Madam Speaker, I find it ironic that the minister is taking all the credit for what happened. I think that the companies involved deserve a lot of the accolades for taking a bad situation and dealing with it to minimize the damage to the travelling public.
I would agree that the legislation is a response to the airline merger wars that we saw last year. The Standing Committee on Transport and the Senate committee dealt with those issues and heard many witnesses who shared with us their concerns and their problems. I would not disagree with the minister that it was a difficult file.
I do not think the preferred outcome that Canadians really wanted was to have one dominant air carrier. I think many Canadians, like myself, would rather have seen two Canadian air carriers providing competition in the marketplace. However, it was quite clear that the reality was that would not happen, that either we would have a bankruptcy, which would put the one dominant carrier in a monopoly position, or we would have a merger. I think Canadians can be somewhat pleased that the outcome was a merger rather than a bankruptcy. At least it is to be hoped that will be the outcome.
Reality is that we now have a company which controls 80% of the domestic market. That is the result of previous government interference and involvement in the airline industry. Previous government regulation is largely responsible for the situation in which Canadian and Air Canada found themselves. Years of poor legislation and regulation put those companies in the very vulnerable position where they were unable to compete in the international market. Given the situation of the industry last fall, some would say that this bill is a reasonable response to that situation. It gives Air Canada a period of time to reorganize after the acquisition of Canadian Airlines and its debt.
Bill C-26 holds Air Canada to the commitments it made to the government and to the competition commissioner in the letter of December 21. Air Canada will be held to its commitments, including the promise to smaller communities to provide air service, at least for a period of three years, and the promise to employees that there will be a controlled reduction of the employee force after a period of two years, and that the reduction will occur through attrition. We hope that this bill will hold it to that commitment. It also agreed to give up slots in some of the major airports and to sell the surplus aircraft to domestic companies.
Bill C-26 makes a lot of these commitments enforceable. That is important. There has to be some way to make sure that those commitments which Air Canada made in its presentations to the government, the standing committee and to Canadians are met. It made commitments to Canadians, the Canadian travelling public and Canadian taxpayers. I think it is important that there be some way of holding it to those commitments, and Bill C-26 tries to do that.
It also tries to make sure that those commitments made by Air Canada are enforceable and that there is some way to make sure the corporate entity responds in kind to those commitments and promises.
Some would say that the $10 million fines and the five year incarcerations are quite heavy. The minister has said that they already exist in the Competition Act. Canadians would feel a lot more comfortable if those fines and levels of incarceration were also to apply to the government when it makes commitments that it fails to follow through on.
The government is trying to hold corporate Canada accountable to commitments it made, and that is a good thing. It would be nice if it would expand that to include itself.
It also is an attempt to have some control over increased air fares. The travelling Canadian public are very concerned that now that we have a dominant carrier, which controls 80% of the air routes, fares will rise to a level that they will no longer be able to afford. The intent of this bill is to put into place, through the Canadian Transportation Agency, the means to make sure that does not happen, that controls and monitoring can be imposed on the company without needing the individual traveller to complain about these sorts of increases in airfares before they can be dealt with.
There are problems with this bill. One of the problems that I foresee, and I am sure others have as well, is that in giving the Canadian Transportation Agency these new powers to do the monitoring there will be a tendency to hire a lot of new staff who will create work to justify their positions. In creating the work to justify their positions, they expand and develop an empire. That is something which the government must ensure does not happen. There must be some control in the development of the bureaucracy that develops the need to monitor beyond the point that they really need to be doing that.
This bureaucratic empire will also create an equal response from the airline industry, and not only Air Canada. It will not only affect Air Canada, but any other small airline that is in a monopoly position. It will create an equal response from the airline. How many people would they have to hire to react to this bureaucratic empire which might be built? There is an onus on the government to make sure that does not happen.
The Canadian Transportation Agency must also determine which are monopoly routes. Many of the monopoly routes flown in this country will not be flown by Air Canada but by smaller airlines like First Air and Bearskin Airlines. They will be brought into this monopoly route situation with the Canadian Transportation Agency overseeing them. I am not saying that should not happen, but we have to make sure that it does not happen to the degree that it overexceeds the need. This would result in the situation where the smaller airlines would either start asking the CTA for advice before they entered a route or before they asked for an increase of the fare, or they would end up having to provide the resources to those small airlines to compete with the demands being placed on them by this bureaucratic agency which had been given this new role.
There have to be controls and there has to be an understanding of what is a monopoly route. We will have to be more careful in that area.
One of the other problems is the inclusion of cargo in the fare increase. Yes, there may be a reason for including cargo, but it has not been made clear. Evidence has not been presented to justify including cargo in the new agency's responsibilities. This measure would concern many of the smaller airlines which service the north. It is not realistic for any airline to be expected to transport cargo below cost. It is going to have to be shown through concrete evidence that there is a requirement to include cargo in the provisions of the CTA.
The other area I have some concern with is the exit provision. I know that with Inter-Canadien there were great problems in the way it was handled. It created a discontinuation of services which caused a lot of problems for the travelling public. However, the exit provisions in the new legislation require a carrier to give four months notice if it intends to withdraw services, not only all of its services, but 50% of the service provided to the community.
It is hard to test a market if the airlines have to be in it for four months. It is expensive for a smaller airline to be committed to four months of service. I wonder if WestJet would have gone into Abbotsford, which was its first major test of the market, if it had had to stay for four months. I am a little concerned that this might eliminate competition in the marketplace because it puts a heavy burden on the airlines.
The minister feels that the 120 days will not do that. I would like to think that the committee would hear from smaller airlines which might be concerned about the exit provision. I will take the minister at his word that he will look at the amendments and the recommendations that come out of the committee hearings to improve the legislation.
The competition commissioner feels that the best way to ensure reasonable airfares is competition. Airlines are extremely expensive. They need a lot of capital to operate, buy equipment and fly that equipment. The 25% limit on foreign ownership is very restrictive. The 25% limit is a regulation that can be changed at any time. There is no commitment from the government in the legislation to consider that in the future.
I would like to think that the government will at least entertain the thought that after a two year period the 25% limitation on foreign ownership will be lifted to 49% to allow more capital to come in to support Canadian carriers in providing the competition that Canada will require.
The competition commissioner has also suggested that there be no limitations on Canadian carriers as to foreign investment. I agree that Air Canada should be given the two years, but at the end of that two year period there has to be a commitment to increase the competition if it has not been created through Canadian carriers. Canadian carriers might be more able to increase that level of competition with Air Canada if it had access to foreign investment and ownership.
Another concern I have is that there is no mention or commitment that the monopoly carrier cannot use its influence to restrict access to airports for other Canadian carriers. Today we see it might be an issue where a Canadian carrier is being restricted to an airport by the airport authority. I do not think that should be allowed. I do not think Canadians want to see an airport authority having that kind of decision making ability and being able to refuse a Canadian carrier access to Canadian airports. I think that should be addressed.
There is another area the bill does not deal with to the extent I feel Canadians would like. The Government of Canada should not be involved in limiting Canadian ownership in Canadian companies. In the Air Canada Public Participation Act the extension from 10% to 15% just does not cut it. It is irrelevant. The whole issue is that the Government of Canada should not have the right to restrict Canadian ownership in a Canadian company. I would suggest that needs to be addressed. It needs to be looked at and removed completely from the books.
We know there have been problems with the acquisition of Canadian Airlines by Air Canada. We are starting to see them happen every day at the airport. I know it is difficult for Air Canada to try to rationalize the service of the two airlines, putting them together and getting rid of the overcapacity. However, the complaints from the travelling public are starting to get very loud.
Flights are being significantly overbooked. Fifteen or twenty people were left standing at the airport when I flew to Ottawa from Vancouver. They had arrived at the airport thinking they had a seat on the aircraft. That is not acceptable and has to stop.
Schedules are being changed with passengers not being informed. Passengers are arriving at airports to find that the connecting flight they were going to take has already left or has been changed or that they have been rebooked on a later flight without being told. Those sorts of things are not acceptable.
I am hoping that they are growing pains, that they are something we are seeing in the short term and will be addressed in the long term. My fear is that the public will only accept a certain level of this kind of treatment. Seeing as how they do not have a viable alternative, there will be a pressure for more regulation. That is not a direction I would like to see the government go.
The answer is not to get back into overregulating the airline industry. The answer is to hold Air Canada accountable for being a good, responsible corporate citizen and for being upfront and honest in the commitments it has made to the travelling public.
The difficulties we are seeing are not just with the travelling public. They are also with the employees. The minister said earlier that one of the conditions was that there would be fair treatment of the employees in this transition period. I think Air Canada made that commitment to the minister. He certainly made that commitment to the Standing Committee on Transport.
There is evidence out there today that some issues have to be resolved. Two unions have come to an agreement and that is good news. Some of the unions are realizing that it is the new reality and they have to come to an agreement. I do not disagree with the company that the unions have to deal with seniority lists, but there are still the issues of seniority lists and of fair treatment of employees.
It is not just seniority lists. An incident happened in Ottawa where the language requirements have come into play. I agree with the minister that part of the legislation is that the airlines comply with the Official Languages Act. The act is quite clear. There are designated bilingual areas and there is a percentage of population that is required in order for the second official language to come into effect. I would like to think that the requirements for the airlines will not be any higher than the Official Languages Act stipulates, that there will not be any additional requirement placed on the airlines that go beyond the Official Languages Act.
The issue that came up in Ottawa was that 60 baggage handlers in the Ottawa airport were given layoff notices apparently because of an inability to speak French. One has to ask where was Air Canada's commitment not to lay off employees for a two year period of time. I would like to think that this will stop after the legislation passes.
What happened to people being able to work in the language of their choice? The argument from the bilingualism proponents is that supervisors need to be bilingual in order to speak to the workers in either language, but that is not the case here. It has to be addressed with Air Canada that it cannot be allowed to continue to allow one employee group to lord over the other ones and to place expectations that should not be placed on them.
In conclusion, the official opposition will allow the bill to go to committee because we think that is where it needs to go. We will give it very close scrutiny in committee to make sure that all players and all stakeholders have an opportunity to look at the legislation, how it will affect them, and to make suggestions on how the legislation can be improved.
The minister said in the House this morning that he would listen to the recommendations from the committee and would consider the proposed amendments. I take him up on that. I take him up on the commitment he made this morning to give consideration to the outcome of the committee.
The official opposition is quite prepared to play the watchdog role with Air Canada to make sure that Air Canada meets its obligation and the commitments it has made to the government, to the opposition and to the Canadian travelling public.
As the dominant air carrier with 80% control of the domestic marketplace Air Canada is close to a monopoly. If it becomes disrespectful of the travelling public because of its position, the official opposition will substantially increase its efforts to increase the foreign ownership component in the Canadian airline industry to provide real competition. We are prepared to give Air Canada two years to make the adjustments to make the merger work, but not if it continually abuses the travelling public. I support the government in sending the bill to committee for further study.