Madam Speaker, I too am pleased to see the end of this debate today.
It is very important to recognize the contribution by not only the Transport Canada people but by the committee members who sat for hours before Christmas and again just recently. Everyone put a lot of time and effort into finding the best solution to dealing with the reality of a monopoly air carrier.
The government does have a role in this situation. It was interesting to hear the minister talk about what happened and why we reached this situation where we had to deal with the merging of two airlines. It was critical last fall when we found that one of our major air carriers was failing and days away from having to shut down its operations. It was prudent that the government stepped in to try to prevent a bankruptcy from happening. I also believed that the interruption to the lives not only of the employees but of the travelling public would have been incredible had a major airline like Canadian Airlines actually shut down its operations overnight. There was a role for government. It recognized that and stepped to the plate.
The legitimate role for government is in safety, environmental issues, labour and competition issues, more specifically, anti-competitive issues.
I do not believe it is up to the government to get back into regulation; to regulate the prices, the routes and that sort of thing. I am pleased the government has not gone that route. Attempts were made today to put in more regulation, but I am pleased to see the government and parliament has stayed away from that.
The best thing the government can do is encourage competition. I listened to the minister with great interest about his hope that Canadian air carriers will step in and be able to provide that competition. I hope so too but airplanes do not come cheap. It takes a lot of money to run an airline and, as in most things, the capital available in Canada for this kind of investment is limited.
I do not see what is wrong with opening the doors and allowing foreign capital to come in to hold up or bolster Canadian airlines. We have done it with other industries and they have been successful. They have offered Canadians good high paying jobs. On more than one occasion I have used the automobile industry as an example. We have tens of thousands of Canadians working in the automobile industry. They have good paying jobs and good working conditions. They are working in Canada under the Canada Labour Code labour relations but the companies are foreign owned. The automobile industry is 100% foreign owned but it provides a lifestyle for tens of thousands of workers that I think is beneficial to our country.
I am not sure that if we can do it for one industry, whether it is the automobile industry, forestry industry or whatever, that it cannot happen in the airline industry where it is a highly capitalized industry.
The government should be concerned about competition and should not be afraid of opening it up. We can have a Canada only airline that is fully owned by foreigners but which still operates in Canada, hires Canadians in good paying jobs and with security, operates under our regulations, buys our gas, pays our taxes and contributes to our Canadian economy. Just because it may not be owned by Canadians does not mean it will not benefit our country. I am not afraid of opening the door to more foreign competition.
The minister made comments about being concerned about the travelling public, the consumer. I would have to say that probably the number one concern of all the committee members was about the Canadian consumer who uses air travel. Because of the size and regional disparity of our country, many people have no choice but to use Canadian air carriers. We were very concerned about making sure that the service to Canadians would be there and that it would be at a price they could afford not at prices out of their reach. We were concerned that the airline, the monopoly carrier, be held to its commitment that it had made to consumers.
However, there are some shareholders of Canadian Airlines who do not see the benefits. The minister was saying that the shareholders of Air Canada have seen great increases in their share prices and that they have benefited from it. The shareholders of Canadian Airlines do not have the same benefit. Basically their shares were taken up at nominal value. Yes, the trade-off was that it it it went bankrupt the shares worth nothing, but some of those shareholders are the employees of Canadian Airlines. Those employees, who gave up 10% of their salary for a number of years to help Canadian Airlines, have taken a real hit in all this.
Part of our concern has to be that government has a role to play in labour relations. We have two labour forces that have to merge. There are some unhappy situations between those two labour forces. I would suggest that maybe one of the legitimate roles of government is to help those two labour forces accommodate that merger.
There are questions about seniority lists which are causing great concern. Maybe the government should take a more active role in trying to resolve some of those disparities between the labour force of the old Canadian Airlines International and Air Canada. I hear from both sides that they are expecting and need some intervention. Perhaps government is the one to do it.
I think the government does have a role to play. With all due respect, it has done the job fairly decently. There is still room for it to move as far as the competition issue is concerned and not be afraid of foreign competition or foreign investment coming in. I for one feel that Canadians can rise to the occasion and that Canadians will step up to the plate to make sure they are in the game. If we really want full competition and consumers to have choices, we need to encourage that competition to happen.
I want to move on to the role of Air Canada, the now monopoly airline company which is offering services to Canadian travellers. I want to tell it that at second reading I agreed with the government that Air Canada needed the transition time, that it was reasonable to give it two years to make the transition. I had assumed that Air Canada would be magnanimous in the way it would deal with this issue. I thought Air Canada would realize that it had a tremendous opportunity to be number 10 in international carriers. I thought it would realize the potential that was there and that it would be a little more gracious about how it handled this transition period.
I am sorry to say that it seems to have chosen a different route. It has chosen to take a hardball, hard-nosed attitude not only toward the travelling public, but toward the system, toward its competition, toward the creditors who had invested and lent money to Canadian Airlines International, and in particular toward its rivals, people who may be the competition, other air carriers in Canada, which the minister is trusting to step up to the plate and become the competition.
Air Canada with its huge monopoly, control and more important, its influence, is sending a message that it does not want to assume the responsibility in a gracious manner and that it is going to play hardball. I am concerned with the way it is treating the competition or people who thought they had a relationship, agreement or understanding with Air Canada prior to the signing of the document. I see that American Airlines may be taking Air Canada to court because of the reneging on a deal it thought it was code sharing.
Service contracts with Canada 3000 have been cancelled with 30 days notice. I am not saying it should be held to contracts which are not profitable or realistic. I am saying that Air Canada should have realized the position it is in, the sensitivity of the airline industry right now. It should have been a little less willing to go in with a heavy hand and should have done some of the negotiating in a more sensitive manner. I have not seen that.
We saw where Air Canada, taking advantage of a situation with its size and ability to add capacity, went after WestJet, another potential competitor that the minister is relying on to develop competition against Air Canada. It was another instance where Air Canada sent a very strong message in a very hard-nosed way that it is not going to tolerate any kind of competition from anyone. After having reduced its capacity on the Toronto-Moncton route, it increased its capacity and lowered the fares to make it impossible for WestJet to establish a market there.
I have concerns. I am sure there is a lot of testosterone in the Air Canada boardroom going into overdose levels. There have been some poor strategic and operational decisions. This has been handled very poorly.
Air Canada has not done a good job in communicating to the travelling public what the expectations should be. It has not told the travelling public that they can expect to wait in long lines, that they can expect airplanes to be cancelled, luggage lost and all the rest of it. Maybe it should not say to the Canadian travelling public that it is not able to meet its requirements and needs. At least it could have explained to Canadians that it is going through a transition period and that there is going to be a period of time when there will be interruptions in services and inconveniences. It could have done a better job in communicating with the people on whom it depends to buy its tickets.
I appreciate the overcapacity issues. Both airlines were not doing as well as they should have been because they were competing nose to nose and were flying half empty planes. I appreciate that. However, I have problems when the first thing Air Canada did was reduce the overcapacity in western Canada by removing aircraft and moving them east. It has sent a message to western Canadians that in the total picture they are not as important as the other people in the country. There may have been a reason that some of it happened, but I have to ask how is it that Air Canada did not feel that there was not a need for some of the aircraft to be relocated in the western area?
I will use an example of a flight from Fort St. John to Prince George which used to take half an hour. This is in northern British Columbia. People who wanted to go to Prince George, a larger centre with better hospital care and the whole bit, used to fly from Fort St. John to Prince George. Now, in order to get to Prince George from Fort St. John, they have to fly from Fort St. John to Vancouver and then turn around and fly from Vancouver back north to Prince George. It now takes six and a half hours on one flight and four and a half hours on the other, when it used to take half an hour. That is the kind of interruption and inconvenience that is being placed on people because of the transfer of the equipment from western Canada to eastern Canada.
The other concern people in the west have is because equipment has been moved it prevents adding on routes or adding on more frequency to destinations during the height of the tourist season. A number of communities depend on convention travel and large conventions. They are having trouble getting bookings now because they cannot get the people who attend these conventions from Vancouver to their location. Whole markets are dissipating because of the change in the flight availability. It is having a detrimental result. Even though it might make economic sense to the air carrier, it has a negative effect on the western region.
I have trouble when I hear that everything is going well and that it is only a matter of time. It will only go well if the corporate entity of Air Canada assumes the responsibility that has been placed with it and it takes on that responsibility in a way that understands the need of Canadians to use air travel. It is not that we want to, it is that we have to. The distances between communities mean for the most part that we depend on air travel.
The government feels that Bill C-26 is the answer. I do not disagree that it is a good step in the right direction. The government's response in giving more powers to the competition commissioner to put in place cease and desist orders so that he can immediately stop predatory behaviour before it has an effect on the competition is a good thing. It is a good thing the minister and his department in their wisdom have recognized the need to have an ombudsman or in this case a commissioner to deal with and investigate complaints from the travelling public and make recommendations as to how they can be resolved. Those are good things.
The most important thing for the Canadian travelling public is choice. If we are going to control prices and service and if we are going to make sure that Air Canada assumes its corporate responsibility, there has to be competition. We have to ensure that Air Canada through its influence does not keep the competition from developing within Canada. We must allow others to come in with their capital and assist Canadian companies to form competition.
The minister mentioned that British Airways will be the competition internationally. That is only if British Airways decides to stay in Canada. The domestic part of its ticket has increased three times. It may be that British Airways and some other international carriers who come to Canada cannot afford to stay. This means that Air Canada not only would have control of the total domestic market, it may be conceivable that unless someone leaves Canada and in my case goes to Seattle, they may not have a choice of using foreign carriers.
The real solution is competition. I would like to think that the government will not stand in the way of looking at how we provide competition if Canadian players are not stepping up to the plate in the near future.
It is a fallacy to think that Americans are bad guys, that Canada is a loser if we use foreign investment money. We do it all the time. Companies do it all the time. They use money from other sources in order to enhance their ability to grow and provide services for people.
I would hope that the government will consider opening up the contributions for foreign investors from 25% to 49%. If put at the 49% level, the company is still considered to be controlled by Canadians. When we have bilateral agreements with other countries, it is important to have a Canada owned airline. Forty-nine percent would ensure that it is a Canadian controlled company and would meet the bilateral agreement requirements.
Not only would we have competition, but the competition would be able to meet the occurring international growth. As the minister explained, Air Canada will become the 10th largest international carrier and I think that is great. Canadians will benefit by having a strong international carrier, a strong Canadian airline. I want to reinforce that the strong carrier should not be able to influence those things that happen in the airline industry outside of the company itself.
In discussions with various witnesses before the committee we heard not only of the difficulties facing WestJet but also the difficulties facing Canada 3000. The implication was that because of Air Canada's volume of flights, because of the 80% to 90% control of the market that Air Canada has and because of its buying power, it has a lot of influence on those who provide services to airlines. I am thinking specifically of airport authorities. When the largest customer is putting pressure on for the best and most of everything, it is pretty hard for the entity to refuse.
If we really want competition, be it international or domestic, good service from airports and good locations in airports must be available to the competition. The dominant carrier should not always get the best space.
We heard from a number of potential airline competitors to Air Canada that they are always relegated to the back corners of our international airports. I think that is something that we may have to look at; not to implement regulations, but to have the understanding that the most important thing in our country is ensuring that competition can come in and can grow.
I think this legislation is a good step. It will help Air Canada through this transitional period by ensuring that it understands what is expected of it. The bill will hold Air Canada to the agreement it made with the competition commissioner.
I am hoping that as time progresses—hopefully not too much time—the government will understand that competition, no matter where the money comes from, is healthy and that we should not be afraid of foreign competition, whether it is from the United States, Britain, Holland, Japan or wherever the money might come from. If it can assist our airline industry to be vibrant and to provide choice for consumers, that is the most important thing.
Canadians need to have choice. Canadians need to be able to decide what airlines they want to take. The services from Vancouver to Ottawa have been reduced. The number of direct flights have been reduced. I do not have a choice. Only Air Canada flies direct from Vancouver to Ottawa.
I think it is important that we have choice, that the Canadian flying public have choice. I urge the government to consider removing that barrier to increasing competition. Also, as I mentioned earlier in my debate, the government may want to look at assisting in the labour relations issues of the two companies which are now before Air Canada. Perhaps that is a legitimate role for government to play.
