Mr. Speaker, this is a somewhat unique situation. I know enough about this bill to know that it is important and it must be supported.
I rise here today to participate in third reading of Bill C-10, which is about modernizing the Air Canada Public Participation Act.
This bill amends the provisions of the Air Canada Public Participation Act dealing with Air Canada's operational and overhaul centres. More specifically, the bill amends paragraph 6(1)(d) in the provisions requiring Air Canada to maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community, and the City of Mississauga and replacing that with a reference to the following three provinces: Quebec, Manitoba and Ontario.
This bill also removes all references to “operational and overhaul centres” and replaces them with a broader reference, namely, “aircraft maintenance activities”, stipulating that this includes work relating to airframes, engines, components, equipment or parts.
The bill also specifies that Air Canada is not under any obligation when it comes to the type or volume of the aircraft maintenance activities it undertakes, either directly or indirectly, in Manitoba, Ontario, or Quebec. Nor is it under any obligation as to the level of employment it must maintain.
These changes seek to modernize the legislation, which is very important, in order to help Air Canada respond more effectively to the changing market conditions, while continuing to maintain jobs for the skilled workers in Canada's important aerospace sector.
First, I would like to say a few words about the privatization of Air Canada.
The House may remember that the main objective of the Air Canada Public Participation Act was to convert a crown corporation into a thriving and competitive private company. The new company would be expected to evolve in an aggressively competitive market that is highly cyclical and sensitive to external shocks.
The act came into force in 1989 to provide the federal government with the legal framework to privatize Air Canada. It also required Air Canada to have provisions concerning, in particular, the maintenance and overhaul of its aircraft, the use of official languages, and the location of its headquarters. Air Canada's competitors from Canada and abroad are not subject to such conditions.
Since privatization, and despite some challenging times, Air Canada has survived as a private company without direct government support.
Today, Air Canada is the only Canadian airline that offers a wide range of regional, national, and international services. Its fleet includes a wide range of aircraft from the world's largest manufacturers such as Bombardier, Boeing, Airbus, and Embraer. We are quite proud of that.
In 2015, Air Canada and its Air Canada Express partners served more than 40 million passengers and provided direct passenger service to more than 200 destinations on six continents. Air Canada alone employs nearly 28,000 people, including 2,400 for its maintenance services.
This bill comes at a very important time for a sector that is booming, but one that is also subject to a great number of fluctuations. We fully realize that this bill gives Air Canada more flexibility when it comes to maintenance, but other restrictions on Air Canada still fully apply, as most of the legislation will remain unchanged.
Other conditions that are important for Canadians, such as the location of the head office and official languages requirements, will continue to exist after the changes we are proposing come into effect.
I would like to remind members that Air Canada is the only Canadian industry stakeholder with such restrictions. None of its competitors are subject to the same restrictions. In a global market and in a sector such as air transportation, which is undergoing major changes, maximum economic flexibility is required to ensure viability in the medium and the long term.
Making this section of the law more flexible will make Air Canada even more viable and, above all, allow it to remain relatively competitive with its national and international competitors.
In this regard, I would like to quote one comment made by Mike Tretheway, chief economist and chief strategy officer at InterVISTAS Consulting Group, who appeared before the standing committee, and stated:
If you choose to have a competitive environment as the basis for your policy, there is a range of competitive issues there, and maintenance is one of the important ones because it's such a large portion of aircraft cost, and you have one airline that has to compete with other airlines that don't have these restrictions.
To give an order of magnitude, in 1980, the International Air Transport Association consisted of 100 airlines from 85 countries. Today, less than 36 years later, its membership consists of 260 airlines, accounting for approximately 83% of total air traffic.
Now more than ever the aviation market is characterized by open skies agreements and the emergence of important new international players. These market conditions offer Air Canada significant global growth opportunities, but also challenges in terms of global competitiveness. Air Canada provides vital connectivity both within our vast country and the outside world. It is also a very important source of jobs.
As Mr. Tretheway said:
...airlines operate with about a 2% profit margin. It's one of the thinnest profit margins of any transport industry, and we can and do see airlines go bankrupt. We've had 60 airline bankruptcies in Canada, and Air Canada itself has gone through one bankruptcy.
Mr. Tretheway further noted:
...[this bill] will have an impact on air travel costs for people flying Air Canada. It will help [Air Canada] get better competitive choices to maintain the high safety standard that Canada requires.... As they become more competitive that I think will get translated, not just for their customers, but customers of the other airlines they compete with, both Canadian airlines like WestJet and Porter as well as foreign carriers that fly in and out of Canada.
The day after Bill C-10 was introduced, some people wondered whether the government was suddenly abandoning skilled workers in the maintenance, overhaul and repair sector in Canada. Some people went so far as to publicly say that Air Canada could limit or even completely stop its maintenance activities that are carried out not only in Quebec, Ontario and Manitoba, but elsewhere in Canada.
Naturally, we listened and expressed our concerns about the impact that the Aveos Fleet Performance bankruptcy had on the workers and their families. At the time, we put pressure on Air Canada and the previous government to act in the best interests of the workers. However, today's conditions are completely different. Let us ask this question: what concrete gains have former Aveos workers made in the past four years?
There is no guarantee that the existing lawsuit would restore the same number of jobs lost four years ago in 2012. The opposition has implied that Bill C-10 would in some way legalize the outsourcing of aircraft maintenance jobs and that the alternative to this bill would be to rehire all the former Aveos workers. In fact, there is nothing in the existing act or the recent Quebec court decisions to require that Air Canada conduct its maintenance in Montreal, Mississauga, and Winnipeg, or to require that the airline go back to doing what it was doing in 2012, with exactly the same employees, before Aveos filed for bankruptcy.
My colleagues are unfortunately creating some unrealistic expectations. That is why we welcome the recent agreements of intent that Air Canada has signed with Quebec and Manitoba. These agreements mention the concrete possibility of jobs, in line with the modern reality of the air transportation sector.
In 2012, the aerospace review noted the growing importance of lower-cost providers of maintenance, repair and overhaul, what we also call MRO, from developing countries, many of which are closer to the growth markets in Asia, Latin America, and the Middle East. While Air Canada does not outsource its aircraft maintenance suppliers in developing countries, many of its competitors do. We must be aware of the global development of these types of services.
It is interesting to note that despite the closure of Aveos in 2012, the MRO sector has experienced significant growth in recent years. Based on data from the report on the state of the Canadian aerospace industry in 2015, the MRO sector experienced strong economic growth from 2004 to 2014, with a 37% increase in direct GDP.
Data from Innovation, Science and Economic Development Canada also indicate that MRO accounted for $3.8 billion of the gross domestic product, that 31,298 people were employed in MRO activities, and that the MRO sector generated revenues of $7.6 billion in 2015. This represents 26% growth in revenue compared to 2010.
Our aircraft maintenance sector remains strong, despite Aveos' bankruptcy, and it continues to be a source of jobs for skilled workers. Over the years, the MRO industry has adapted to the realities of the market. This industry is very competitive in certain leading-edge sectors.
The industry has had to adjust and has become specialized over the years. This industry looks nothing like it did some 30 years ago. It has evolved into a sector that now includes major economies of scale and economies of specialization.
In Canada, our strengths lie mainly in MRO work on engines, landing gear, and simulations. We are fortunate to have many companies working on aerostructure, but not all of them can work on all types of aircraft, so it would be difficult to say whether they would be competitive, in light of the big variety of aircraft operated by Air Canada.
Consider companies such as Air France-KLM and Lufthansa, major global players in aircraft maintenance, repair, and overhaul.
Looking closely at the maintenance structures of these important carriers, it appears that they generally maintain line maintenance within their respective countries for certain types of aircraft. However, their global supply chains are also very important. They are present in major markets, such as Asia and South America, where maintenance centres specialize in certain types of services. Of note, for example, is Air France-KLM, which has an MRO laboratory and innovation centre in Singapore.
The various announcements made by Air Canada, either with regard to the development of centres of excellence in Quebec and Manitoba or its intention to buy C Series aircraft from Bombardier, will result in huge job opportunities in the aerospace industry, and will especially favour continued growth in the MRO sector in Canada for the foreseeable future.
We must stop looking backward and take concrete actions to think about the future in the short, medium, and long term, in light of the very important changes that I have already mentioned.
I see the centres of excellence and the purchase of Bombardier's C Series aircraft as concrete measures that will produce real job opportunities for lots of Canadians.
When Peter Wallis, president and CEO of the Van Horne Institute, appeared before the standing committee, he said that the opportunity to create a centre of excellence in Quebec to maintain Bombardier's new planes is huge for the sector. It would enable that sector of Canada's industry to set itself apart from the global competition.
I strongly believe that in light of various Air Canada announcements, Delta's decision to purchase C Series planes, the creation of centres of excellence, and the decision to drop the lawsuit with Quebec and Manitoba, we will have a much better chance to create jobs and grow our aerospace sector, which is so crucial. Instead of sitting on our hands and waiting for other people to step in and do the work, we will have an opportunity to work and put forward solid proposals.
These promises, which will be fulfilled in the coming years, offer real opportunities for us to distinguish ourselves globally and create a Canadian hub of expertise and innovation. Projects like these will generate better long-term economic growth for Canada and create permanent skilled jobs. I think that is where what we are doing now differs from what was done in the past. Let us stop trying to do things over. Instead, let us look ahead and work for the future.