Mr. Speaker, I am pleased to rise today to speak to Bill C-10, an act to amend the Air Canada Public Participation Act and to provide for certain other measures.
As the official opposition critic for transport, I have a number of concerns with both the proposed amendment to this act and the government's timing in introducing this change.
Let us review the facts.
On November 3, 2015, the Quebec Court of Appeal, Quebec's highest court, confirmed an earlier ruling by the Quebec Superior Court that Air Canada had failed to fulfill its legal obligations stemming from the Air Canada Public Participation Act concerning heavy maintenance of aircraft in Montreal, Winnipeg, and Mississauga.
On December 11, 2015, Bombardier formerly requested financial support of $1 billion U.S. from the Government of Canada. This was two months after the Government of Quebec had purchased a 49% stake in the C Series program for that same amount.
On February 16, 2016, Republic Airways, which to that point had placed the largest order for the C Series, streamlined its operations as it filed for bankruptcy protection and cancelled its order for up to 80 C Series aircraft.
The very next day, February 17, Air Canada announced that it had begun negotiations with Bombardier to purchase 45 C Series variant 300 aircraft, with an option for an additional 30.
I will be discussing this announcement further, later on in my remarks.
Considering Air Canada had for years shown no interest in the C Series and had just completed an agreement with Boeing to purchase 61 737 Max aircraft, this announcement surprised virtually the entire airline industry. Prior to Air Canada's announcement, Bombardier had gone nearly 17 months without landing a firm order, so it goes without saying that the timing of this transaction was fortuitous for the aerospace giant.
Furthermore, Airways News, a trade publication, estimates that there is a 40% chance that Bombardier will land another order for its C Series aircraft this year. Therefore, to say that Air Canada has saved the Bombardier C Series program would be an understatement.
Concurrent with this announcement, Air Canada announced that it would undertake the heavy maintenance of the C Series aircraft in Quebec for 20 years and create a centre of excellence in the province.
On the same day that Air Canada made its announcement to purchase these airplanes, the Minister of Transport announced that he would lessen Air Canada's obligations under the Air Canada Public Participation Act.
On March 8, the Minister of Transport put the bill we are debating on notice.
On March 14, Air Canada announced that it would move some of the maintenance work presently being done in Mississauga and Montreal to Winnipeg, thereby creating approximately 150 jobs in Manitoba.
On March 24, the Minister of Transport introduced the bill we are debating today.
Given that it is common practice to put a bill on notice and introduce it within a few days, the 16-day delay from when this bill was put on notice to when the minister introduced it has not been explained. In his short justification for introducing Bill C-10, the Minister of Transport hailed Air Canada's decision to purchase the C Series aircraft, combined with the Government of Quebec's and the Government of Manitoba's intention to discontinue litigation against the carrier, as the main cause. He also noted that this would allow Air Canada to be more competitive in an evolving aerospace sector.
While this proposed legislation should have nothing to do with Bombardier, this bill unfortunately appears to have everything to do with Bombardier. If this legislation is part of the government's plan to support Bombardier, then it should just say so.
Let us look at the justification in greater detail, starting with Air Canada's purchase of the C Series airplane.
As was mentioned, Air Canada signed a letter of intent to purchase the C Series aircraft on February 17 this year, with a two-year negotiating window. No money has changed hands, and none will for several years.
Neither Bombardier nor Air Canada has announced the price they have agreed on for the C Series aircraft. However, it is believed to be under $30 million per unit, which is far below the break-even point for Bombardier.
Assuming Air Canada's letter of intent leads to orders at the end of the two-year negotiating window, planes are scheduled to be delivered beginning in early 2020, after deliveries of Boeing 737 Max aircraft are completed, and assuming no delays take place in production.
I would also note that the narrow-body Boeing 737 Max variant 200 and variant 300 airplane that Air Canada is purchasing seats between 160 and 180 persons in a two-cabin configuration, depending on the cabin layout, which is approximately 20 more seats than the C Series.
While I know that all of us here are pleased that Canada's largest airline has made what could be a substantial order for the Bombardier aircraft, none of us should be under any illusion that we will be heading home for the next constituency week on this aircraft.
As is the industry norm, Bombardier will only receive payment from Air Canada once the planes have been delivered, which is many years away. Finally, as with all major orders, due diligence takes time, and either side has the ability to withdraw from the negotiation at any time.
Next is what the Quebec government agreed to, and I will quote Air Canada's press release on this matter:
Subject to concluding final arrangements—
—and those are important words, “concluding final arrangements”—
—the Government of Quebec has agreed to discontinue the litigation related to Air Canada's obligations regarding the maintenance of an overhaul and operational centre following Air Canada's agreement to collaborate with the Province to establish a Centre of Excellence for C Series airframe heavy maintenance work in Quebec.
The Government of Quebec has not abandoned litigation against Air Canada. It has temporarily suspended litigation as both sides negotiate a settlement deal. Until Air Canada takes possession of its first C Series and begins maintenance work on that aircraft, or even concludes its purchase with Bombardier, this deal with the Government of Quebec cannot be final.
The Province of Manitoba, which had originally joined Quebec's lawsuit, has agreed to cease pursuing litigation subject to Air Canada moving approximately 150 jobs to the province. These jobs will be moved to Winnipeg sometime in 2017.
I would note that prior to Aveos filing for bankruptcy, approximately 400 heavy maintenance jobs were in Winnipeg. Air Canada is proposing to bring back 40% of them.
It is clear that with Bill C-10, if something happens and Air Canada does not end up purchasing the C Series aircraft for any reason, whether because of a change in demand for air travel or if the C Series does not fulfill its performance guarantees, the Quebec and Manitoba governments will not have a legal recourse because the law will have changed.
If the governments of Quebec and Manitoba are indeed satisfied with Air Canada's commitments to create and maintain jobs in both respective provinces, there is no need to move as quickly to change the maintenance provisions of the Air Canada Public Participation Act, because no further lawsuits would be forthcoming.
Finally, the minister makes the point that this change would allow Air Canada to be more competitive. The amendment that the minister is proposing in Bill C-10 would indeed allow Air Canada to move some of its maintenance work to jurisdictions where presumably the cost of labour is lower, therefore saving Air Canada money.
In making the point regarding Air Canada's competitiveness, the minister has not provided an estimate of the financial benefit this legislative change will give Air Canada, not even for next year. Perhaps this information will come up in today's debate.
What is even more curious is that in its lengthy and detailed submission to the Canada Transportation Act review, which is available online, Air Canada does not mention aircraft maintenance once as a financial concern.
The location where Air Canada undertakes its overhaul maintenance only became a major concern when the carrier lost in court twice on this matter.
In the same public submission, Air Canada, along with virtually every major aerospace sector stakeholder in Canada, lists the air travellers security charge, the rapid growth in airport improvement fees, taxes on aviation fuel, the need for more streamlined customs processes, and the high airport rent collected by the federal government as major impediments to sustained growth of the aviation sector in Canada, especially relative to American competitors.
If the government wanted to take measures that would stimulate the entire Canadian aerospace sector, including Air Canada, it could have chosen to tackle any of the issues above. I would also note that all of these measures have near universal support in the aviation sector and would not lead to a loss of jobs in Canada, but so far, the minister has been silent on all of these.
The Conservative Party believes that Air Canada should become a private sector company that is not supported by taxpayers while ensuring that Canadians have access to reliable air travel. That was the original intent of the Air Canada Public Participation Act when it was introduced in 1988. The act put in place clear conditions to ensure that all of the support Air Canada had received from government to turn it into a profitable crown corporation would not be lost. These conditions will become well known over the course of this debate, but I will take the time and the opportunity to list them here. Air Canada is subject to the Official Languages Act. It maintains its corporate headquarters in Montreal. Seventy-five per cent of its voting shares have to be held by Canadians. Finally and most important for the purpose of this debate, Air Canada has to “maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community, and the City of Mississauga”.
Today, Air Canada is the largest airline in this country and an important international player in the sector because of support from taxpayers over the years.
Upon being privatized in 1988, Air Canada inherited a fleet of 109 aircraft.
All of Canada's major airports where Air Canada first flew to were built with the financial support of the Government of Canada and taxpayers. Today, Air Canada is the largest tenant in nearly every major airport in Canada, with the exception of Calgary and Billy Bishop Toronto City Airport. This gives Air Canada significant influence over each airport's operations and access to the best landing slots in a slot-controlled airport like Pearson. Air Canada also has intangible assets, like landing slots at some of the most slot-controlled airports in the world, such as London Heathrow, Washington Reagan, and New York La Guardia. Earlier this year, Air France sold a pair of its landing slots at London Heathrow for $75 million. For perspective, Air Canada owns 150 weekly slots at that airport.
Air Canada was also the beneficiary of back-to-work legislation in 2012, which was enacted because of Air Canada's importance to this county's economy. I would note that the Liberal Party and the former member for Westmount—Ville-Marie voted against this legislation.
The Conservative Party supports the concept of making Air Canada more competitive relative to other carriers. But as I noted earlier in my remarks, the minister has failed to demonstrate that this will be achieved while ignoring measures that the government could undertake that would achieve this without leading to job losses in Canada.
We know that Air Canada supports these measures because it said so in its comprehensive submission to the Canada Transportation Act review. Therefore, the question remains: Why would the minister undertake to amend this legislation and not take the opportunity to address any of the other measures that Air Canada identified in its submission? Neither this bill nor the Minister of Transport addresses any of these. This is, to me, Bill C-10's greatest failing and why the Conservative Party cannot support this legislation.
To conclude, while it is not clear what level of benefit this legislative change will give Air Canada, we do know that this change will make it possible for the carrier to move thousands of jobs from Canada to other jurisdictions. We also know that the government is missing an opportunity to allow Air Canada to better compete against U.S. and international carriers.
I hope all members will keep this in mind as we continue to debate Bill C-10.