Mr. Speaker, I am pleased to speak today to Bill C-27, the Canada airports act, introduced in the House on March 20. It is part of the vision for our transportation system policy framework embodied in “Straight Ahead - A Vision for Transportation in Canada” that was released in February by the Minister of Transport.
The Canada airports act would be part of moving this vision forward and would guide the continued development of a sustainable airport system. This is a piece of legislation that has been developed for the longer term. Its purpose is not to address the short term challenges facing the entire air industry sector at this time.
These more immediate concerns have the full attention of the government. Let me assure the House that the government is actively monitoring the current situation in the airline industry. As we all know, the air industry is facing challenges, such as the SARS health issue, the war in Iraq, and fluctuating fuel costs.
The government remains fully committed in reviewing its policy on rents collected at the airports that it leases. The minister hopes to be able to announce shortly the direction the government intends to take on this matter.
The Canada airports act would provide a legislated economic policy framework for the only part of our transportation infrastructure that is lacking one, namely airports. Canada's transportation policy has evolved over the years in response to changing times and conditions. Today, we need to modernize and reform Canada's airports policy by enshrining some key obligations and governance principles in legislation. In doing so, we are contributing to the governance agenda as set out in the most recent Speech from the Throne.
The act responds in a positive manner to the recommendations in the government mandated local airport authority review report of 1999 and the Auditor General's report of October 2000. It conveys the governance response to the recommendations on airport governance in the Canada Transportation Act review panel report and in the final report of the independent observer on airline restructuring.
It reflects comprehensive consultations with the affected airport operators, air carriers and provincial and territorial governments.
The Canada airports act is intended to build on the successes of the 1994 airport commercialization policy, while addressing new and emerging issues that have arisen, with 10 years experience since that policy was announced.
The bill contains a new declaration for a national airports policy that replaces the 1994 policy which was primarily divestiture oriented. This declaration is very much in line with the new transportation policy statement set out in Bill C-26, the transportation amendment act, introduced in the House on February 25.
The declaration recognizes that it is in the public interest to have a national system of airports that is operated in a manner that is safe, secure, efficient, economically sustainable, transparent and environmentally responsible. The new policy also articulates the requirement to provide facilities and services to air carriers in an effective, pro-competitive manner and to provide opportunities for air carriers and passengers to express their views on key airport development issues and fees.
The policy recognizes local and regional interests through the activities and governance structures of airport authorities, as well as the role airports play in linking the air transportation system to other modes of transportation and linking the communities they serve to the rest of the world.
The new national airports policy declaration will guide airports in how they must implement the requirements of the act.
Upon passage, the Canada airports act will apply to 29 airports that account for 95% of the traffic of all scheduled passenger and cargo traffic in Canada. This includes the 26 airports identified in 1994 as comprising the national airports system and other airports of national significance due to their strategic geographic location, continued federal residual ownership or because they serve more than 200,000 passengers annually.
The bill contains the key elements that constitute an economic policy framework to strengthen the governance, transparency and accountability of these airports.
I will say a few words on each of these.
Let me start with the government's role and powers. The government's key role is to protect the public interest as it relates to airports, namely, monitoring the airport system and making policies to promote the integrity and long term sustainability, protecting federal property and promoting good corporate governance.
The Government of Canada will be granted the power to give directions and create regulations, for example, in the provision of equitable access for air carriers to airport facilities such as gates, bridges and counters, slot coordination, federal visibility and environmental requirements. The Government of Canada will also be given emergency powers to remedy extraordinary disruptions similar to what is provided in the Canada Transportation Act.
As for the roles and obligations of all affected airport operators, there will be a requirement for them to provide information to the Minister of Transport in support of carrying out his role of overseer, policy-maker, landlord and regulator.
Operators will also have to develop a pro-competitive, equitable access policy for airlines wanting to use essential airport facilities and services, and to post information on fees.
Airports will also have to give access to state and military aircraft, and airports with international traffic will have to ensure visibility of symbols of Canada.
All will have to help Canada meet its international obligations including trade commitments, for example, obligations under bilateral agreements with other countries.
Turning to disclosure and accountability, the focus of the act is on higher transparency through public reporting. There is a more limited application to the airports in the territorial capitals and airports not operated by authorities. However all affected airport operators will have to produce annual reports with audited financial statements and hold annual meetings that are open to the public.
In the case of airport authorities, the requirements are spelled out in greater detail and include those respecting financial information on investments in subsidiary and minority interest corporations. They include the requirement for an independent, comprehensive performance review to be conducted every five years from the date of transfer. To increase transparency, authorities will have to have all their key documents available for public review including their leases and performance review reports.
Perhaps one of the most important subjects covered in Bill C-27 relates to airport fees. Although notice requirements are covered in our leases, this bill would establish a more formal fee setting process respecting aeronautical fees and passenger fees of general application.
The bill sets out the charging principles and requires that a methodology for determining fees be developed that will make it clearer how they meet financial needs. It establishes a procedure for notices of fee adjustments and obligatory consultations with concerned parties.
The bill makes provision for appeals to the Canadian Transportation Agency in cases of alleged non-compliance with these procedures or with charging principles.
The proposed bill includes rules on the use of airport improvement fees, AIFs, collected from passengers. AIFs can only be charged in support of capital projects and those projects must be identified. Smaller airports, with traffic of less than 400,000 passengers, are permitted to use passenger fees to cover operating costs and they must also be disclosed.
I would like to explain some of the elements specific only to airport authorities, those related to their corporate structure and governance regime.
Unlike the port authorities that were continued under the Canada Marine Act of 1997, airports were divested without the benefit of a specific legislative framework. All but three airport authorities were incorporated under the Canada Corporations Act, part II, as for not for profit entities.
We have now determined that it is more appropriate for the airport authorities operating leased airports of national significance to be incorporated under their own legislation. Consequently, all the airport authorities will be continued under the act. This means that instead of 21 different statements of purpose, the airport authorities will have a single, simplified statement that applies equally to all of them. Initially this will affect 18 airport authorities. This will be accomplished without any requirements other than to amend their bylaws to comply with the act.
The rights of the airport authorities will be preserved and they will continue as not for profit entities without share capital that are not agents of the Crown. The airport authorities will have the power to engage in activities defined as essential and complimentary activities of the airport and to create subsidiaries within investment limits.
Bill C-27 would also establish the framework for a more uniform corporate governance regime for authorities that updates and strengthens what we have now.
Nothing can replace a solid regime of governance and transparency for airports of national significance that provide an essential public service. The regime will be based on elements such as the structure of boards of directors, the necessary skills, the rules of eligibility for directors and rules regarding conflicts of interest.
All airport authorities will be subject to the same requirements regarding the make-up of boards of directors, with the possibility of choosing directors based on local factors in the region where the airport is located.
The bill spells out the types of organizations that can become selecting bodies that appoint or nominate directors as well as the processes for nominations and appointments of directors. These bodies include the federal government, the provinces, the regional authorities and municipalities and five categories of non-governmental entities, including the Air Carrier Industry Association. This uniform yet flexible regime is designed to ensure that no single entity controls the board and that persons with all the necessary skills are identified.
The proposed bill sets out in detail the duties of the boards of directors and will require them to have a governance committee and an audit committee. In addition, there are rules on auditor selection and rotation, on public bid solicitation and mandated consultation with air carriers and the community. As well the airport authority obligations respecting compliance with the Official Languages Act have been transferred without change.
We believe that with this bill we have struck a balance between the freedoms that airport authorities have and the need for increased accountability. We also believe that we have struck a balance between the wish of air carriers to have their say in the decisions of the authorities, and the independence of said authorities.
There are pro-competitive provisions to assist the airlines and the airports in their decisions on access to essential airport facilities such as slots, gates, bridges and the like. We believe these are measures that will contribute to ensuring the viability of air carriers. How communities can relate to their airports is made much clearer.
Many of these obligations are already in some form in our leases with the authorities, but we have done more. We have offered to provide advice on how to be compliant with the act to any airport that asks. Members should know that some airport authorities have already begun to put in place transitional measures to bring themselves into compliance more quickly.
The bill is a significant piece of legislation which I know has been anticipated by members. The Minister of Transport looks forward to the debate on its contents and to discussing it in detail in standing committees.