Mr. Speaker, I am very pleased to take part in the debate this afternoon as we wind down on this very important piece of legislation. This bill is designed as a federal response to the restructuring of our two major airlines and to deal with the consequences as far as the rest of the Canadian airline industry is concerned, as well as travellers and shippers.
I would like to thank members of the Standing Committee on Transport. I have to say that this has been one of the more salutary efforts I have been involved with in the House, in the sense that there has been remarkable co-operation on all sides. There has been good, sharp, intense debate. Amendments came forward which received the acceptance of members of the other side, which helped to strengthen the legislation and clarify some things. I am extremely happy to have had that co-operation from members of the committee and I thank them publicly.
I want to put on the record my thanks to all of them. I know what long, and late, hours they put in to move this bill forward as quickly as they have.
My second reason for being pleased is that the prospects for passing this bill sooner are looking brighter.
Members of this House, I am sure, understand the importance of bring this bill into force, and I have no doubt the other House will be of the same view.
I would like to deal with a few of the important points of the amended bill.
The law at present provides the authority for the process to approve the airline acquisition deal between Air Canada and an Alberta numbered company and Canadian Airlines. This bill provides the mechanisms and the enforcement tools necessary to ensure compliance with the terms and conditions of the deal, which are the commitments made to me by Air Canada and to the undertakings negotiated between Air Canada and the competition commissioner.
This bill expands the powers of the Competition Act to ensure new protection against anti-competitive behaviour by the operator of a domestic air service that would impede or discourage the development of new services by other Canadian carriers. This is extremely important.
There has been much made in recent weeks about the need for competition. I have met with charter carrier officials and people from other airlines in Canada. I can assure the House that there is a willingness to step in and provide the necessary competition. But the people want some assurance of stability, some clarity of the rules and the knowledge that Air Canada would not use its pricing might, its capacity, to drive other airlines out of business. That is why this bill is so important.
We have not only brought in predatory pricing provisions through a clause that was developed by the Competition Bureau, we have actually toughened up that particular aspect of the bill.
This bill brings increased protection for consumers and new obligations to ensure that communities can make the case for the retention of services when carriers are considering reducing service, or withdrawing from a market.
This bill ensures that travellers and shippers will be able to deal with Air Canada and all its subsidiaries, current and future, in the official language of their choice, where there is significant demand.
I made a small comment on the importance of these amendments with respect to the Official Languages Act and its application to subsidiaries of Canadian Airlines International. This is a notable change in our policy, because Air Canada used to be a crown corporation, and now it is a private sector company.
Before commenting on what is new and improved in the bill as amended, I would like to say a few words about what is not in the bill. There is nothing in the bill which would change Canada's policy regarding Canadian ownership and control of our airlines.
Despite the lack of support for the policy by some editorialists and columnists, the government will maintain its policy. I know that members in my own party sought to increase foreign ownership from 25% to 49%. We have that statutory authority now, but we fixed it at 25% because we believe that the airline industry must be controlled by Canadians. That has been clear throughout this debate, through letters to the editor, e-mails we have received and polling. There was a poll done by Maclean's and CBC in December which showed that 83% of Canadians believe that we have to maintain a strong Canadian identity in this new century and that Canadian ownership of business in Canada should be even greater.
I would ask why we would want to arbitrarily increase the 25% limit when many other countries around the world keep that limit themselves. The Americans do not allow foreigners to have more than 25% ownership in any U.S. carrier. Hon. members will remember a few years ago when Air Canada owned 25% of Continental Airlines. It was a very good investment by the former president of Air Canada, which reaped great benefits for Air Canada, but it could not hold any more. It could not, in effect, control Continental Airlines. Why should we dilute our control and yet allow the U.S. to maintain its 25%? And not just the U.S., but other countries in the world. We must maintain solid Canadian control, effective Canadian control, of our airlines.
When it comes to other issues of competition, we have been held up to some criticism by editorialists who believe that we should allow foreign carriers to come into the country. Again, I have spoken with Canadian carriers, the WestJets, the charter carriers and others, and they believe that they can fill the void.
I noticed in the clippings today from transport statements made by Mr. Kinnear, the president of Canada 3000. I met with him last week and what he said to me privately he said publicly, that is, now that they know what the regime will be they are going to acquire more planes. And not just that charter company, but other charter companies will be doing the same thing.
I think the naysayers in the media and some of these great experts we see who pop up from academia should perhaps wait for 18 months to see what the Canada 3000s, the Air Transats, the Royals and the Sky Services can do. We know that CanJet, the airline being proposed by Mr. Rowe, a prominent businessman from Halifax, is going to get off the ground. He has made public statements in the last few weeks. That will be an exciting development. He wanted to see what kind of bill we were bringing in. He wanted to see what kind of regime he would have to deal with. He wanted to know that the competition commissioner would have real power to deal with Air Canada, which, notwithstanding its protestations about competition, has 80% of the market and naturally would try to push the envelope. I think we have seen evidence of that in the last few weeks. There was so much evidence that members of the committee became quite annoyed at the president of Air Canada and took him to task when he appeared before the committee. As a result, the bill was toughened up.
Now that the bill has gone through the House and will be going to the Senate—and hopefully will receive expeditious approval after full debate in the Senate—companies like CanJet and WestJet and the charters will know the regime and they will want to plan for extra capacity. I am quite excited about the new discount carrier that Mr. Rowe will be basing in Halifax and Toronto because that will provide discount competition from the hub in Toronto. We now have discount competition by WestJet from Hamilton serving eastern Canada.
Western Canada has continued to enjoy the good service of WestJet. There is Conair and some other smaller companies not allied with Air Canada providing good service and price competition. The charters provide that competition. Even before Air Canada and Canadian merged, in the peak season in the summer months Air Transat, Canada 3000 and Royal Airlines provided 25% of the capacity between Toronto and Vancouver. There was choice.
One of the problems is that there is not a choice for the business traveller. It is to be hoped that an airline will come along. I have heard certain things where there will be other entrants into the market whereby there will be real competition, full service competition, not just in the charters, not just for those people who want the cheapest seat possible, but competition for those companies that want some real choice for their executives travelling across the country. That will come.
What makes me so annoyed in this whole debate is that somehow people think we can just flick our fingers after we announced on December 21 the historic deal of putting these airlines together and brought in a bill in February and somehow competition would emerge overnight. As Mr. Kinnear of Canada 3000 said in the newspaper on the weekend, he has four A319s on order to lease but they cannot get into service until next summer. There is a backlog of new aircraft orders around the world.
It is not like flicking our fingers and getting immediate certifications of planes, training crews and having a total competitor to Air Canada overnight. That is why I keep talking about 18 months to two years to give the marketplace time to sort itself out. If it does not, I can tell the House categorically that the government will not hesitate to bring in foreign carriers to compete with Air Canada because ultimately we have to make sure the travelling public has a good deal.
I am not happy with the kinds of prices we have seen in the last 10 years. As I said earlier at report stage, the duopoly of Canadian Airlines and Air Canada was not competition at all. People are lamenting the demise of Canadian Airlines as the end of competition. The fact is there was very little price competition. What they were doing was bashing themselves over the head with extra capacity all around the country with flights departing at the same time.
I remember going down to the Deputy Prime Minister's riding about a year ago. I was booked on an Air Ontario flight to go to Toronto. Then I found out that there was a Canadian regional flight that was leaving a half hour earlier. I had about three minutes to get a ticket and get on it, and I did. I ran to that plane. It was a 19 seat Beachcraft. Do hon. members know how many people were on it? Yours truly. I was the only one on it. Do hon. members know how many people were on the Air Ontario flight? There were six people on a 50 seat Dash-8. That is the kind of ludicrous competition that we had. It was not competition.
Anyway, let us not talk about the past. We are wasting time talking about the past. Let us talk about the future. We have made Air Canada strong. It has new roots. It is now the world's 10th largest airline. It will do battle with the best in the world, British Airways and Cathay Pacific. The U.S. carriers are not even in Air Canada's league. They are not in Canadian Airlines' league. We had two of the best carriers in the world. They won awards for service. Now we will turn them loose as a combined entity under the Air Canada banner right around the world.
New services have been announced. I was present in Toronto a few weeks ago for the new non-stop service by Air Canada to Tokyo. There will be other new markets to Asia, to Australia and to other parts of Europe. This is great for Canada, because we not only have a good product. We have a strategic advantage.
With the open skies agreement with the United States we attract the biggest market in the world to come through the Canadian hubs of Vancouver, Calgary, Toronto, Montreal and Halifax. We will sup up a lot of that traffic which knows that they get a poorer product on U.S. carriers. They will go on Air Canada.
Air Canada will be happy. It will make lots of money. There will be competition on the international routes because if people do not like Air Canada's prices then all those foreign carriers still come into Canada and there is competition on the transborder.
Where we are really concerned is for those people who do not have competition in Canada. That is why the bill is particularly strong with respect to monopoly pricing on routes where there is no competition. Is it likely that we will have competition in some smaller communities in the country? No, it is not. We have to make sure that Air Canada does not gouge the travelling public.
That is why we have amended the Canada Transportation Act, to ensure that the Canadian Transportation Agency has that power. We are giving it on its motion the authority to go after Air Canada and say “Listen, justify your price. Roll it back”. We are not just going to wait for any member of the House or a member of the travelling public to go in there and say “We have a complaint and would you deal with it over the next few months?”
The Canadian Transportation Agency will be monitoring these prices on a daily basis. With modern computers it will be monitoring all the prices, not just the full, economy and business class fares but all the various excursion fares, to make sure that Canadians get the best opportunity.
We clearly share the view that there should be a federal official who can deal with consumer complaints. I believe we have found a formula which will not create a new bureaucracy but will provide for the mediation of complaints where no other remedy exists.
Making the proposed air travel complaints commissioner a member of the Canadian Transportation Agency complements the other complaint handling mechanisms which the agency said it wanted to put in place to gather complaints, including those from persons who want to register their views.
I know members of the committee were a bit frustrated when they gave their report and I gave the government's response because they wanted an ombudsperson. We had some real reluctance in this regard because we did not want to set up yet another bureaucracy to deal with the complaints about service and pricing. On pricing we have the mechanisms in the Canadian Transportation Agency. On predatory behaviour and predatory pricing, we have given new powers to the commissioner.
In putting our heads together over at the department we asked why we could not have this person whom the committee wants to oversee the merger and to make sure that complaints are dealt with. Why do we not give the individual real teeth? That is why we are doing something quite extraordinary. We are naming a new commissioner of the Canadian Transportation Agency. Again this does not seem to be out there in the country.
The Canadian Transportation Agency is the quasi-judicial regulatory body over transportation in the country. If we name a new commissioner who specifically will have the mandate to deal with airline restructuring, that is an extremely powerful individual. It is an individual who can subpoena documents and haul in the executives of Air Canada to ask them what is going on. This individual can demand mediation and use the full powers of the office. If that were not enough, the individual can refer matters to the full commission for adjudication, refer matters to the Competition Bureau for its adjudication, or refer matters to the courts for ultimate arbitration.
I cannot believe that Air Canada would want to run afoul of the Canadian Transportation Agency, the regulatory body. I am sure it will co-operate now. To its credit, Air Canada has named its own ombudsperson. The fact it has done this is an admission of the fact that not everything has gone that well with the merger. By and large, the macro issues have been managed quite well, but a lot of what people may refer to as the smaller issues in terms of consumer-customer complaints have not been handled properly.
I was a customer the other week, along with some members of the Reform Party going back to British Columbia and some colleagues of mine from Winnipeg and Windsor. We saw firsthand some of the problems. We cannot dismiss a small complaint when as a result of a mechanical problem on one plane with a capacity of 135 a larger plane was brought in with a capacity of 180 and the airline tried to squeeze in 230 people on that 180 seat plane. No wonder there was a lot of irate passengers. Plus, there was the fact that the flight from Winnipeg had a mechanical problem and it was three hours late. As well, there were not enough ticket agents on duty because there were some off sick.
These may seem like small things to some. I note that on Bay Street they say that we are not taking note of all the big things that have gone well. The air service exists solely for the Canadian travelling public. It does not exist for the stock market. It does not exist solely for the shareholders of Air Canada. It exists for the benefit of passengers. That is why we have not apologized one whit—neither have the members of the committee, no matter what party in the House—for defending the rights of the Canadian consumer, not the rights of the air carrier.
The modifications we have in this bill are quite strong and they will deal with many of the problems that will have to be addressed as the merger goes on.
Let us take the exit provisions. There were some modifications required because some of the carriers like the charters came to us. WestJet came to us and even Air Canada asked if it was particularly fair going from 60 days to 120 days. We have shown some modification there. We have made it easier for the WestJets of the world to go into a new market and not have to stay there for 120 days and lose their shirt if they are not going to make any money.
I think people will forgive me in the House if I blow the horn of the government. If we do not do it ourselves no one else will do it, certainly not if we read some of the editorialists across the country. We have found through government action by using section 47 last fall a private sector solution. It was a bit messy. It was a bit annoying for some people. Anyone who follows the business world knows that mergers and acquisitions are messy at the best of times. The difference here is that the government instigated the whole process through section 47. We had to adjudicate it in the end and come forward with regulation in parliament, which is what we have done through this legislation.
It is obvious, having done that, we would get knocked around in the process. However there is no one that can convince me that we were not right in bringing this whole matter to a head. If we had not done so, we would have had a failure of the second airline in the country. We brought forward a regime that came forward with a private sector solution.
Some people said that we should have let Canadian Airlines go bankrupt. There were columnists in national newspapers saying that. These guys sit at their typewriters or their computers and do not think about the 16,000 people working at Canadian Airlines. They do not think about the thousands of travellers across the country who would have been inconvenienced. I tell the House that the government was not going to let the travelling public down. We were not going to let the workers of Canadian Airlines down.
When we did the deal on the Tokyo route on December 20, Canadian Airlines had two days cash left. I did not know whether it would meet the payroll for Christmas. All these great observers said that we should let the marketplace find its ultimate way and let these people be out of work. It is government, parliament, members of parliament no matter on what side of the House, who would have had to pick up the pieces. It is all right for people to make great pronouncements, but when men, women and children would have been affected, disrupted, that would have been a tragedy.
There was not the capacity in the country to deal with it. Air Canada could not have picked up the load. U.S. carriers could not have come in here even on temporary permits to pick up the load. The charters could not pick up the load at Christmas. Everyone was stretched.
This was the only solution. Not everyone likes the deal that was negotiated between the commissioner of competition and Air Canada, but in the failing firm scenario he had to deal with it the best he could do. I would like to thank him publicly for the work he and his staff have done in helping all of us bring this new regime forward.
The deal has resulted in the taking of the number one airline in the country, the number two airline in the country, 41,000 people, 350 aircraft serving hundreds of destinations in Canada and around the world. We did not have to put up a nickel of taxpayer money to bail out Canadian Airlines. The taxpayer has not been asked to fork out a nickel. There was no bankruptcy. There was no tragedy. There was no heartache.
There has been some slight disruption, depending on the day. We would not call it slight. I did not call it slight the other day at the Ottawa airport. However, the next day when I came back it was okay and things have improved this week. That is why I asked for time for the airline to get its act together. I asked for time for competition to develop because there will be competition, Canadian competition operated by Canadians. It will give the pricing and the flexibility that Canadians want.
I think the commissioner will be making an announcement today or tomorrow about his negotiations on the sale of Canadian Regional Airlines. He got a very big extraction out of Air Canada as part of the deal. Canadian Regional is not an inconsequential player. It has 53 planes, 28 of them jets, albeit old jets. It flew to many communities across this country and even to a few in the U.S. Under the deal that was negotiated by the commissioner, Canadian Regional Airlines must be offered for sale. That is about to be done.
My friend from the Reform Party was taking me to task the other week in question period about the delay in this airline being offered for sale. However, as I said at the time, it has been very difficult to put a value on Canadian Regional Airlines because it was part of the overall Canadian Airlines International. We did not know what amounts should be assigned for marketing, maintenance, sales and all the rest. That has now been done. A third party is being retained to sell that airline. If it is not sold, Air Canada gets to keep the airline. I cannot believe there are no entrepreneurs out there making an offer for Canadian Regional Airlines. If that is the case, there will be more full service competition to Air Canada in the months ahead.
In looking back at the last nine months, I must say that it has not been easy. It seems that anything I have been involved with in my career as a politician has not been easy. However, it is not all the knocks taken on the way; it is how a certain issue ends up. This is ending up, I think, good for Air Canada and for its shareholders.
Let us not forget that if we were Air Canada shareholders, having bought shares when the Mulroney government privatized it in 1988, watching the stock market go through the roof in the last few years, at $6 a share when all this began last year having been floated at $8, we lost money. Today the shareholders are laughing. The share price is at $16 or $17. It is rumoured to be going even higher. We have done the shareholders of Air Canada a favour, despite all the hand-wringing of last fall about the poor shareholders and how they would be sacrificed. The Air Canada shareholders are happy.
We as Canadians are happy. We are going to have the world's tenth largest airline, an airline that is fully bilingual in the service that it provides to the travelling public, and an airline of outstanding quality, of dedicated employees, of new aircraft, one of the newest fleets in the world, and it will be Canadian. We should all be proud of that.
We have also helped all those employees who would have been thrown out on the street. The people at Canadian Airlines will be protected for two years. Any redundancies have to be provided with full packages. The communities that Canadian Regional was servicing at the time the deal was consummated on December 21 must continue be served by Canadian Regional. Those employees will be needed. They should have no fear if a new owner comes along. The alternative would have put people out of work and put families under pressure at a difficult time of year. We see a positive aspect there.
Communities are protected in the bill. For three years Air Canada has to give service. The same goes for Canadian Regional if it is sold. It is all right for guys like me who come from Toronto because we have service coming out our ears. It is the same for the hon. member from the Reform Party who comes from Vancouver. We are lucky. We have lots of service.
My friend from the NDP comes from Churchill, a small community. There is not much service in that area or in areas like that. My parliamentary secretary, who has done an outstanding job here, is from Thunder Bay, another small community. The Thunder Bays of this world will all be protected in this particular regime.