Debates of April 15th, 2016

International Trade

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, if you seek it, I believe you will find unanimous consent for two motions.

That, in relation to the Trans-Pacific Partnership Agreement (TPP) Public Consultation, ten members of the Standing Committee on International Trade be authorized to travel to Montréal and Québec, Quebec; and Toronto and Windsor, Ontario, in the Spring of 2016, and that the necessary staff accompany the Committee.

[The Deputy Speaker, Conservative, Bruce Stanton]

Does the member for Laurentides—Labelle have the unanimous consent of the House to propose this motion?

[Some hon. members]

Agreed.

[The Deputy Speaker, Conservative, Bruce Stanton]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Deputy Speaker, Conservative, Bruce Stanton]

(Motion agreed to)

Transport, Infrastructure and Communities

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, here is the second motion:

That, in relation to its study on Rail Safety, ten members of the Standing Committee on Transport, Infrastructure and Communities be authorized to travel to Lac-Mégantic, Quebec, in the Spring of 2016, and that the necessary staff accompany the Committee.

[The Deputy Speaker, Conservative, Bruce Stanton]

Does the hon. member have the unanimous consent of the House to propose this motion?

[Some hon. members]

Agreed.

[The Deputy Speaker, Conservative, Bruce Stanton]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Deputy Speaker, Conservative, Bruce Stanton]

(Motion agreed to)

Air Canada Public Participation Act

[Amarjeet Sohi, Liberal, Edmonton Mill Woods, AB]

moved that Bill C-10, An Act to amend the Air Canada Public Participation Act and to provide for certain other measures, be read the second time and referred to a committee.

[Kate Young, Liberal, Parliamentary Secretary to the Minister of Transport]

Mr. Speaker, I am pleased to rise today to commence debate at second reading of Bill C-10, amendments to the Air Canada Public Participation Act. These amendments seek to modernize legislation to allow Air Canada to more effectively respond to the evolution of market conditions while continuing to support jobs for skilled workers in Canada's aerospace sector. This bill would amend the provisions of the Air Canada Public Participation Act dealing with Air Canada's operational and overhaul centres.

Let me first say that this bill is being submitted for consideration to the House in the context of an historic investment by Air Canada in Canada's aerospace sector. As members are aware, Air Canada has announced its intention to purchase up to 75 Bombardier C Series aircraft and to ensure that these planes will be maintained in Canada for at least 20 years.

Air Canada has also said it plans to support the creation of centres of excellence for aircraft maintenance in Quebec and Manitoba, and the company says it will continue to carry out significant work in other parts of Canada. In other words, this bill comes before this place at an important time for Canada's aerospace sector. Not only is Bombardier producing an aircraft that is a game changer for aviation in terms of its efficiency, environmental performance, and noise, but Air Canada is adding this plane to its fleet, creating significant opportunities for high-value employment.

Quebec has estimated that the creation of the centre of excellence in Montreal alone could produce 1,000 jobs over 15 years, while the manufacturing of Air Canada's C Series aircraft could create an additional 300 jobs. Air Canada also intends to support the creation of 150 jobs in Manitoba, with a possibility to expand beyond that. These are precisely the results that we should be pursuing. They are market-driven investments aimed at improving Air Canada's bottom line and ability to serve Canadians, by investing in world-class technology right here in Canada.

As members are aware, the Attorney General of Quebec took legal action against Air Canada following the closure of Aveos Fleet Performance in 2012, accusing the carrier of non-compliance with these provisions of the Air Canada Public Participation Act. In light of Air Canada's investments in aerospace in Canada, including aircraft maintenance, Quebec has since announced its willingness to discontinue its pursuit of that litigation.

This creates an appropriate context for us to modernize the Air Canada Public Participation Act. This legislation is now close to 30 years old. It was created to enable the privatization of Air Canada, which occurred in 1989. Specifically, I am referring to paragraph 6(1)(d), which calls for Air Canada to have in its articles of continuance:

provisions requiring the Corporation to maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community and the City of Mississauga;

Let me begin by providing to the House some of the history of this legislation. The Air Canada Public Participation Act was brought in at a time when countries around the world were moving away from a high degree of regulation and public ownership in certain sectors, notably air transport. Canada was no exception. To support economic growth, deliver new services to Canadians, and significantly reduce the burden on the taxpayers, the government took several actions. We deregulated the air transport sector. We commercialized our major airports. Also, by way of the Air Canada Public Participation Act, we transformed Air Canada from a crown corporation into a viable and competitive private company.

The air transport sector has greatly evolved since 1989. Now it is common for global air carriers to outsource aircraft maintenance and to distribute their supply chain across different geographic areas, with a view to being more efficient. This is the competitive environment within which Air Canada operates. Other air carriers, Canadian and international, are not subject to the same obligations regarding their maintenance facilities. That means that they can seek out efficiencies in ways that Air Canada cannot.

Ultimately, the result of this is that Air Canada could be less competitive. Furthermore, if Air Canada's ability to reduce costs is limited by the act, that could make air travel more expensive for Canadians. In other words, the Air Canada Public Participation Act could place limits on the company's ability to be competitive and cost effective, with implications for the travelling public and the Canadian economy. This does not support an approach to air transport that focuses on competition and market forces as the best means to deliver value to users. Air Canada, like any company, needs flexibility to evolve within its competitive environment to remain viable.

Of course, we were all concerned when Aveos closed it doors in 2012, resulting in layoffs across the country. Some divisions of Aveos were purchased as part of the bankruptcy process and kept in operation, but others were not. The closure of Aveos meant that Air Canada ceased to carry out certain work in Canada. The minister objected to this, as did many of our colleagues. That is why we are so pleased to see that Air Canada is now investing in Canada's aerospace and aircraft maintenance sector, and in doing so creating concrete employment opportunities for Canadians in this sector. That is precisely the type of outcome we wanted to see.

The Air Canada investment in the C Series and support for the creation of the centres of excellence in Quebec and Manitoba offer specific opportunities for highly skilled aerospace workers, both during the manufacturing phase, and later, for maintenance. Our intention in introducing this legislation is to strike the right balance.

First, we want Air Canada to have flexibility to organize its activities, to match how the air transport sector has evolved and will continue to evolve. At the same time, we want to ensure that the act continues to require Air Canada to carry out aircraft maintenance in certain Canadian regions. This proposed legislation maintains that commitment.

The act currently refers to the city of Winnipeg, the city of Mississauga, and the Montreal urban community. I note that the Montreal urban community, which no longer exists as a jurisdiction, did not include all of greater Montreal. For example, it did not include Mirabel. Also, Air Canada's activities extend throughout the greater Toronto area, not just Mississauga.

Given this, we have chosen to expand the reference in the legislation to cover the provinces of Manitoba, Ontario, and Quebec, which allows for Air Canada's maintenance work to extend to areas around the named cities, as opposed to remaining strictly within the city limits. Furthermore, Bill C-10 would clarify that paragraph 6(1)(d) of the Air Canada Public Participation Act requires Air Canada to commit to carry out or cause to be carried out aircraft maintenance, including with regard to airframes, engines, components, equipment, or parts, in Manitoba, Ontario, and Quebec.

However, this does not mean to specify particular types or volumes of such maintenance in each location, or particular levels of employment. In this way, it will be clear that we are not tying the hands of a private company to manage its operations into the future. Air Canada will be able to adjust its activities to respond to the evolution of the air transportation sector in the same way that any other company does.

I would like to remind the House of the nature of air transport and how it has evolved. This is a truly global business, characterized by large international corporations providing services over vast networks, using extremely expensive equipment. It is also highly susceptible to external shocks and is cyclical in nature. Air transport provides essential connectivity, both within this vast country and to the outside world. It is also a major source of employment. Air Canada alone employs close to 25,000 people.

Air transportation has evolved considerably since the 1980s. We have seen important new aircraft technologies, huge global growth in traffic, new business models, and new air carriers. It has also weathered major shocks, such as pandemics, economic crises, and the terrorist attacks of 9/11. We can only imagine how the sector will evolve in the future.

Federal policy regarding Canada's air transport sector places a premium on competition and market forces. We do not subsidize the sector. Rather, we support the user-pay principle with regard to infrastructure and service. This is not the case in all countries.

Since its privatization, Air Canada has existed as a private enterprise without state support, despite weathering some difficult periods. While the federal government participated in bridge financing, along with private partners, to help Air Canada through the credit crunch resulting from the 2009 global financial crisis, this was done on commercial terms. Any loans were paid back in full with interest.

Where both air transport and aerospace are concerned, it is essential that Canada be competitive, but we cannot rest on our laurels as the world of aviation is changing quickly.

I am particularly pleased that our aviation and aerospace sectors have come together, with the recent announcement by Air Canada regarding its purchase of the Bombardier C Series. This will allow Air Canada to operate aircraft that set new standards in aviation by cutting fuel consumption, reducing GHG emissions, and minimizing noise.

These aircraft will be designed, assembled, and maintained in Canada, creating opportunities for well-paid employment. It is hard to imagine a better outcome. This is the sort of result we hoped to see when we raised concerns around the closure of Aveos.

I am also very pleased that Quebec and Air Canada are nearing an end to the litigation based on the Air Canada Public Participation Act.

I commend Air Canada for supporting the creation of centres of excellence that will provide employment for highly skilled aerospace workers in Manitoba and Quebec.

In this context, it is now time to modernize the Air Canada Public Participation Act to clarify its intent. Yes, we want the legislation to be clear that Air Canada will undertake aircraft maintenance in Manitoba, Ontario, and Quebec. However, as it is a company that needs to compete in an evolving global marketplace, we need to give Air Canada the flexibility to meet these requirements in a way that also supports its competitiveness.

I believe that Bill C-10 achieves that balance. I hope honourable members will join me in supporting this bill and will quickly refer it to the Standing Committee on Transport, Infrastructure and Communities, where we can hear from stakeholders.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Mr. Speaker, taking into consideration the government's propensity to consult, I am wondering if the parliamentary secretary can tell us which stakeholders have been consulted prior to introducing this legislation.

Has the government consulted with any of the companies that presently support Air Canada's maintenance operations, or a single union, for that matter?

[Kate Young, Liberal, London West, ON]

Mr. Speaker, listening to stakeholders is always very important when government is making decisions like this. That is why we want to move this forward to the committee.

We need to have stakeholders voice their concerns, if they have concerns, and the proper place to do that is at the committee level. That is what we are proposing.

[Anthony Housefather, Liberal, Mount Royal, QC]

Mr. Speaker, as a member of Parliament who comes from Montreal, I am very pleased that the Air Canada head office would continue to have to remain within the Island of Montreal.

I would like to ask the parliamentary secretary whether or not she believes that, for the foreseeable future, both the requirement to keep the head office in Montreal and the official bilingualism requirements of Air Canada will remain in place.

[Kate Young, Liberal, London West, ON]

Mr. Speaker, the hon. member raised an important question.

It is important to underscore that this legislation does not talk about the bilingual nature of the Air Canada Public Participation Act. That is not part of any changes. That will continue.

We are all very happy that Air Canada has made the commitment to continue talking and working toward much better service for all Canadians throughout the country.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Mr. Speaker, my hon. colleague chose to use words like “efficiency”, “flexibility”, and a “changing” environment in her speech. It is the same old discourse we hear time and time again in neo-liberal arguments: that corporations must remain competitive in a dangerous time, and we have to give them carte blanche to basically move their operations out of Canada to a cheaper jurisdiction. The Liberals used to stand for this particular act. I remember in 2012, they were expressing their concerns, but my oh my, how the levers of power change one's principles.

I want to ask the hon. member if the government understands that, by instituting these changes to the act, it is in a sense legalizing job losses in Canada.

[Kate Young, Liberal, London West, ON]

Mr. Speaker, actually we are doing quite the opposite. What we want to do is secure jobs for the future, and that is what making some changes to the act will do. The aerospace industry is so competitive that we must look to the future to make sure we keep jobs and build new jobs right across the country.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

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.

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, I am very happy that Air Canada has purchased Bombardier C Series planes, and there is no doubt about that. However, this is about helping to ensure Air Canada can remain competitive on the world stage while supporting Canadian jobs. That is a concept the member's party often claims to support.

It is about supporting Canadian jobs, Canadian ownership, Canadian principles, and Canadian competitiveness. This is a Canadian bill for a Canadian company. I am looking forward to seeing more of Air Canada's maintenance work in my home province of Quebec, with even more pride knowing they are also flying Canadian planes.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Mr. Speaker, I recognize there was no question there, but I will restate that Conservatives do support the concept of making Air Canada more competitive relative to other carriers. However, as I also stated, there are more competitive ways and other measures which the government could undertake to accomplish this without leading to job losses in Canada.

[Matthew Dubé, NDP, Beloeil—Chambly, QC]

Mr. Speaker, I thank my colleague for her speech.

Since the consequences of the present act do not suit the government, it would rather change the act than enforce it. I will have more to say about that later in the debate.

My question for my Conservative Party colleague is simple: when the Conservatives were in power, why did they do nothing to enforce the Air Canada Public Participation Act?

In 2012, when Aveos went bankrupt and people lost their jobs, we asked the government some questions. I would like to take this opportunity to point out that the Liberals asked the same questions.

Why did the government of the day do nothing to enforce the law? Can my colleague help us understand that?

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Mr. Speaker, as I stated earlier in my remarks, we do support the concept of making Air Canada more competitive relative to other carriers.

At this point in time, we know there is a review before the Minister of Transport which contemplates a number of recommendations from the air industry to make its operations far more competitive. I will just name a few: tying all airport improvement fees to specific projects with explicit sunset provisions; overhauling the financing model for security; replacing the current one-size-fits-all passenger screening approach which treats all passengers equally with an intelligence driven, risk-based passenger screening process; and the list goes on.

I look forward to hearing what the government is going to do in response to the Canada Transportation Act review and how it is going to seek to implement some of the recommendations that were put forward.