold for 25 minutes to find out where his luggage is? Would he accept that level of service? I do not think he would. I would challenge Mr. Milton to review and fix that problem on the luggage communication system. People are already upset when they lose their luggage and they do not need that system to make it worse.

Last night a lady called me and told me that she had spent two days trying to get through to the frequent flyer program. She said that she was on hold for more than an hour on one occasion and still did not get through. The only way she said that she finally got through was by trying at 7 o'clock. on Sunday morning.

Again I ask the senior management of all airlines: “If you were trying to get a product or to check on the service of your car, would you accept a one hour wait on the phone, or even 25 minutes?” I do not think so.

I ask the senior management of the airlines that have 1-800 numbers to review them. I propose that they put in a standard. If a customer has to wait for five minutes he or she should be told that the call will be so many minutes, whether it is 25 minutes or an hour or whatever, or it should just ring busy. However, do not play tricks on people and get them on the line, hold them there and lead them to believe they and their problems will be dealt with shortly when they will not.

My approach is not adversarial on this issue. I think it is important for the airline management to know what is going on. In the turmoil surrounding the transition, with all the plane changes, the union negotiations, the scheduling and everything else, I believe consumers are getting left by the wayside in this whole issue. My goal is not to be adversarial with the airlines. My goal is to help them realize and understand what their consumers are going through. I hope that if people register their complaints with me I can then seek assistance and relief for these problems from the senior management of the airlines. I am confident that I can to that.

Air Canada was recently recognized as the best airline in the world. That was because they have superior service. It is important to me that Air Canada maintain that standard as the best airline in the world because Air Canada is in many respects our ambassador all over the world. It is the most tangible symbol of Canada that is ever seen in many countries.

Having the best airline in the world reflects well on our country. My goal is to help Air Canada and all other airlines to maintain the very highest standards of customer service and safety. If I get good responses from my invitation to receive complaints and if they are addressed properly, the airlines will be able to maintain those high standards. My goal is to help them maintain their reputation.

My experience with Air Canada and all other airlines is that when I go to them with a problem they act extremely quickly at management level, but consumers do not have that access. They do not have access to anything other than a 1-800 number, which is extremely frustrating. I believe in the long term the ombudsman would serve to make sure that the airlines are aware of what their customers and consumers are going through. In the short term, I would like to provide that service myself until the legislation is passed.

My proposal is to act as an interim ombudsman through my office until the legislation is passed. It not only refers to Air Canada, but also to airlines such as WestJet, First Air, et cetera. No matter what airline consumers are using, if they have a problem I, and I am sure the minister and the company itself, want to hear about it. We guarantee that if we get a complaint we will see that it goes to the proper authority and the proper company, whether it is the company itself, the Transportation Safety Board, the Canadian Transportation Agency or the minister's office. We will monitor the complaints and make sure they are addressed.

I offer anyone who has a problem or complaint with the aviation industry to write to me, Bill Casey, MP, House of Commons, Ottawa, K1A 0A6, or e-mail me at caseyb@parl.gc.ca, or fax me at 613-943-2295, or check our website at www.pcparty.ca and all that information will be there. We invite everybody to send us their remarks and we will share them with the appropriate body.

For the long term the ombudsman must be there. If Mr. Milton, the president of Air Canada, for instance, has a car problem and is not satisfied with the service he gets at the dealership, he can go to another dealership. However, if Canadian consumers, who use most of the airline's service, are not happy there is no place to go and there are no options. I think it is important to have an ombudsman who will make sure that Air Canada is aware of consumer complaints and that they are dealt with in an appropriate fashion. In the interim, we would be pleased to provide that service.

I encourage people to communicate with us. If we have a good response, if there is a substantial problem or a consistent series of complaints, then it will help us to get this amendment through for the ombudsman to be added to Bill C-26. A poor response will of course indicate that there is no need for it, and I can live with that as well.

I believe there is a problem and that consumers are frustrated with overbooking, cancelled flights and delayed flights. There is a big problem in communications with the major airlines. If those complaints are filed with us then we can do something about them. I am sure that the all-party committee, which has already supported the amendment I am proposing today, will again support it in the House.

In closing, I want to say that if anybody wants to contact me my address is caseyb@parl.gc.ca for e-mail. My fax number is 613-943-2295. Check our website at www.pcparty.ca.

I look forward to this bill going to committee. It has been an enlightening experience for all of us on the committee. It was a tremendous experience to go through the debate about the airline merger. We met some incredible people in the industry. We were all impressed with the industry officials. I look forward to this coming back to committee and dealing with all the amendments from all the parties. I am sure that we can come up with a good bill that will protect consumers, the industry, the airports and the minister.

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1:20 p.m.

Don Valley East Ontario

Liberal

David Collenette LiberalMinister of Transport

Madam Speaker, I listened very attentively to my colleague's speech and I am not sure it is appropriate for a member of the Conservative Party to use the vehicle of a debate on a bill in the House to solicit memberships by offering his phone and fax numbers. I am just wondering if the fortunes of the Conservative Party are such that it has to resort to this.

I would like his assurances that if he is inundated, as I think he will be with all manner of consumer complaints for having repeated this three times in the speech, that he will not come back to the Speaker or the House administration to request additional resources.