Mr. Speaker, I rise in the House today to debate Bill C-10, proposing amendments to the Air Canada Public Participation Act.
I would like to take a few minutes to explain why the Government of Canada believes this is an appropriate moment to modify the almost 30-year-old act. This is about promoting Canadian industry at home and giving Canadian companies the best chance to compete in global markets.
By amending the provisions of the Air Canada Public Participation Act dealing with Air Canada's aircraft maintenance activities, this bill seeks to ensure that the air carrier can compete in keeping with the evolution of the global transport sector.
The amendments to paragraph 6(1)(d) modernize the legislation by increasing the flexibility of Air Canada to make business decisions in response to market forces and competition. The amendments will remove reference to specific cities, recognizing that this work may take place in wider regions. As has already been noted, the Montreal urban community, which is currently referenced in the act, only included Montreal Island and did not even embrace Mirabel.
The bill also clarifies that the act is not prescriptive in terms of particular types or volumes of such maintenance in each location. Through this bill, a new subsection would be added to the Air Canada Public Participation Act. It would be clarified further that Air Canada may change the volume or type of aircraft maintenance that it will carry out or cause to be carried out in each of the aforementioned provinces, or the level of employment in those activities.
Let us first recall that the Air Canada Public Participation Act's primary purpose was to convert a crown corporation into a thriving and competitive private corporation, in an industry that is characterized by aggressive competition, strong cyclical business patterns, minimal profit margins, and sensitivity to external shocks.
The Air Canada Public Participation Act was brought into force in 1989 to provide the federal government with the legal framework to privatize Air Canada. It also requires the airline to have provisions regarding where it will carry out maintenance, the use of official languages, and where its headquarters will be located.
Other airlines, Air Canada's competitors from Canada and abroad, are not subject to such conditions. This dated legislation now runs the risk of inhibiting Air Canada's ability to be competitive, both domestically and internationally.
Other carriers, Air Canada's competitors, are not subject to the same rules, which means that foreign carriers and other Canadian carriers are able to conduct their aircraft maintenance activities in ways that drive efficiencies and enhance their cost competitiveness.
On May 2, 2016, witnesses at the Standing Committee on Transport, Infrastructure and Communities said that costs are one main component that any airline has that must be addressed. Indeed, costs are very much tied up in maintenance. Maintenance costs are around 10% to 15% of any airline's cost structure.
The market conditions in which Air Canada operates are now greatly different from that of 1989. The 1980s were characterized by deregulation, and since that time the world has seen a proliferation of new air carriers as well as new airline business models. In June 1980, the then president of the International Air Transport Association reported that its membership was composed of 100 airlines from 85 nations. Today, its membership is composed of 260 airlines.
In short, the air carrier marketplace is now much more competitive. This is a good thing. It benefits travellers, and it pushes the airlines to be as efficient as possible. However, we must ensure that our carriers are able to compete themselves, or we risk limiting Canadians' connectivity and threatening the economic viability of these carriers.
The Canadian marketplace has also evolved. By the end of the 1990s, Canadian Airlines International ceased operations, reducing the extent of competition. Other carriers, like Canada 3000, also came and went. However, since then, there has been a flourishing of growth among Canadian companies. WestJet, Porter, Transat, Sunwing, and others provide travel options for Canadians. I should also note the important role by foreign carriers in offering travel options to and from Canada.
New carriers have emerged that are changing the global competitive landscape. In key competition markets, such as the United States and the European Union, carriers have restructured or merged.
We heard in committee from key industry experts. As mentioned in committee by one witness:
We no longer see government-owned airlines in any meaningful way as we did 30 years ago, and this is especially important in the maintenance industry. This industry today is very unlike the maintenance industry of 30 years ago. This industry has evolved into huge economies of scale and specialization
Air Canada continues to provide vital connectivity both within our vast country and to the outside world. It is also an important source of employment and opportunities. In 2015, Air Canada, with its Air Canada Express partners, exceeded 40 million passengers and offered direct passenger service to more than 200 destinations on six continents. Air Canada alone employs around 28,000 people, and that number rises to 33,000 when its partner air carriers are included.
Our air sector has also weathered some difficult times, including the tragic events of 9/11, global pandemics, and the recent economic crisis, yet it continues to robustly offer service options to Canadians. In short, we have come a long way since the 1980s when the government of the day created this law and we left behind a highly regulated sector.
The Air Canada Public Participation Act has achieved its primary objective of successfully privatizing Air Canada. Now, given that times have changed and the air transport sector has evolved, it is also important to ensure that this statute remains up to date. In particular, the provisions of the act that deal with aircraft maintenance risk hampering Air Canada's competitiveness by limiting its ability to organize its activities in a way that responds to the evolution of the sector. Furthermore, given Air Canada's role in providing Canadians' connectivity, this could also impact on the overall competitiveness and cost of air transport throughout the country.
It has been suggested that by way of Bill C-10, the government is not supporting workers in Canada's maintenance, repair, and overhaul sector. It has also been suggested that this legislation would allow Air Canada to eliminate its aircraft maintenance work in Manitoba, Ontario, and Quebec. Of course, we expressed great concern about the impact on workers and their families as a result of the bankruptcy of Aveos Fleet Performance in 2012. Furthermore, at that time, we pressed Air Canada and the Conservative government to act in the best interests of workers.
By placing limits on Air Canada's ability to drive efficiencies in its operations, we are increasing its costs. This in turn will be felt by Canadian travellers and shippers. This could also cause Air Canada to lose market share, resulting in reduced employment in Canada. We have heard in testimony that maintenance accounts for about 15% of Air Canada's costs. Therefore, if our legislation pushes up those costs, it could have important implications for the company's competitiveness.
We have also heard that heavy maintenance is increasingly concentrated in locations specializing in particular aircraft. I note that Air Canada is the only Canadian carrier with a significantly varied fleet, involving large numbers of wide and narrow-body aircraft. It is also the only Canadian carrier with a complex global network, covering multiple continents, and thus in competition with the world's major carriers.
In 2015, Air Canada, with its Air Canada Express partners, exceeded 40 million passengers, and offered direct passenger service to more than 200 destinations on six continents. Air Canada alone employs nearly 25,000 people.
This leads me to the second point, which is about economic opportunities for Canada's aerospace sector. Air Canada and Quebec have indicated their intention to end their litigation regarding the carrier's compliance with the Air Canada Public Participation Act. This announcement came on the heels of Air Canada's declared 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, as well as to collaborate in the establishment of a world-class centre of excellence in Quebec.
This announcement was followed by another significant piece of news. Quebec and Air Canada decided to seek an end to their litigation, which had been based on the Air Canada Public Participation Act. As part of the agreement between Quebec and Air Canada, the carrier committed to supporting the creation of a centre of excellence for aircraft maintenance in Montreal, as well as committing to maintain its fleet of newly acquired Bombardier CS300 aircraft in Quebec for 20 years following delivery. This is an important development for Canada's aerospace sector. It further underscores Montreal's position as an international aerospace cluster with big industry players located there, such as Pratt & Whitney, CAE, Bombardier, and of course, Air Canada itself. This is an excellent opportunity for Air Canada to assist in ensuring that Canada is the global centre specializing in the maintenance of this aircraft.
The Air Canada-Quebec agreement will allow the carrier to benefit from cutting-edge aircraft technology produced here in Canada. It will also result in significant benefits from the aerospace industry, including aircraft maintenance right across the country. This is the sort of investment that the aerospace sector needs. Quebec and Manitoba indicated that these conditions create a context in which they would be willing to discontinue their litigation against Air Canada. These developments provide us with an opportunity to rethink our approach and look for opportunities for improvement.
Beyond business, let us not forget that the United Nations International Civil Aviation Organization is headquartered in Montreal, along with the International Air Transport Association and Airports Council International, among others. Federal officials identified specific concerns around the maintenance provisions of the Air Canada Public Participation Act because they create challenges for Air Canada's ability to be competitive. Specifically, they prevent Air Canada from doing what other carriers do, which is to organize its supply chain to optimize efficiency.
The intention of Air Canada, Quebec, and Manitoba to discontinue their litigation creates an appropriate context to modernize the act, and indicates that the parties are working together toward a similar objective: the growth of Canadian prosperity. However, let me be clear. We continue to believe that Air Canada should commit to undertaking aircraft maintenance in Manitoba, Ontario, and Quebec. As well, we intend for this to be stipulated in the law.
However, we need to provide Air Canada with the flexibility to meet these requirements to compete in an evolving global marketplace. We cannot predict how the airline industry will evolve in the future. Whatever happens, our carriers will need to adjust to meet the challenges and remain competitive. Air Canada needs the flexibility to enable it to adapt to changing market conditions. Bill C-10 would allow us to target the right balance between such flexibility and the continued expectation that the carrier will undertake aircraft maintenance in Canada.
I believe it is important that Air Canada continue to bring high value-added aircraft maintenance work to Canadian communities. The recent announcements regarding additional work in Montreal and Winnipeg show that the carrier is willing to do that; and Bill C-10 would further reinforce this expectation. The time is now to modernize the Air Canada Public Participation Act to reflect the reality that, to be able to compete effectively, Air Canada must have the flexibility to take decisions for its business in response to evolving global markets. This is good for the carrier, and it is good for Canadians.
The opposition members would have us believe that Bill C-10 would legalize the offshoring of aircraft maintenance and that the alternative to this bill would be that the former Aveos employees would be re-employed. Let me be clear. The alternative to Bill C-10 is not the reinstatement of jobs lost as a result of the failure of Aveos.
Also, Bill C-10 would not legalize the offshoring of aircraft maintenance. It was the choice of Air Canada and Quebec to announce that they were willing to seek an end to their litigation with respect to Air Canada's compliance with the Air Canada Public Participation Act. However, it is important to underscore that the litigation did not hold out any guarantee that the carrier would recreate the level of employment that existed prior to 2012 or hire back the same workers who lost their jobs.
I repeat, the time is now to update the Air Canada Public Participation Act and to achieve this balance. I encourage all members to vote in favour of this bill.
