STANDING COMMITTEE ON TRANSPORT
LE COMITÉ PERMANENT DES TRANSPORTS
[Recorded by Electronic Apparatus]
Wednesday, April 5, 2000
The Chair (Mr. Stan Keyes (Hamilton West, Lib.)):
Good afternoon, colleagues.
Just before I begin, I thought I'd give a special
welcome to students who are with the Forum for Young
Canadians. They're with us in committee today.
They've chosen our committee amongst the many to come
and listen in on. We welcome you here to the Standing
Committee on Transport, as it's known, and we hope you
enjoy your stay and have a great learning experience
while you're up here in Ottawa.
Colleagues, pursuant to the order of reference of the
House dated March 31, 2000, this is a consideration of
Bill C-26, an act to amend the Canada Transportation
Act, the Competition Act, the Competition Tribunal Act,
and the Air Canada Public Participation Act, and to
amend another act in consequence.
We welcome this afternoon the Canadian Transportation
Agency and its chairperson, Marian Robson. Joining
Marian are Mr. Gavin Currie, director general, air and
accessible transportation branch; Claude Jacques,
director, legal services directorate; and David
Western, director, accords, tariffs and enforcement.
We welcome our witnesses to the Standing Committee on
I would assume it's Ms. Robson who will be making the
presentation. When you're comfortable, please begin.
Ms. Marian Robson (Chairperson, Canadian
Transportation Agency): Thank you very much, Mr.
I'm very pleased to be here this afternoon with my
colleagues from the agency. As you are aware, I was
not originally scheduled to appear before the
committee, but in light of the testimony yesterday and
the focus that was given to the consumer protection
issue and the interest of this committee in the role of
the agency, I felt it was important to personally be
here today. I'm here to respond to your concerns and
to assure you that we at the agency attach a great deal
of importance to these issues.
We have a short presentation for you on the agency's
new role and our action plan. We've prepared a deck to
guide the discussion, and I assume that's been
circulated. I will just give some summary opening
remarks and then I will ask Mr. Currie to follow me in
As you're no doubt aware, in Bill C-26 there are five
major areas of concern for the agency. The first is
mergers and acquisitions, and this is really an
expansion of our current role vis-à-vis Canadian
ownership and control of airlines.
The second is
discontinuance or reduction of service, and this is an
area where the legislative provisions have been
slightly expanded; however, the agency's role itself
An important new element is, of course, domestic
pricing. Here there's a new role for the agency
designed to ensure that no price gouging takes place on
routes served by only one carrier and that indeed an
adequate range of fares is offered on those routes.
Here we have significant powers, both on our own motion
and on complaint.
The fourth area is domestic tariffs. Here we have
a slight expansion of our current role on domestic
tariffs, which will give us the power to require
compensation for consumers under certain circumstances.
Last but certainly not least is terms and conditions
of domestic carriage. This is a new role for the
agency and a very important consumer protection issue.
This will now give, on the domestic scene, a more close
parallel to what is currently happening under
international rules. Here we're talking about issues
such as lost baggage. This would be a complaint
mechanism, where the terms and conditions were seen in
some way to be unreasonable or discriminatory.
I'll now ask Gavin Currie to review these issues in a
little more detail.
Mr. Gavin Currie (Director General, Air and
Accessible Transportation Branch, Canadian
Transportation Agency): Thank you, Ms. Robson.
Dealing first with the new provisions on mergers and
acquisitions, the agency has a role to play here.
Basically, the agency must determine whether a proposed
merger or acquisition would result in an air carrier
that is Canadian owned and controlled. We already do
assessments of Canadian ownership and control as part
of our licensing process, so in a sense it's an
extension of our current responsibilities.
I'm now going to say a few words regarding the discontinuance
or reduction of service. When we say reduction, we mean the
discontinuance of at least one weekly flight to a point. In such a
situation, a carrier must give 120 days notice and consult with
local officials, if it is the last or second last carrier at the
point or if the discontinuance of a year-round non-stop scheduled
service would result in reduction of at least 50% of the weekly
passenger-carrying capacity on a route.
In such circumstances, the Agency is empowered to take some
action. First, the Agency can, on application, reduce the notice
period. Also, if the required notice is not given, the Agency may
order the service reinstated for up to 60 days, if possible.
However, it should be noted that the Agency cannot prevent
discontinuance of service. The relevant clause of the legislation
prescribes only a notice.
Turning to domestic pricing, there are, as the
chairman mentioned, a number of new responsibilities
for the agency here and some limitations as to
where the agency can operate.
I would stress first that the agency has power to act
only in situations where there is a route within Canada
served by one licensee and included in that licensee
are any affiliated licensees. However, the agency can
look at all fares on such routes, in contrast to the
current situation with the current act, where the
agency is limited to looking at basic fares only.
The agency may determine that there's one licensee on
a route if it finds that every alternative service is
In terms of what the agency can do, if the agency
determines on complaint or on its own motion that a
fare rate or increase is unreasonable, it may disallow
the fare rate or increase, it may order a reduction, or
it may order a refund if practical.
Also, if the agency determines that the range of fares
or rates on a route is inadequate—and “route” here
again is a route with only one carrier—the agency may
direct the carrier to publish and apply additional
fares or rates.
In determining whether the price is reasonable or not,
the legislation gives the agency considerable
direction. The agency shall consider historical data
and fares or rates on similar but competitive routes,
as well as other information provided by the carriers
or requested by the agency.
But it's clear here that the legislation expects the
agency will do its determination of whether a fare is
reasonable or not primarily by comparison: comparison
to what existed before, in the past, and comparison
with what exists on comparable routes with its
competition, where presumably the competitive process
ensures that fares are reasonable.
I will now deal with the issue of domestic pricing, in
particular, with the conditions that apply to domestic service.
Carriers must have a tariff which includes all fares, rates and
charges, as well as the terms and conditions of carriage which
apply, for example, to passengers whose luggage is missing or who
are denied boarding. If carriers do not abide par their tariffs,
the Agency may order a carrier to do so or order compensation for
expenses. This is a new clause.
Regarding terms and conditions of domestic service which lead
to a complaint, if the Agency determines that they are unreasonable
or unjustly discriminatory, it may suspend or disallow them or
substitute other terms and conditions.
So having talked about the main provisions of the act,
I'll turn the microphone back now to the chairman, who
will talk about our action plan.
Ms. Marian Robson: Thanks, Gavin.
I would like to give you a few details about the
action plan we are currently working on to respond to
this legislation when it receives royal assent. We
are, of course, in the planning stages, and this is
very much a work in progress. However, we have set up
an internal project team drawing on the resources from
various areas of the agency, with a mandate to plan for
and manage the transition from our current regulatory
regime to the expected new one.
There's a lot of work going on now operationally in
terms of planning how we would actually handle
these new responsibilities.
We are also planning an information campaign to inform
Canadians about the agency's new role and their rights
and recourse under the new provisions. Once royal
assent is given, we intend to hold a press conference,
do some regional media work. We're preparing posters
and brochures for the travel industry; revising the
agency's website to include provision for on-line
complaints; and creating a new and improved 1-800
number, which I understand had some attention
yesterday. We're going to be making use of a call
centre initially, since we have absolutely no idea of
what sort of volume to expect. We're planning for all
contingencies in terms of the early stages of the new
We'll see how things go and whether an ad campaign at
some point would be appropriate or whether in fact
Canadians are aware through these other means of the
We're also expanding our complaints unit to deal with
an increased workload. We're creating a new pricing
investigations unit, developing and refining price
monitoring and analysing techniques, training staff for
new responsibilities, and expecting some modest
additional resources for communications activities.
Our goal is to be ready to go on day one after the act
is proclaimed. I think I can say the agency already
has quite a well-established track record in dealing
with consumer complaints and consumer issues with
respect to accessible transportation. In that area, we
are extremely active, and I think we are pretty well
established with both the consumer groups and the
carriers in terms of the services we offer to the
I am confident we can build on that experience. We
have an excellent group of people in the agency, and
I'm confident we will be able to fulfil this mandate
Thank you very much, Mr. Chairman.
The Chair: Thank you, Madam Chairman. We
appreciate your presentation to our committee. We'll
go right to questions.
Colleagues, we have until 4:30 p.m. for questions of
Ms. Val Meredith (South Surrey—White
Rock—Langley, Canadian Alliance): Yes. I know my
colleagues will be asking you questions about the
complaint mechanism, but I am interested, Madam Chair,
in your final points in the agency's action plan, which
were expanding the complaints unit to deal with the
increased number of complaints and creating a new
pricing investigations unit.
What I'm interested in is how many full-time
equivalent positions you have now, what kind of growth
you anticipate, and how large a unit you're talking
about. And perhaps you could comment on how you see
the airlines responding to that, not only Air Canada
but the other smaller airlines that are going to have
to deal with your agency probably on a more frequent
basis. What is the cost likely to be to those airlines
in meeting the comparable requirements from your new
unit in investigating complaints and looking at various
other regulatory issues that the minister is giving you
through this legislation?
Ms. Marian Robson: That was quite a detailed
question. I'll try to answer some of it, and I'll pass
some of it to Gavin to respond to as well.
We are, as I said, at this point in a planning mode as
far as our resources are concerned. We have taken a group
from within the agency that have adaptable skills and
have put them to work on developing the plans for the
new work. We've tried to make some estimates as to
workload, and that's a very difficult task because we
simply don't have much in the way of data that would
guide us there. So we are having to try to make some
assumptions about the kind of staff requirements
At this point, we don't have any firm numbers. We are
in the process of developing a Treasury Board
submission, which of course can't come until the
legislation is in place. We're really in this holding
pattern of a transitional team until we.... Now, we
certainly have scoped out the type of work we see
coming. Part of our problem is not knowing the volume
or the complexity of the work.
So at this point we really aren't in a very
good position to be specific on FTE.
Ms. Val Meredith: Are we talking, though, about
two positions or five? What size are we talking about
for this new unit you're planning?
Ms. Marian Robson: Gavin, do you want to...?
Mr. Gavin Currie: I would say, in terms of staff,
we're talking perhaps of ten people as opposed to two.
We're not talking about 100 people. There's no great
army being planned. As the chairman said, it's very
difficult to estimate what resources are going to be
required. It depends very much on what the response of
the airlines is to the new situations, how good the
service is, and how many complaints it engenders. It
also depends very much on how often people want to
complain. Until we get some experience with that, it's
going to be difficult to tell.
Our approach so far, as the chairman said, has been to
identify existing resources and move them on a
temporary basis into this transition team. We
certainly couldn't staff rapidly enough anyway. It's
not possible in the government. And we do plan to be
The chairman did mention, for example, in terms of
dealing with telephone calls—we expect that at the
time the bill is proclaimed we could perhaps get quite
a surge—we are planning to use a government call
centre. They have the resources not only to handle a
lot more calls than we could immediately, but they also, if
necessary, can expand quite rapidly if the need arises.
In other words, we're trying to ensure that we are
building flexibility into our planning so that we can
respond, as required, to the number of complaints we
Ms. Val Meredith: If the number of complaints are
not there, do you foresee limiting the growth of this
new unit to the work at hand, or are we going to see a
make-work project, where they start going out looking
for trouble that isn't there and putting an onerous
burden on airlines to report and meet requirements that
perhaps are not really necessary? Do you foresee
reacting to only the level of complaints you
receive on this issue?
Mr. Gavin Currie: We have two different roles
here. One is a role to react to complaints, both in
terms of consumer complaints and complaints regarding
pricing. Certainly, we're not going to do anything to
encourage them. I think people will complain as they
want, depending on the kind of service they get. And
in one sense, it would be great if there were no
complaints at all. This would show that the industry
is operating very well. Unfortunately, that hasn't
been the case to date, and I'd be very surprised if the
complaints were zero.
The other role we have, and it's important to
recognize this, is a proactive monitoring role with
regard to prices, and we are expected to monitor price
changes on our own motion—in other words, on our own
initiative. That would certainly go ahead whether or
not there were complaints. That will go ahead quite
actively to start with. If we find that there are no
examples at all of situations where there are
unreasonable price increases on monopoly routes, then I
think the monitoring would be scaled down.
But certainly, I suppose the short answer—I've
perhaps given a rather long one—is that we're not
going to have people sitting around doing nothing. If
there's no work to do, they'll be reassigned elsewhere
The Chair: Thank you, Val.
Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.):
Thanks very much, Mr. Chairman.
Lady and gentlemen, welcome.
I'm curious, in plates 5 and 6, “Discontinuance or
Reduction of Service”, about the 120-day notice. Now,
I understand the reason that's there. If a carrier has
been there for a year or more and has set up the
service and everything else, there should be some way
for the community to respond to the situation if the
carrier wants out. But I want to put it on its head. I
want to look at it another way.
What about a new carrier coming in? They'll take a
look at this, and as soon as they sign the papers to
set up service, they're going to be hooked into 120
days. I'm wondering if they wouldn't think twice
about that. In fact, if the service to that community
is marginal, they may just say “Forget it, there's a
120-day impediment here. I'm not going to get into
Mr. Gavin Currie: Yes, I think you're right.
Right now, of course, it's not 120 days, it's 60 days.
So the same impediment exists, but it's a somewhat
We have had one situation that arose
this summer where a carrier was planning to go in on a
temporary basis to a new location.
They were concerned about this,
so they came to the agency and said
“It doesn't make any sense for us to give 60 days'
notice before we leave. Can you provide an exemption
In other words,
it's a situation where the carrier's going in for a
specified period of time, and it doesn't make sense,
really, to follow the provisions here. The agency has
the power to allow the carrier to do something
different by making it clear that the carrier is there
for only a limited period of time and it's not caught
by these discontinuance provisions.
Mr. Murray Calder: Okay, because on plate 6 you
make the statement, “On application the Agency may
reduce the notice period.”
Does that mean to say there's still the basement floor
at 60 days, and you can't go below that? Or could you
go below that?
Mr. Gavin Currie: Yes, we can go down as low as
the agency considers reasonable. In terms of deciding
whether to reduce the notice period, the agency takes
into account the circumstances of the situation.
Now, you were talking about a situation where a
carrier is coming in for a period of time to try
something out and wants to be able to leave after a
certain period. That could be arranged right at the
very start using the agency's exemption powers.
Mr. Murray Calder: Perfect.
Mr. Gavin Currie: The person therefore could be
allowed to come in for that period of time and leave on
a known date in the future. That is being done
Mr. Murray Calder: So the proper process, then,
would be for the carrier to come in, contact the CTA,
and say “I'm looking at establishing an air service;
what about this 120- or 60-day?” He could come to an
agreement with the CTA before he establishes a service.
Mr. Gavin Currie: If he's coming in for a short
period of time, yes.
Mr. Murray Calder: Okay.
Thank you, Mr. Chairman.
The Chair: Thanks, Mr. Calder.
Michel Guimond, please.
Mr. Michel Guimond (Beauport—Montmorency—Côte-de-Beaupré—
Île-d'Orléans, BQ): Ms. Robson, your brief presentation was very
clear, and my questions will follow those asked by my colleague,
The role of the Canadian Transportation Agency is limited to
the following: you can enforce Bill C-26 only as far as it deals
with mergers and acquisitions, discontinuance or reduction of
service and domestic pricing and tariffs. Am I right?
Ms. Marian Robson: And terms and conditions of
carriage as well?
Mr. Michel Guimond: Yes.
Ms. Marian Robson: Yes.
Mr. Michel Guimond: Who will be able to act as a watchdog
regarding the quality of services offered by a carrier? Who will
monitor the frequency of services offered by a regional carrier,
its punctuality, as well as the displacement of carriers which had
contracts previously? Who will be this watchdog? Do you think it
will be the Agency? The Competition Bureau? Who will monitor the
quality of services, their frequency, their accessibility, the type
of aircraft which is used, as well as the upgrades? All these
issues are not within the jurisdiction of the Agency.
Ms. Marian Robson: There is a mix of things here,
Mr. Guimond, so I think perhaps I should let Mr. Currie
deal with this question.
In some cases the tariff provisions and terms and
conditions of carriage do affect some aspects of
quality of service, but in other areas, of course, we
don't have jurisdiction.
Do you want to continue?
Mr. Gavin Currie: Yes, I can answer in part. We have
jurisdiction in some areas, including the terms and conditions of
domestic service. For example, we could act if a passenger is
denied boarding. Whatever has to do with the frequency of service,
the quality of the services offered or the quality of the meals
provided on a plane has to be dealt with by the carrier's
management and has nothing to do with the terms and conditions
included in tariffs.
Mr. Michel Guimond: So, the Agency doesn't believe it has a
role to play in these areas.
Mr. Gavin Currie: When we get complaints regarding the quality
of services, we just forward them to the carrier.
Mr. Michel Guimond: So you'll act as a mail box.
Mr. Gavin Currie: I believe it's more than that. We do more
than act as a mail box. We also receive the carriers' comments. We
are planning to publish a summary of the complaints we get,
indicating their number and their nature. So we'll be in a position
to give better information to the public.
However, we cannot do anything about flights frequency or the
quality of meals. I believe that by publishing the summary of the
complaints we get, we'll encourage the carriers to do something
about their shortcomings.
Mr. Michel Guimond: For your information, the Committee has
unanimously recommended the creation of a position of ombudsman.
It's our Recommendation 42.
Mr. Gavin Currie: Yes.
Mr. Michel Guimond: When the Transport Minister appeared
before us yesterday, he stated that he had no plans to appoint an
ombudsman, because there will then be duplication with the work
being carried out by the Department, the Competition Bureau and the
Agency. Where would there be any duplication between the work of an
ombudsman and that of the Agency regarding the issues I raised
earlier, when you say yourself that you don't look after that kind
of thing, except to act as a messenger or to publish a summary
description of the complaints you get? This doesn't solve the
problem. The people who live in the regions still don't get a good
Mr. Gavin Currie: I believe you didn't understand what I said.
There are several types of complaints, including some dealing with
the quality of the service. What we are talking about are
complaints against carriers which do not abide by the terms and
conditions of the tariff, for example. The Agency can deal with
many problems regarding the terms and conditions of carriage,
including overbooking or situations when passengers are denied
boarding. However, monitoring the quality of meals is not within
our jurisdiction. Some issues related to the quality of the
services offered are the responsibility of the carrier's
management. This is not something which is regulated.
Claude, do you want to add something?
Mr. Claude Jacques (Director, Legal Services Directorate,
Canadian Transportation Agency): I certainly agree with what you
just said. The Agency never had the authority to monitor the
quality of meals and to decide that the coffee served was too hot
or too cold. There are, however, many areas we can regulate, for
instance, anything which has to do with the terms and conditions of
tariffs, including the loss of luggage and overbooking. Even if the
Agency is not empowered to do anything about some complaints, it is
often successful in getting the carriers to compensate those
passengers which did not get the service they deserve. Our role
goes much further than just being a go-between. We can convince the
airlines to compensate some passengers, even if they have no
obligation to do so legally. Thank you.
The Chair: Thank you, Michel.
Mr. Lou Sekora (Port Moody—Coquitlam—Port Coquitlam,
Lib.): Thank you, Mr. Chair.
There's one thing I must say. I got a call from a 905
exchange this morning chastizing me for being so unkind
to Air Canada. So if any news reporters are here in
the House, please don't print word for word what I'm
going to say—
Voices: Oh, oh!
Mr. Lou Sekora: —because you're going to make me
look worse. But I'm going to say, word for word, what
I have to say, because I'm just that kind of guy.
Yesterday we talked to the minister about
discontinuing and cutting service, and I see in your
plates 5 and 6 that there's something you can do about
Number one...and I'm talking about Penticton,
which we talked about yesterday.
Canadian Airlines and Air Canada almost discontinued
their service in Penticton, but yesterday afternoon I
heard they put the service back because the minister
went after them. They put the service back because
apparently it's against their regulation or whatever
They've put it back, yes, but what happens now is that
they have a Beaver going to Penticton and coming to
Vancouver in the morning, and in the afternoon they
have a Beaver going from Penticton to Cranbrook.
That's where it ends.
Can you tell me something about that? What kind of
powers do you have on something like this? I mean, it
looks totally like violation—not cutting more than 50%
but cutting more than 99% of service.
A voice: What did they have before?
Mr. Lou Sekora: They had good service in there.
They had three or four different planes going in, with
two or three different services from both sides.
Then I have some more.
Voices: Oh, oh!
Mr. Lou Sekora: Well, I just wonder what kind of
powers you people have.
The Chair: As long as it's within five minutes,
Lou, you can ask all you like.
Mr. Gavin Currie: I'm not familiar with the
details of what's actually happened at Penticton,
although we certainly have heard of that quite a bit
over the past month or two.
In terms of the powers of the agency, if a service has
stopped completely, then that service must be...but
currently 60 days' notice given unless the agency
grants a shorter notice period. If it's a reduction in
service, then the agency powers come into play only if
the reduction is to less than once per week. If the
carrier changes from one type of aircraft to another,
then there is no power under section 64 to deal with
So if it goes from a larger aircraft to a smaller
aircraft but it's still going more than once a week,
then we do not get involved.
Mr. Lou Sekora: I really have great problems with
adding another ten bureaucrats just to be able to
report lost suitcases. I'm sorry for being that bold,
but I want to know exactly what this committee can do
about a lot of things that are happening, and who we
We want an ombudsman who would have, I feel, some kind
of power. Maybe somebody could create some interest in
what's happening and work on something. But when I
hear there are going to be ten more people, I mean,
that's frightening to me. That's adding ten
bureaucrats when, really, we're not accomplishing a
Ms. Marian Robson: First of all, I'd like to
clarify that we have not decided we're adding ten
bureaucrats at this time, Mr. Sekora. We are looking
at the potential workload and trying to make some
Frankly, I think there are some quite important new
responsibilities here that are very much aimed at the
consumer and protecting the consumer.
Certainly on the pricing side I think this is a very
important role. It's going to look at each route on
its own, each monopoly route on its own. It's going to
look at the range of fares being offered and if
those have been reduced in some way. It's going to
look at the level of fares. We have the power, on
our own motion—and that's partly why we need some
staff—to be able to investigate routes in terms of
both fare levels and fair distribution.
I think that's a very important economic consideration
for consumers, so I don't think I agree that we have
nothing very important to do. I think that's quite a
Mr. Lou Sekora: At one point you or one of your
people mentioned the fact that when you get complaints,
you'll be writing or sending a notice to the company,
whatever the airline is, by mail.
Is that what you're saying?
Ms. Marian Robson: No.
Mr. Lou Sekora: Would you be phoning them?
Ms. Marian Robson: Faxing, phoning, e-mailing.
Basically, what Mr. Jacques referred to earlier is
true. We have a consumer complaints role now that is
quite limited. We have very little power to be able to
enforce the terms and conditions of carriage. Our
staff members do it through either decisions and orders
or, in many cases, moral suasion.
We've developed, I think, a very good record with
consumers and carriers, and now we are going to have a
much more expanded responsibility. I think you'll find
that we already have a very well-established set of
procedures in place with the carriers. We act very
expeditiously on the complaints we handle now. We have
a very good record on our whole accessibility area,
where we've had a lot of experience, so I think we're
going to be able to perform some of these new roles
Mr. Lou Sekora: Thank you very much.
The Chair: Thank you, Lou.
Ms. Bev Desjarlais (Churchill, NDP): Actually, you
indicated that you're here because of some of the
discussions that took place yesterday and obviously
because of the importance of how the health committee
saw the CTA's role. I think that was a direct
reflection of the minister, on numerous occasions,
saying that will be the role of the CTA.
I think there was an impression that we were going to
hear you come here today to tell us that you were going
to have a plan in place to address a lot of the things
we're mentioning, a lot of the things that consumers
have been complaining about: delays on the tarmac; the
overbooking; problems with reservations; problems with
pricing; whether or not a piece of equipment...like
when you sit down in your chair and the armrest is
missing and you get a screw into your elbow; whether or
not there's no notice of cancellation; whether or not
your bags don't get there because the cargo is
guaranteed but the bags with the passenger aren't;
whether or not there are maintenance delays; and
whether or not those things are going to be addressed.
So of all of those things I mentioned just now, how
many of them are you going to be able to deal with?
Delays on the tarmac...? Overbooking 10%...? That's
standard practice: they overbook 10%. Whether or not
reservations are being handled in a timely manner...?
Pricing you're going to be able to deal with, I think
you said. If there's equipment broken and stuff like
that, are you going to be able to tell them they have
to do those things?
Did you get the list? Do I need to go over it again?
Mr. Gavin Currie: I can respond to some of them,
With regard to delays on the tarmac, certainly we would
not be dealing with that in terms of the agency. It
depends on what causes the delays, of course. Is it a
weather delay? Is it a delay caused by the airport
services? Is it a delay caused by air navigation
systems? Who causes the delay? We do not have rules
requiring carriers to minimize the delays. That's not
part of the regulation. That's looked upon as a
In terms of broken equipment, it depends on whether
it's a safety issue or not. If it's a safety issue it
would be dealt with by Transport Canada. Certainly if
someone got themselves hurt on the aircraft because the
equipment was broken, and they complained to us, I'm
sure we'd be able to deal with the carrier on that.
There would certainly be a requirement to compensate
someone who is hurt on an aircraft because of the
equipment being broken. I'm sure we could deal with
In terms of overbooking, overbooking is one of the
practices that does cause a lot of concern to people.
The reason that it's done, of course, is that there are
a lot of no-shows. The way the airlines deal with that
is by having in their tariffs specific provisions for
dealing with involuntary denied boardings, as they call
it. If the person shows up and gets bumped, then there
are certain things the airlines must agree to do in
terms of providing service to that person. We can
certainly handle that.
Certainly the alternative to overbooking, I suppose,
would be to charge everyone who doesn't show up for a
flight. That's a possibility. It's not the way the
international airline industry works, so the question
is, are we going to try to impose something here that
is different from the standard practice across the
Baggage is something we can deal with. The question
was about baggage being delayed...?
Ms. Bev Desjarlais: Actually—and I've seen this
happen—often passengers' bags will be left behind
because there's too much weight on the plane. The
cargo that's on the plane is guaranteed cargo but the
passenger bags aren't.
Mr. Gavin Currie: I'd have to look at the tariff
to.... I suspect that the airline has a right to do
that in their tariff, but I don't know. That's
something we could look at. Certainly the way baggage
is handled is something that's covered by the tariff,
but if you had a complaint about baggage we could
certainly look into that complaint, no question at all.
Ms. Bev Desjarlais: Is there any kind of standard
for what types of services have to be on the plane?
Let's say, for example, that if you have a one-hour
flight you have to be guaranteed to get one glass of
water, or if you have a four-hour flight you should get
a meal and water or coffee. Is there any kind of
standard to give passengers any kind of...?
Mr. Gavin Currie: We have no standards of that
nature. These are things that are, again, within the
purview of airline management as management issues.
Ms. Bev Desjarlais: Can I fit one more in, Stan?
The Chair: One more.
Mr. Gavin Currie: Did I cover them all off?
Ms. Bev Desjarlais: Pretty close—I think you got
most of them in there.
There's another thing I wanted to ask about. You
mentioned—and I know it was just a
possibility—possibly ten staff being needed. As you
heard, the committee was pretty adamant that we saw a
need for an ombudsman, for obvious reasons: because
the issues that I brought up and that others have
brought up were major concerns that we heard about.
So right now, as the CTA, with what you've been
dealing with related to the airlines, what number of
complaints would you be getting that are airline
Mr. Gavin Currie: I think Dave Western has more
details on that. I'll ask him to answer.
Ms. Bev Desjarlais: Actually, if you have the
details of numbers of complaints, types of
My other question is, what's your
staffing allocation right now for complaints?
Mr. Gavin Currie: Dave, do you want to take that?
Mr. David Western (Director, Accords, Tariffs and
Enforcement, Canadian Transportation Agency): Sure.
Mr. Gavin Currie: Roughly speaking, I think we had
about 160 complaints last year. That is my
recollection. I'll give you some numbers, which I
think are right, until Dave finds it.
Mr. David Western: Yes, we're looking.
Mr. Gavin Currie: I think it was 160 or
thereabouts. This year to date I think we've had about
70; that's in the first quarter of the year. These are
In terms of dealing with complaints, if someone gives
a complaint by phone, we then ask for something in
writing just to confirm it. The written complaints are
the ones we deal with.
So that gives you a feel for the level of complaints.
In terms of—
Ms. Bev Desjarlais: Just on the latter point, what
types of complaints do you get? Just—
The Chair: Bev, we won't go on. You asked for the
Ms. Bev Desjarlais: No. I did ask for that and
they're on that page, so rather than flip that page—
The Chair: No. Bev, we could go for 10 or 15
minutes, so we'll just keep it to the questions you've
asked so far and then we'll move on.
Mr. Gavin Currie: What questions am I allowed to
The Chair: How many positions...I think that was
the other one.
Mr. Gavin Currie: Right now we have a couple of
people dealing with complaints.
Ms. Bev Desjarlais: A couple as in two?
Mr. Gavin Currie: Two.
The Chair: Thank you, Bev.
Charles Hubbard, please.
Mr. Charles Hubbard (Miramichi, Lib.): Thank you,
I was following along with Bev. How many employees do
you have now and how many of those people are assigned
to the air transportation sector?
Ms. Marian Robson: The total is 250 people.
Mr. Charles Hubbard: Two hundred and fifty...?
Ms. Marian Robson: The air side is 90 on the air
Mr. Charles Hubbard: You have 90 already. On
those 90 in terms of air, if you listed their five main
duties presently, what would they be?
Mr. Gavin Currie: Their main duties would be in
terms of administering the licensing system. We issue
licences to carriers, both to Canadian carriers and to
foreign carriers operating to and from Canada. As
subsets of that we deal with verifying their insurance,
and we deal, for Canadian carriers—and this can be
quite complex—with their ownership and control.
On another area, we deal with tariffs, international
tariffs. International tariffs are filed with the
agency. There's a group dealing with that.
We have a group dealing with international agreements.
We get involved in the negotiation of bilateral
agreements with other countries and in the
administration of these agreements. That's another
We have a group dealing with accessible
transportation, that is, making the transportation
system more accessible to persons with disabilities.
We deal with the issue of charter permits. We deal
with thousands of charter permits every year for
Have I done five yet?
Mr. Charles Hubbard: I think you have five. So of
Mr. Gavin Currie: We have others as well.
Mr. Charles Hubbard: —approximately how many of
those would be with the air sector?
Mr. Gavin Currie: Around 80 to 90.
Mr. Charles Hubbard: When you have companies....
We talked about these charts, plates 5 and 6, dealing
with companies getting out of service. For example,
last fall Inter-Canadian certainly didn't serve any
notice; they just simply stopped flying. In most
relationships of providing service to an industry or to
a government, there is a bonding mechanism by which a
carrier or a business is forced to have a bond, which
means they live up to the obligations.
Now, it was 60 days, but I think it was in less than
six hours that they served notice: how did
Inter-Canadian get around the former regulations?
Mr. Gavin Currie: Around which regulations?
Mr. Charles Hubbard: The regulation was, before
this new act or new bill, 60 days' notice.
Mr. Gavin Currie: Yes.
Mr. Charles Hubbard: Their notice was less than
Mr. Gavin Currie: That is correct.
Mr. Charles Hubbard: I'm saying, how did they
manage to do that and still exist within the act and
the regulations that we had previously?
Mr. Gavin Currie: They didn't. They clearly did
not respect the act and regulations.
Mr. Charles Hubbard: So you're saying that really
it doesn't mean a whole lot if the companies go into
economic or bankruptcy types of protection. They
simply can exit at any given time without any
responsibility. So there really is no bonding in the
Mr. Gavin Currie: There's no bonding domestically.
To return to what you indicated very briefly, the
remedy in the act is that if someone does exit without
appropriate notice, then the agency can require that the
service be reinstated for up to 60 days, if it's
practical to do so.
In the case of a bankrupt carrier, frankly it's
not practical to do so; you can't force a bankrupt
carrier to fly. However, it does make quite a lot of
sense if a carrier is—and we have done this in
the past—a healthy carrier serving
lots of places in the country and it does discontinue
service at a point without appropriate notice. Then the
agency can order the carrier to go back into that place
it exited without appropriate notice, and we can
make that stick. We have the power to do that and we
can make sure the carrier does that. But that's only
because it's feasible to give that order and to make it
So it works for a carrier that's basically a
financially viable carrier that stops at a particular
point. We can require them to go back to that point. If
a carrier is bankrupt, giving an order isn't going to
do much good. They've already broken the law, they're
going to break it again, and really we can't do much
about it unless the government is prepared to
say, “Go back and we'll pay you to do
it”. That's a different matter. We don't have the
power in the agency to provide a subsidy, but that
would have been another option.
Mr. Charles Hubbard: But to follow this through,
Inter-Canadian worked as a type of subsidiary of
Canadian. They took over a route that was previously run
by Air Atlantic, which had a long relationship with
Canadian. Was there a fly in the ointment in terms of
how you allowed that system to develop where a company
can be spun off, spun off, spun off, and then
eventually have no responsibilities?
Canadian have said—and I guess Air Canada have
said after taking over Canadian—“We don't want to
assume the responsibilities of Inter-Canadian”. But
between Air Atlantic and Inter-Canadian, they operated
in Atlantic Canada for about 25 years. Certainly,
with that history and with that connection to Canadian,
it seemed very unfair and unjust that suddenly they
could say one night to their people, about 800 or 900
employees, tomorrow we're all done.
Is there a flaw in the legislation past or presently
presented that would avoid that type of situation?
Mr. Gavin Currie: I won't try to go through
the whole history of Inter-Canadian or Air Atlantic
here, but certainly Inter-Canadian was a completely
separate company from Canadian Airlines. They did have
a code-sharing agreement with them that allowed them to
use the CP code and provided certain passenger transfer
features. But Inter-Canadian was a separate company.
It wasn't part of Canadian. Neither was Air Atlantic.
Air Atlantic was a separate company as well. It may
be that at some time in the past Air Atlantic was
partly owned by Canadian, but that's going back quite a
few years. It's certainly going back more than five
years at least and perhaps further.
So if you are to allow the business environment to
have different entrepreneurs develop companies in
different places and operate them, then you're going to
have to, I suppose, allow companies.... You give them the
power to enter the market, but you also give them the right
to exit as well if they fail. It's the right to
succeed, the right to fail—it's the marketplace.
It's very tough on the people involved, and I'm not
suggesting it's a good situation. But I'm not sure
how you avoid it if you are prepared to allow new
companies to develop.
Canadian got out of Atlantic Canada, as I
understand it, because they didn't want to be there.
They got out by—going back several years now, as I
understand it—selling off the company to another
The Chair: Thank you, Charles.
Mr. Charles Hubbard: Mr. Chairman, maybe I'll have
to come back on the next round.
It mystifies me
that you talk about your agency and how they permitted
that to develop. This could be a serious problem for
any of the airlines in the future, where you allow a
major carrier to simply spin off and spin off and
dissolve itself from any connections with it and then
suddenly have the newly established company go
bankrupt. I'm concerned.
But, Mr. Chairman, maybe we can go
back to that later on.
The Chair: Thank you.
Bill Casey, please.
Mr. Bill Casey (Cumberland—Colchester, PC): Thank
you, Mr. Chairman.
Following up on my colleague Bev Desjarlais' request
for those statistics on the types of complaints they've
had, Mr. Western has a book there that he referred to.
I wonder if we could have a copy of that book of
charts. Could we have those tabled and sent around to
The Chair: If it's permitted by the agency to be
Mr. Bill Casey: We'd like to have that.
The Chair: It can come to the committee clerk and
then it will be distributed. Thank you.
Mr. Bill Casey: Mr. Currie, a couple of times in
this debate or this session today my colleagues have
brought up an issue and you've said, that issue is
under the purview of management, so you wouldn't deal
with those. The minister said yesterday that you
would be dealing with those issues. He said either his
office, the Competition Bureau, or you would deal with the
issues and there was no need for an ombudsman. So if
you don't deal with those issues that are under the
purview of management, and they have a monopoly and
they can maintain an unsatisfactory situation...who do
consumers turn to if you don't deal with it?
Mr. Gavin Currie: I think it depends what
issues we're talking about. If we're talking about the
quality of food on the aircraft, is that something
you want the government to regulate? The answer is, we
Mr. Bill Casey: You mentioned, though, there were
several issues that were under the purview of
management. The point is we've now given an airline
a monopoly. If they have an unsatisfactory situation,
like the lineups—I've had complaints in my office
about lineups, that people line up so long they miss
their flight—you said earlier that comes under the
purview of management. If that continues and
management refuses to do it, do we as consumers just
have to live with that because there's no place to
turn? Who deals with it?
Mr. Gavin Currie: The agency can only use the
powers that are given to us to deal with it. We can't
extend and say we will now deal with lineups at
airports unless something is done to say that lineups
at airports are something the government wishes to
regulate and asks the agency or an ombudsman or someone
else to do that. It then becomes a decision as to how
far the government wishes to go in regulating the
quality of service.
I'm not saying we couldn't regulate lineups at
airports. I'm saying we currently don't have the power
to do it. I'm not saying whether it's a good thing or
a bad thing. I'm just saying that we can only operate
within the powers we're given.
I think there is clearly a balance here in deciding
what kinds of things are really essential to regulate in
a monopoly and what kinds of things are still going to
be left to the carrier in terms of the service they
provide to the public. It's always a judgment call, and
it's a fine line between.... I think everyone agrees
that on certain things like pricing on a monopoly
route, in a monopoly situation, there
should be some control there, and at the other end
of the scheme, the kind of
coffee provided probably is not worth regulating.
Maybe there's somewhere in between where you have to draw the
line. The question is, where do you draw the line?
Wherever the government decides to draw the line, then
we will administer the line as best we can, but we
really can't decide where the line is. We can tell you
where it is or isn't right now; we can't decide where
it should be. That's really up to the government to
Mr. Bill Casey: I don't mean to be saying that,
but what we're trying to point out here as a committee,
I think almost on every side and with every point, is
there is a hole that is not being addressed in
relatively low-level customer complaint problems.
I don't believe the Canadian Transportation
Agency should deal with long lineups at airports, but it
is a problem for people. If you go to this airport
right here now, you're probably right this very minute
faced with an hour lineup to get your boarding pass.
That's not your purview, but somebody should deal with
that, because it's been consistent for months now, since
the merger. We passed a recommendation unanimously
that there would be an ombudsman to deal with low-level
complaints that you shouldn't deal with, the
Competition Bureau shouldn't deal with, and the minister
shouldn't deal with.
It sounds like you would even confirm there is a hole
there that isn't being addressed and has to be either
addressed through increased powers to you or an
Ms. Marian Robson: If I could make one addition to
that topic, I think we did refer earlier to the fact
that we will no doubt be getting complaints with which
we can deal under our jurisdiction and those with which
we can't, some of the things you're talking about.
One mechanism we feel is important, although it doesn't
necessarily solve the immediate problem, is we feel we
have a very good reporting system in place now, and
we will certainly be building on that in the future.
We feel that we will be able to provide really accurate
reports, first of all to the carriers to say this is
what's happening here and here are some trends that are
developing, or here is a situation that we already know is there.
We'll have all those complaints analysed and passed on
to the carriers. As well, we plan to have some sort
of reporting mechanism to government of what goes
on. It doesn't necessarily solve all these situations,
but I think it would give a lot of good information
that could lead to further action either by the
carriers, the minister, Transport, or by us.
Mr. Bill Casey: In my opinion, there are
circumstances out there now in the form of delays,
lineups, cancellations, things like that. A
business would not survive with that level of service
if there was competition, because people would just go
to the competition. That's my point. And I don't
believe the CTA should deal with all those issues.
I have one more question I want to ask.
The Chair: Sorry, Bill, your time is up.
Roy Bailey, please.
Ms. Marian Robson: I'm sorry, I took some of
Mr. Roy Bailey (Souris—Moose Mountain, Canadian
Alliance): Thanks, Mr. Chairman.
I thank the guests for being here. As you know,
you're pretty brave. You weren't so brave, you sent
the minister first. I would like to think that you
missed some great things yesterday.
Ms. Marian Robson: We don't do the sending, Mr.
Mr. Roy Bailey: Right. I understand.
This bill, Bill C-26, is an act to amend a number of
agencies, which includes yours, and it's already been
mentioned that this group yesterday, this committee, was
quite emphatic about what we recommended in the
transport committee's report about the ombudsman. And I
want to make it abundantly clear that what we were
looking at was to have something, an agency, that would
move quickly and honour the complaint and deal with it
within a relatively short space of time.
Your agency, from what I hear today, seems to have
been given that role of being the ombudsman. This
seems to be the case, that you're going to take on
what is traditionally thought of as the ombudsman's role,
and I must admire you for being so confident in being
able to play that role up without moving it around to
other departments. I want to have some assurance in my
mind that the change in this legislation will in fact
bring a quicker response to the complainant. I'd
like your comment on that.
Ms. Marian Robson: In terms of your comments
about the ombudsman, we are at a little bit
of a disadvantage in not fully understanding this
committee's views about what the exact role of the
ombudsman would be. But we think part of our role
could be described as an ombudsman in the sense that we
would be receiving complaints on a whole range of
matters, some of which are within our jurisdiction and
some of which aren't, and therein lies a difficulty.
The government has not decided, in its wisdom, to give
these blanket powers to anyone with respect to what I
would call quality-of-service types of issues. So we
have a limitation on what we can do by the legislative
We will be very active, and fast and effective, in the
areas within our jurisdiction, and in those areas where
there are complaints that don't fall within our
jurisdiction, we will be in a monitoring and reporting
function, and an assistance function where we can. We
already, as I say, have quite a bit of expertise in
getting at the root of some of these issues as people
complain, but some of these problems that have been
discussed today we're not going to be able to
Mr. Roy Bailey: So, first of all, we understand
that the change in this act is bringing new
responsibilities to you. That's a given.
My concern is, and I suggest it is a concern of this
committee, that while your responsibilities will
increase with the act, how quickly and how efficiently
are you prepared to handle these in what this committee
thinks an ombudsman would do in rapid order? I think
I'm saying what the committee feels, and that's why we
put it into the legislation.
I might add that the minister—he may be right—was
quite confident that these additional powers would in
fact serve the need of what this committee was saying
to your agency. And somehow I'd really like to
believe that, but I just can't get my hands on it yet.
Ms. Marian Robson: I can repeat that we would
handle complaints in a very expeditious manner. This
doesn't sound like fast, but we have a 120-day maximum
on any complaint that comes before the agency, whether
it's a huge corporate thing or whether it's an
individual complaint. We obviously are much faster
than that on individual complaints. But we do have a
fairness and a legal process that must be followed,
which is that you do have both sides responding to the
other. That all takes time, so it's not an
overnight fix-it kind of approach.
Mr. Roy Bailey: Thank you, Mr. Chairman. I was
very kind, by the way. Some of the questions that
follow may be a little more to the edge.
The Chair: Thank you, Roy.
Colleagues, I have to remind you we have another set
of witnesses that will start at 4:30. I have Stan
Dromisky and Joe Comuzzi on the list, and now I have
Bill Casey on the list, so let's try to keep it short
if we can.
Mr. Stan Dromisky (Thunder Bay—Atikokan, Lib.): I
had two questions, but I'll drop one of them and just
deal with one area.
I'm a little bit concerned about the kinds of concerns
that have been raised at the meeting here and the kinds
of expectations we have of your agency. I wouldn't be
too happy if we were heading in the direction where
this agency is going to manage the airlines by the
demands being made of the members of the House of
Commons or even the general public. The next thing you
know, you'd be coming to us and asking us for an
increase in salary comparable to Robert Milton's, and I
don't think our budget could handle that.
Voices: Oh, oh!
Mr. Stan Dromisky: Many of the problems you will
be dealing with and are dealing with right now are
simply because people don't have the proper
information. This is a very, very serious concern.
People don't realize why the ticket costs so much
What are the costs that are passed on through the
user-pay policies we have and that the passenger
eventually finds immersed in his ticket? Whose
responsibility is it to let the public know why the
rates are going up? Whose responsibility is it to let
the public know routes are changed or a route is
dropped or there are major changes in the types of
planes being used and so forth?
I find most of the air carriers don't carry that type
of responsibility, and the passenger suddenly finds
himself in a certain situation, with a plane or without
a plane or with a different-size plane, or suddenly
facing a huge increase when he goes to the travel
agent, no matter what the increase might be in the
Education could solve many of the concerns from the
general public. If they are knowledgeable, they can
react to it in a very rational way. They may not like
it, but they'd face reality, because most Canadians
can, in a very rational way. Whose responsibility do
you feel it should be to educate the public?
Ms. Marian Robson: When it comes to issues
such as changes in aircraft types and fares and so on,
again, unfortunately we are being repetitive—
Mr. Stan Dromisky: Yes, I know. It's not your—
Ms. Marian Robson: —but essentially it's the
For proposed discontinuance of or reduction in
service, a consultative process with the local elected
officials in communities has been included in our
legislation. That is an important new addition. But
in general terms, we don't have that direct role.
We do have an educative role when it comes to the
issues we are responsible for, and we're going to be
very aggressive in a communications program to make
sure Canadians understand their new rights and to make
sure the carriers understand their new
responsibilities. We're going to be quite aggressive
in communicating, once the act is passed.
The Chair: Thanks, Stan.
Mr. Stan Dromisky: Okay.
The Chair: Mr. Comuzzi.
Mr. Joe Comuzzi (Thunder Bay—Superior North,
Lib.): Thank you.
Hi, Ms. Robson and gentlemen.
Let me ask a couple of questions at the outset. I
don't expect an answer now, but when I finish, I'll
wait for the answer.
First off, what is your agency empowered to do now
about the predatory pricing that's happening between
Thunder Bay and Hamilton? What action have you taken
to ask Air Canada to cease and desist in that predatory
pricing presently in existence? That's number one.
Number two, I understand with your previous
legislation you had some control over the pricing
policy of airline tickets. Through our last set of
hearings and through my research, I found you only
dealt with and handled fewer than ten complaints about
the pricing of tickets in over a three- or four-year
span. Yet every time I went to an airport, everybody
would come up—well, not everybody, but many
people—and show me the price of the tickets and the
increase in the fares and so on.
That leads me to the third question, which has been my
concern. This legislation really is a bit scary. How
does the average Canadian—and I'm not talking about
the person who lives in Ottawa...? We have a whole
bunch of people in this country who are having trouble
getting access to their old age pensions, their
CPPs—things that affect their lives on a daily basis.
Please tell me how you think your agency, whether you
hire ten people or a hundred people, is going to be
able to deal with this Garden of Eden we're setting up,
or that we're supposed to be trying to set up, through
this legislation. It just, in my judgment, can't work.
I'm willing to listen.
Those are my three questions.
Ms. Marian Robson: I'll ask Mr. Currie to
respond on the Hamilton-Thunder Bay route.
Mr. Gavin Currie: It's the Competition Bureau that
has been given responsibility for dealing with
predatory pricing, so we don't have any role in that
Mr. Joe Comuzzi: But you have roles with the
airline fares. Did anybody come to you on that in the
Mr. Gavin Currie: Right now a person can only come
to us if it's on a monopoly route. Are you talking
about Toronto to Thunder Bay or...?
A voice: Hamilton.
Mr. Gavin Currie: Oh, Hamilton to Thunder Bay.
Mr. Joe Comuzzi: It's not Toronto. It's Hamilton
to Thunder Bay. There are two routes.
Mr. Gavin Currie: Hamilton to Thunder Bay being—
Mr. Joe Comuzzi: WestJet.
Mr. Gavin Currie: Yes, WestJet.
If we got a complaint on that, it would be that the
fare was unreasonable or that the price increase had
been unreasonable. Provided the agency determined it
was a monopoly route—and I guess there is only one
carrier on that route, although I haven't checked it
carefully—then the agency could look and decide
whether the increase was unreasonable.
We haven't had a complaint, and without a complaint,
we can't act on it.
Mr. Joe Comuzzi: So you don't police or monitor
these types of things?
Mr. Gavin Currie: Not under current legislation,
The second question I think dealt with pricing
complaints and the fact that we had very few of them.
That is true, and I think that's partly because the
pricing complaints can only be made to the agency on
monopoly routes. In other words, if there's only one
carrier, then a complaint can be lodged. Of course on
most routes across the country, there's more than one
carrier, so there are very few where it is in fact
possible currently to lodge a complaint.
Your third question was a more general one: How are we
going to handle things in the Garden of Eden, as I
think you described it? It's very difficult to decide
just how many complaints we're going to get and what
the nature of these complaints will be. We've tried to
make a reasonable estimate of what it might be on an
ongoing basis. We expect a surge to start with, and we
are taking steps to try to make sure we can deal with
an initial surge of complaints, especially by
telephone. Really then it's a question of trying to
adapt what we're doing and our resources to the number
of complaints we get. If we're overwhelmed, then we'll
certainly go and seek more resources on a short-term
basis first, and then on a longer-term basis.
Mr. Joe Comuzzi: But if you're overwhelmed, that
tells you the system isn't working.
Mr. Gavin Currie: If that is the case, if we're
overwhelmed.... We're hoping we will not be. We're
hoping the situation will not lead to an overwhelming
number of complaints, but it may do.
Mr. Joe Comuzzi: But my question, sir, is how does
the average Canadian access the Canadian Transportation
Agency—the average person out there who doesn't have
an idea about what Ottawa is all about? How does he
access you folks? It's easily said, but it's hard to
Ms. Marian Robson: It is hard to do, Mr. Comuzzi,
but that is a major goal of ours in this new
legislative framework, because now we do have some very
clear consumer protection powers and the authority and
ability to correct some situations, which we didn't
So we are going to be getting out there, and our
emphasis is very much going to be on average Canadians
across the country, not just in the big urban centres.
A lot of the monopoly route situations are going to be,
as you well know, in some of the smaller and
medium-sized communities. So we are going to be
doing, as I mentioned before, a very serious
communications program, which will include members of
Parliament, and we're going to be doing major media work
in all of the regions.
We're going to be targeting travel agents in
particular with information on the agency and its new
powers and on people's rights and how they can
complain. We're going to be having complaint forms
electronically for e-mail. That's not necessarily for
average Canadians, but we're going to be doing
everything we can to reach the public across the
Mr. Joe Comuzzi: Thank you.
The Chair: Thank you, Joe.
We have Charles and then—
Mr. Charles Hubbard: That's okay.
The Chair: I thought you wanted to come back. You
don't want to now?
Mr. Charles Hubbard: Well, we're short on time.
The Chair: That's all right. I'll make allowance.
If you want to ask your question, go ahead, Charles.
Then we'll have Bill Casey and that will be all.
Mr. Charles Hubbard: The question I was asking was
in terms of the new legislation. We still have really
no consumer protection in terms of how a company might
be started, be spun off, or be involved in the industry
and suddenly say it had no money to continue. Would
that be true?
Mr. Gavin Currie: I can respond to that. I will
try to respond briefly. When a new company starts up,
there are financial requirements that must be met, and
the agency does check to make sure the financial
requirements are met at that time. It involves enough
money to roll start-up costs plus three months of
operation without any revenue. All that means is that
when a carrier starts, it does have the financial
resources to give it a chance at success.
We do not monitor financial fitness on an ongoing
basis. If a carrier makes poor management decisions,
is very unlucky, doesn't manage to get the passengers
it expects, then it can fail fairly quickly. That has
happened a few times in the past.
Generally speaking, the carriers that start off with
those kinds of resources manage to keep going. We've
had a few examples such as you've given where it hasn't
happened, but in the legislation now—and this will be
in the new legislation as well—there are the financial
requirements, which do mean there is some basic
financial capability when a carrier starts off.
Mr. Charles Hubbard: My point, Mr. Chairman, is
that a major carrier, for example Air Canada, could
spin off a route or several stops to a newly created
carrier. When the new carrier suddenly goes whatever
way, not able to continue, is there a responsibility
for Air Canada to come back to pick up what that
carrier can't accomplish?
Mr. Gavin Currie: No. There's no responsibility.
Right now there's no control over who flies what
routes. That's up to the carriers to decide.
Mr. Charles Hubbard: It's my understanding in
terms of this legislation, in terms of our report, that
a route cannot be abandoned. In fact, the smaller
communities are guaranteed transportation from a
carrier for a given period of time. Is that not true?
Mr. Gavin Currie: This is something—
Mr. Charles Hubbard: What I'm asking is whether a
current carrier, whether it be Air Canada or another,
can spin off a route to a new carrier and suddenly
absolve itself of all responsibility in terms of that
new carrier going out of business.
The Chair: To get around this.
Mr. Charles Hubbard: To get around this
legislation. That's what I'm asking.
Mr. Gavin Currie: I'm not the best person to
answer this. It probably should be answered by
Transport Canada. My understanding is that Air Canada
made certain commitments to the minister to maintain
service to all communities served by either Air Canada
or Canadian for three years from the time of the
commitment, which was in December. My understanding is
that there is a commitment from Air Canada to do that.
I don't think that could be disposed of by spinning
The only exception is that there is a requirement, I
believe, for Air Canada to put Canadian Regional
up for sale. If Canadian Regional is spun off and has
certain routes, then I think the routes go with
Really I'm not the right person to answer that
question. It is part of the commitments of Air Canada.
You might check with Mr. Milton perhaps or with
Transport Canada. That's my understanding of it.
Mr. Charles Hubbard: Thank you, Mr. Currie.
The Chair: Thank you, Charles.
Mr. Bill Casey: What is the definition of a
monopoly route? How many are there? Will you maintain
an updated published list so people can know what
routes you deal with?
Mr. Gavin Currie: In terms of the definition of a
monopoly route, the agency makes a finding as to
whether there's only one carrier on a route or not.
It's up to the agency to decide. There are a number of
criteria laid out. In a situation where there's a
major carrier and some alternative service, the agency
can decide whether that alternative service is in fact
sufficient to be considered to be a reasonable
alternative service or not. So that's a decision by
How many are there? I don't know yet. We're working
Mr. Bill Casey: Do you have any idea?
Mr. Gavin Currie: No, I don't. One of the things
we will be doing in the near future is looking at that,
probably starting with the major routes across the
country and working down in terms of volume, and
deciding whether the routes are a monopoly or not.
One of the main reasons for doing it is that then it
provides a way of separating the complaints on pricing
right at the start. If it is not a monopoly route and
a pricing complaint comes in, then we simply send back
a letter saying politely that we can't deal with it.
We certainly intend to do that and do it soon.
This of course will change over time. Each time a
complaint comes in, we'll have to check to make sure
that the basis on which the decision was made that a
route is a monopoly route is still valid.
Do we intend to publish this? We hadn't planned to,
but I suppose there's no particular reason we can't.
It would probably be useful.
Mr. Bill Casey: You really should, because the
consumers wouldn't know what they can access and what
Mr. Gavin Currie: We could provide it and update
it from time to time, yes. I would think we'd be
looking at the major routes across the country—not
every route across the country, but the major ones.
The Chair: Mr. Currie and Ms. Robson, if a list is
created by you and called the monopoly route list, may
this committee have a copy of that list when you have
Ms. Marian Robson: Yes, certainly.
The Chair: Thank you.
Ms. Robson, Mr. Currie, Mr. Jacques, and Mr. Western,
thank you very much for appearing before our committee.
If we have further questions we may need to call you
back. I think we've been pretty thorough on what we've
needed to know. We appreciate your presence before us.
Colleagues, we'll take a two-minute break and then
we'll invite representatives from ATAC to appear before
us next. Thank you.
The Chair: Colleagues, can we resume please? We
have a single presentation, but we have two witnesses
before us from the Air Transport Association of Canada,
Mr. Mackay and Mr. Everson. Gentlemen, welcome
back to the committee. We also have Mr. Harvey
Friesen, who is president and CEO of Bearskin Airlines.
We look forward to your presentation. Questions will
Mr. J. Clifford Mackay (President and Chief
Executive Officer, Air Transport Association of
Canada): Thank you very much, Mr. Chairman.
Let me first introduce Mr. Harvey Friesen and Mr.
Clifford Friesen, who are the leadership of Bearskin
Airlines, a major carrier in the northwestern part of
Ontario. I think you know Mr. Everson and me.
I'm not going to take a lot of time because of
course we've been here before. I certainly know that
this committee has spent many hours on airlines. Let
me start by just saying a few things. Then I want to
make a few very specific points and turn to questions.
To begin, we believe this legislation should do
two things. First, it should try to promote fair
airline competition in the country. Second, it should
protect consumers from excessive price increases as a
result of the restructuring. We don't oppose those
objectives at all; we subscribe to them. Therefore, we
are not in opposition to this legislation in any
Having said that, though, we think there are a lot of
dangers in trying to do too much all at once. Once you
start limiting markets and market forces in one place,
it's always tempting to try to add another 35 problems
to the list and start limiting it in other places.
This bill gives quite sweeping powers to various
officials and agencies. In so doing it runs the risk
of crossing that line and creating a situation where
you push the industry back into a highly regulated
environment. That's certainly not what we would
There are tremendous dangers if we go too far down
that road, for both consumers and the industry as a
whole. So we very much want the committee to take on the
task of making sure that, in reviewing this
legislation, that does not happen and there
is a balance. We would
like you to look very carefully for what we call
unintended consequences of the legislation. I'm sure
you will hear about some of these unintended
consequences from some of our members in other
hearings as the committee does its work.
One is First Air. I'm sure they'll be appearing before
you at some point in the future and will speak to you
about that. There are a number of areas where we are
in danger of causing some problems that I don't think
were ever intended in the legislation.
So with those general points, let me very quickly,
because I don't want to take much of the committee's
time, turn to a few very fundamental points that we
think you should think about.
First, and by far the most important, are the
provisions that are contained in proposed section 66 of
the bill. These provisions, as you know, really relate
to the ability of the Canadian Transportation Agency to
take on new powers to review prices.
We suggest you look at those provisions carefully from
a number of points of view. Just to give you one
example, the agency, under these rules, will have the
power to review a range of fares, as opposed to a
benchmark fare that was in the old rules, in
monopoly route situations.
I should tell members of the committee that on any
given day in North America there are over 12,000 price
changes in our industry. It is a highly complex
business. On any given flight, I'm sure all of you are
aware, there can be anywhere up to 15 or 20 price
offerings, depending on the size and nature of the
route. So the ability of an agency to actually inquire
into one price point on one day on one route and try to
determine whether it's fair and reasonable, against
some other comparable route, frankly, gentlemen and
ladies, is highly difficult.
One of the things we suggest you think about, to make
it a little easier, is looking at the range of fares
being offered as a package, rather than trying to look
at the price point. Then maybe the agency can look at
that relative to some practices on other routes and try
to make a determination as to whether it's fair and
reasonable. We suggest that for your consideration, as
a means of trying to hopefully arrive at a more
balanced approach in struggling with this matter of
Most importantly, we would make the point that with
regard to the provisions of proposed section 66, the
committee should demand that both the agency and the
Competition Bureau table clearly what their guidelines
are, prior to the implementation of this legislation.
Uncertainty in this area will cause untold problems.
We must know what the rules are up front.
Mr. Casey previously asked about the list, and we
strongly advise that you also ask that the list be
published and updated periodically, so everybody knows
what playing field they're on. Without those kinds of
clear and transparent guidelines and lists, you will
have a situation where many of our members will simply
not know whether they are a monopoly service provider
or not, or whether or not what they're doing might be
straying across the line, etc.
I can tell you the general response to that will be to
be safe rather than sorry. You will have a long lineup
of people, at the CTA or the bureau, seeking
pre-approval of various things. That will put us back
into a world we don't want to live in, where nobody
will make a decision unless the government makes a
decision first. I don't think that's how you want a
vibrant and growing industry to operate.
That's the most important point I wanted to make.
A more minor point, but something that deserves some
of your attention, is that proposed subsection 66(6)
provides the agency with an ability to initiate
their own investigations for the first two years, and
then some ability to proceed. We're somewhat concerned
that puts them in a position of being not only an
investigator, but also the judge at the same time.
We're frankly somewhat concerned that they're going to
find themselves in a conflict position, or at the very
least, some people are going to start impugning their
credibility in the process.
We're not sure why that's necessary. This particular
legislation and what's been going on in our industry is
certainly very well known to the public, so we're not
sure why you need to have these further provisions. If
people have a complaint, I don't think they're going to
be shy—they're going to make it, so I'm not sure
that's an issue. Our view is that this is a bit of
The third point I'd like to make to you very briefly
is that the legislation in section 66 makes
provision for similar pricing review of cargo rates.
Candidly, we have had great difficulty in having
anybody tell us what the problem is. We've asked the
agency, the Competition Bureau, our members. We've
asked a number of people, and we're just not aware of a
major problem or concern on the cargo side.
That, in addition to the complexity of even trying to
figure out what a fair and reasonable price for cargo
would be in this context, leads us to make a very
simple recommendation to you. That is, that cargo
should simply be struck from the bill. The fundamental
focus should be passengers. Cargo, in most cases, is a
residual product, and in almost all cases, there are
numerous other modal opportunities for cargo, including
air. So we just don't understand why it's there.
The last point I want to make to you—and I would
encourage some of my colleagues to comment on this
one—is the provision in the bill to extend the
notification period for cessation of service from
60 days to 120 days. We do not object at all to the
intent of that provision. We fully subscribe to the
need to ensure that small communities have as much
certainty as possible for these sorts of services.
But our concern is that the remedy may not achieve
what you want to achieve, and in fact may do the
opposite. If you tell a small service provider that in
going into a new community and trying on a market they
automatically commit themselves to 120 days of service,
you put a significant business risk in front of them in
making the decision to go in and try that market. I
don't think that was the intent. I think the intent
was to provide certainty at the other end. If you have
a service provider, you don't want them pulling out
Our view would be to ask the committee to consider a
different way of accomplishing the same thing, and
rather than forcing it at the front end, say that any
service provider that has been serving a market for
more than a year must give 120 days' notice before they
can pull out of that market. That certainly protects
all the existing communities, because the current
provisions between the government and Air Canada cover
off all of that for at least three years. Also, in
most cases, many of the other small service providers
have been in their routes for a year, and it provides lots
of flexibility at the front end for people to try new
markets, for local economic development agencies to try
to attract new and different services into their
communities, and so on.
What we would like to commend to you
for your consideration is a way by which you achieve the
certainty on the other end, while putting no market
barriers in the way of people wanting to try to promote
new air services into their communities.
That is our brief. You have before you
a much longer version, but I know time is of the
essence and I wanted to hit the high points.
Thank you very much, Mr. Chairman. We'd welcome any
The Chair: Thank you very much, Mr. Mackay.
Roy Bailey, please.
Mr. Roy Bailey: Thank you, Mr. Chairman, and thank
you, gentlemen, for coming.
If I recall, the previous time or times you've been
here, you always provided us with some challenging
information. No doubt you have heard that this
committee, in our report, kind of had the same thoughts
as you, Mr. Mackay, in that we don't think they should
be the judge and the jury and everything else. That's
why we wanted somehow to have an independent agency to
which our complaints would flow.
The minister assured us yesterday that by giving
increased powers to the transportation agency,
that's going to be handled that way. You are
suggesting something that I really believe this
committee has to re-examine before this bill can be
You are suggesting the elimination of the freight
concept of the bill. Because we have representation
here from Bearskin Airlines in particular, I would like
to ask you, with flying into the remote areas, how is
an outside agency going to compare or make an analysis
of the freight rates, and so on, in the various parts
of Canada? We have planes lining up here with nothing
but freight—freight, passengers, and so on.
I think maybe I have to agree with you on that issue,
but let me ask you your personal reason why you'd like
to see that part pulled out of the bill completely.
Mr. Clifford Mackay: There are two reasons—and
I'm going to ask Mr. Friesen to comment too.
One is precisely for the reason you just said. We
just don't see many situations where there is much
monopoly in freight. There are very many providers.
You have dozens of different options, even in smaller
communities, everything from trucking to rail, to air,
and so on.
The second point is that most freight in Canada
today flies in the bellies of passenger airplanes, and
it's essentially a residual product. If you can put
more people on the airplane, you will take the freight
off, and so the price tends to be one that is fairly
residual. It's not cast in concrete. Sometimes
there are longer-term contracts, but sometimes there
aren't. It's very difficult to arrive at any
kind of common pricing strategy when it comes to
freight, and trying to compare things is even more
We just think the agency will be asked
to take on an extremely complex set of issues, and we're
not sure what the problem is we're trying to fix.
Perhaps I'd ask Mr. Friesen to comment.
Mr. Roy Bailey: Okay. I have one more question,
but go ahead.
Mr. Harvey Friesen (President and
CEO, Bearskin Airlines): While we agree
with the ATAC stand on freight, we don't feel that
there is a problem. There is competition in the
marketplace with freight.
Mind you, there are two
types of freight. There is the courier service, the
small package freight, and of course the freight you
mentioned, which goes into remote communities.
I think it's easier to achieve a competitive price if
you open the marketplace and leave it flexible for
small carriers and large carriers to go in and compete,
and I don't see where there would be any problem as
long as the marketplace is free and open to compete.
Mr. Roy Bailey: This is my last question. You
people represent the Air Transport Association. Do you
represent all the airlines currently operating in
Mr. Clifford Mackay: With the exception of about
three that I can think of that are very small, the
answer is yes.
Mr. Roy Bailey: So you are the spokesman for the
dominant carrier as well as the smaller carriers,
except those three?
Mr. Clifford Mackay: Yes. Air Canada, Canadian,
all of the charters, all of the cargoes, and almost all
of the tier two and tier three airlines are
Mr. Roy Bailey: So you can tell us distinctly that
their message that the Air Transport Association brings to
this committee is the same message you bring here
Mr. Clifford Mackay: I can tell you that the
message I've given you today has been...among
our members, and they all agree with it.
Mr. Roy Bailey: Thank you very much.
The Chair: Before we go to Joe Comuzzi, I
just can't let something go by.
Mr. Mackay, unless you have some kind of a crystal
ball that I don't have regarding the purpose of the
legislation—and I hope your members have been properly
informed of what it is they're agreeing with when ATAC
makes its presentation—what we're dealing with here is
not the government, through its agencies, going out and
trying to change pricing or monitor pricing to the
degree that in some way they would start to do the
actual pricing of the industry or anything of that
sort. The whole idea behind it, and the idea behind our
study, which preceded the legislation, is to ensure that
because we are going through a change, because we could
be faced with a monopoly airline in this country, we
want to be able to have the tools, through our agencies,
and in particular the agencies, to act and act quickly
and responsibly with those airlines or the
airline that might take advantage of consumers or the
people who work for the airlines, and so on. That's
why we want to do this.
There is no hidden agenda. There is no government
wish to intrude on the way business is carried out by
business. That is first and foremost. It's the reason
we are ensuring that if we do go to a monopoly
airline in this country, and it looks like we're going
to, we are going to make sure the consumers are
protected. That's why this legislation exists and
that's why the clauses are in it.
On the subject of cargo, coming from Hamilton, I can
tell you that cargo is the most important product
moving out of the Hamilton area. If I thought for one
moment that the government had some hidden agenda to
not just monitor, but to start to decide how much
airlines should charge for cargo, I'd be sitting there
instead of being here making sure my voice was heard.
But, again, the fact of the matter is that we could be
faced with a monopoly airline in this country, and
because cargo flies in the bellies of those passenger
jets—you said it yourself—we're here to ensure that
whether it's in the belly of passenger jets or by
Purolator or any of the other companies involved,
those people who use the system of air cargo, the
customers, are protected. That is the reason behind
it. In three years' time, if there then seems to be no
problem, that's it. Whatever happens after that,
That's why this legislation is created. There is no
hidden agenda. There is no watch. There is no
ambition on the part of the government to suddenly
decide who charges what for what, whether it's
passengers or cargo. It's there as a protection
mechanism for the people.
Please go ahead.
Mr. Clifford Mackay: The first
thing I would say is that I probably wasn't strong
enough in my opening remarks. We do not oppose this
legislation. I will say that again.
Our concern, Mr. Chairman, is not with what you've
just said about protection. Our concern is about what
we refer to as unintended consequences. The minute you
move down the road to providing regulatory powers to
semi-independent organizations like the CTA and the
bureau, with all the good intentions that are there, we
would just simply want to counsel the committee that
you look very carefully at the nature of the powers
you are providing them and the scope you
are providing them. These are complaint-based
systems. Once they start, you can't simply always
control them. That's the point we're trying to
make. It's certainly not the point that it isn't
prudent for governments to look at the protection of
consumers as this industry evolves, etc. We do not
disagree with that for a moment.
The only other point I would make, Mr. Chairman—and
there are a number of ways you could make this point,
but I'll just give you one factoid in order to give you
the sense of it—is that there are about 200 airports
in this country that have scheduled air service. Air
Canada and Canadian serve less than 50 of those
The Chair: That's why I'm puzzled as to why you
would want to give a one-year grace period. We're
trying to protect these regional areas in terms of the
air service that they currently enjoy. If someone has
started up only eight months ago, or nine months ago,
or ten months ago, you're saying that if they crash, we
shouldn't worry about them because we're only going to
pick it up if they've served the community for more
than a year.
Mr. Clifford Mackay: No.
The Chair: Who are you protecting here?
Mr. Clifford Mackay: What I'm trying to do, sir,
is provide protection to the community in those places
that have air service and maximize their ability to
attract new service at the same time. If an investor
is going into a small community—perhaps there's a new
resource development in the area or something and it
looks like there could be greater service necessary, so
the local community is trying to attract more
service—you say to the investor or the service
provider that he has to remember that the first day he
lands there, he's there for 120 days no matter what
happens. That's difficult, sir.
The Chair: Well, we'll agree to disagree.
Mr. Joe Comuzzi: Thank you, Mr. Chairman.
Perhaps I could just make an observation. Perhaps
during the rest of these hearing processes, when you're
talking about a business failure, you shouldn't refer
to it as a “crash”.
Some hon. members: Oh, oh!
An hon. member: Pardon the pun.
The Chair: Point taken.
Mr. Murray Calder: Good one, Joe.
Mr. Joe Comuzzi: I want to thank Mr. Bailey for
drawing to our attention something that we heard at the
last session. The folks who are in front of us are
from the Air Transport Association of Canada,
representative of all airlines in Canada. I had
forgotten that. I think we canvassed the area of how
the larger airlines have representation. At the end of
the day, though, they speak on behalf of all the
airlines when they come before us. Thanks, Roy. That
was a very valid and good point.
Also, Bearskin Airlines, with both Friesen
brothers here—and this isn't political,
please—provides a service in northwestern and
northeastern Ontario. They land in places that you've
never even heard of, Stan.
The Chair: No, I've been to a lot of them.
Mr. Joe Comuzzi: Yes, but there are a lot that you
haven't been to.
I always compliment them. They are the real asset
that we have in the business. These folks fly in the
God-darndest conditions that you've ever seen in your
life. How they do it is beyond me, so I compliment
them. The only thing I'd like them to do is land back
in Marathon. It would make my life a hell of a
lot easier, and I think you guys should consider that,
because it's an area that isn't serviced.
I'll get to the point. The last time you folks were
here, Mr. Mackay, you told us you represent all the
airlines, and you wanted us to know that you were here
because only 10% of the airline industry in Canada was
in difficulty. What you were trying to do is
correct something when 90% of the airlines
are operating satisfactorily.
Mr. Clifford Mackay: I think 10% is a bit low, but
Mr. Joe Comuzzi: It's in and around 10% or 15%.
But now we're faced with the problem of how much of the
airline industry could be in difficulty. There have
been substantial changes, so how much would you say
now? What kind of difficulty do you see us in now?
Mr. Clifford Mackay: To try to answer your
question, sir, I have to put it in a different context.
In the short term, assuming that all of these myriad
changes that we're living through at the moment
happen—and it's mindboggling how complex all that's
going on right now is—in general I think the industry
will be in better shape than it was twelve months ago.
In the long term, the big questions are whether the
market will keep growing and whether there will be lots
of vibrant competition on the domestic side in the
tier two and tier three service providers. Then,
internationally, will Air Canada be strong enough to go
nose to nose with huge international airlines like
American, like British Airways, like the big
Asian carriers and others? That's the big question.
Will we have a dynamic domestic service going on inside
the country, and will Air Canada be big enough and
strong enough to compete internationally? If it can't
compete internationally, then we're all in trouble,
To some degree, all you can do is point to history.
For a country our size, we have an enormous aviation
community, when you think about it. It's very large
and it's generally profitable—not every year, but most
years. I think we have a pretty good track record, so
as long as the market continues to grow and develop, I
think we're okay and will have a relatively prosperous
The thing that worries us to some degree is that it's
fragile. It has always been fragile in Canada. We may
think we're big, but by international standards we're a
relatively modest market, frankly, so we always have to
be careful that we're walking that tightrope of not
inhibiting the market to the point where we start to
hurt the viability of the service providers. At the
same time, the chairman's right, particularly in a
situation that seems to be evolving and in which we're
going to have one dominant carrier. You have to
protect the consumer's interests in this.
So the short answer to your question, sir, is that I'm
an optimist, not a pessimist, about the future market.
I do think it's going to grow, and if you look around
at economies that are growing right now, Newfoundland's
a good example. The industry there is doing well, and
it's growing quite nicely.
Mr. Joe Comuzzi: This is my last question, Mr.
How do you foresee your industry? We are all afraid
of the non-competitive factor. Maybe it's something we
shouldn't fear—I don't know—but we are all concerned
about and afraid of things that could be developed.
How do you foresee, through your organization, more
competition? Is there anything we haven't
addressed that would bring more competition into the
Mr. Clifford Mackay: There are a number of things,
and I don't want to take a lot of the committee's time.
For instance, on the infrastructure side, and I've said
this before in other contexts to the committee, the
cost of infrastructure is critical to our industry—the
cost of airports, the cost of air navigation services,
this sort of thing. We are concerned that the cost of
airports is too high. Part of that problem, frankly,
is the government. You're taking too much money out of
airports. You're taking well over $200 million a year
now out of airports, and you're not putting anything
back. That's not the whole problem, but it's part of
There are some tax issues that would go a long way to
helping particularly the smaller users. We pay fuel
taxes. Big companies actively pursue strategies to try
to fuel in places that minimize taxes. Small companies
don't have those choices. They have to fuel where they
operate. They pay taxes, and they're not getting
anything back for that. It's not like somebody in the
public is building roads or things like that. They're
paying for all it.
So there are a number of things government can do. But by
far the most important thing I think governments can do
is make sure the framework's right. Make sure we
have a growing economy. If we have a growing
economy, our industry will grow and prosper. That, and
try to minimize the barriers for people to come in and
try to take advantage of market opportunities.
Mr. Joe Comuzzi: Thank you.
The Chair: Thanks Joe.
Ms. Bev Desjarlais: On page 3 you talked about
WestJet and you said this company is “taking risks and
moving fast. It's important that the government not
restrict its expansion”. I was trying to sort out
exactly what within the legislation would necessarily
restrict WestJet's expansion.
Mr. Clifford Mackay: I should say that I think Mr.
Smith is probably going to appear before you, so I
don't want to put words in his mouth. But, for example,
WestJet is very concerned about the 120-day provision.
They've said that to us directly. They are constantly
looking at new markets to go into. They will take
risks and go into a market. But if you tell them
they're there for 120 days, they'll look at it a second
time before they take that decision. They are very
concerned about that.
I can tell you that by their estimation, they think
they currently operate 14 monopoly routes. Now, we'll
have to see whether they do, because it depends on what
the CTA says to them. But they are very concerned
that they're going to end up spending time and money on
lawyers and other things, coming down here and arguing
various things, if some particular person takes umbrage
to some particular price they charge on some particular
Ms. Bev Desjarlais: Okay, so it's the pricing as
well as the fear about the 120 days. There's
always been the 60-day notice in place.
Mr. Clifford Mackay: Exactly.
Ms. Bev Desjarlais: And it's always been that when
you come into the industry, you have to have so much
money set aside initially.
Mr. Clifford Mackay: That's not an issue.
Ms. Bev Desjarlais: Okay. From my understanding
there hasn't been—at least we haven't heard it—any
big issue where anybody had a problem with the CTA's
ruling. Actually, they commented today that somebody
did come to them and they got a reduction in it,
because they understood the need for doing that.
there particular problems that were there that just
haven't come forward, or is this just a hypothetical
“we think this might happen”?
Mr. Clifford Mackay: Well, I'm not sure how
hypothetical it is. In the case of WestJet, they've
been adding a new route to their system about every two
or three weeks. So I don't think they'd see it as
hypothetical. But the fundamental—
Ms. Bev Desjarlais: Yes, but have they had a
Mr. Clifford Mackay: No, they haven't had a
problem, because 60 days is a very short period of
But the fundamental point they make to me is why
they would want to go down and have to argue in front
of the CTA for something like this when they should
just make the business decision and get on with it.
I mean, what value-added is there to just getting on
with it? You know, they're quite happy to see the
protection on the other end. They've been flying into
Kelowna for a while now. If they decided, for whatever
reason, they didn't want to fly into Kelowna, nobody
would object to having to go and sit down with the city
fathers of Kelowna to go through the process and
justify their business decision. But they're concerned
more about their ability to be nimble and quick to make
decisions and get on with it at the front end.
Ms. Bev Desjarlais: Could I just sneak one
more in there?
In the area of the cargo, again, I did question the
CTA on some of the things they could intervene on,
because I have seen situations—and maybe this is why
this is in there—where a passenger's baggage was not
allowed on the plane because
of the weight, or where
passengers were asked to come off the plane because
the cargo was guaranteed but the passengers weren't.
The CTA person said he would have to check the tariffs
and see what's what.
I'm wondering whether we couldn't have situations
where maybe the competitiveness or the issue of the
passengers' fares in relation to what's happening with
the cargo could have some connection. And I've seen
this not just once; it's an ongoing thing that happens.
I don't know why, and the CTA person said he'd have to
check the tariffs, so I can certainly tell you I don't
necessarily know whether it's allowed or not. But it
certainly has been a problem.
Mr. Clifford Mackay: Do you want to talk to that?
Mr. Harvey Friesen: Could I just say a few words
on your previous question? In regard to the 120 days,
we're very concerned about this when dealing with small
markets. As Mr. Comuzzi said, we go into markets that
have perhaps only 200 people and we go into markets
that have a million people. So we need the
flexibility, when we look at routes, so that we won't
have to stay in a small market and bleed for 120 days.
We find 60 days sometimes quite difficult to deal with.
Being a small airline trying to get into and provide
service to small communities, sometimes things just
won't work out.
We do a market study. We try to do our homework, but
it sometimes doesn't get into the planes what we were
told we would get. So we need the flexibility to try
it and then the flexibility to get out as quickly as
we can. I think a lot of small airlines need that
flexibility. And when you talk about competition, if a
large airline decides to vacate a market, I think
you'll have airlines like us, airlines perhaps like the
connectors of Air Canada, and airlines smaller than us
getting into those markets to provide service. We
could get in and provide service and make money,
whereas an Air Canada would not be able to do that at
all. We and companies our size are very keen and
interested in getting into these markets.
So I don't think the concern about markets being
vacated should be as big a concern as you think
it might be.
Ms. Bev Desjarlais: How do we avoid the
Inter-Canadian situation where we still have communities
with no air service? We literally overnight had
people not able to proceed with their plans and
numerous employees were out of work. How do we ensure we're
protecting everybody in the system?
Mr. Harvey Friesen: Well, I'm not aware of any
communities that we vacated overnight. I've never heard
of any myself.
Ms. Bev Desjarlais: I was under the impression
that happened, but....
The Chair: Thank you, Bev.
Mr. Stan Dromisky: Thank you very much. I have to
apologize first. I had to rush out and make a couple
of calls before 5 p.m., and my question may have
been answered already while I was out.
First of all, I'd like to thank you for coming. I'm
very pleased with the direction in which you're going
with one of your recommendations, one that pertains to
getting clarification, educating all the people who are
involved and all the partners who are involved.
You heard my question in the last presentation
pertaining to responsibility regarding educating and
informing the public. I get people complaining to me
about the high cost of flying, but when you stop and
break it down for them and give them in general terms
the areas the money is going to, what the airline
companies and owners have to pay, and all the different
user fees and taxes, you name it, the list is very
Whose responsibility is it? Would you as an
association assume that responsibility to inform your
public why the price—whatever the price may be—is as
it is, or do you want the government to do that?
Mr. Clifford Mackay: No, I think we do have a
responsibility to do that, sir. We've been trying to do
it. I'm not sure we've been doing it as successfully
as we'd hoped we could. But we as an industry
collectively certainly have a responsibility to try to
tell our consumers just what our pricing is all about.
I think that is one of our responsibilities.
I don't think the government has no responsibility in
this area, though, because in some cases they are a part
of the pricing, and that needs to be explained and
communicated to people.
I think the short answer to your question, sir, is
that it's the industry's responsibility to explain
their prices to their customers.
Mr. Stan Dromisky: My general impression of the
aviation industry in Canada at the present time is a
pretty healthy one. Sure, we have some problems and we
could end up with a monopoly major carrier. There's no
doubt about that. But as you've already indicated, Mr.
Friesen, wherever a vacuum is going to be created, we
have people who would be quite willing to fill in that
vacuum immediately, practically overnight, and take
advantage of a market and expand their services.
Flexibility is very critical, and you've already
mentioned that. I definitely agree with you. We have
to be so careful that the laws and regulations and
conditions of operating your business, whatever they
might be, aren't so stringent that they'll suffocate
you. Do you understand?
I agree with you because you have very unique problems
in serving the remote parts of this country—very
unique. They can change from day to day. We always
have to keep that in mind when we're sitting here in
Ottawa making rules and regulations on how you people
have to operate and behave and what kind of service you
have to provide in the wilderness of this country.
You're doing a fantastic job.
Mr. Harvey Friesen: Thank you.
Mr. Stan Dromisky: I'm going to now turn to a
statement that's in your document here. You may have
addressed it already, Mr. Mackay. You state here that
the government wasn't thinking of Bearskin Airlines
when it wrote this bill. I have to disagree with you.
We were thinking of Bearskin Airlines because we have
two people on the committee who come from Thunder Bay
and many times refer to this aviation industry.
Bearskin Airlines has a good rapport with Aeroplan,
and that's still in operation, right?
Mr. Harvey Friesen: Yes.
Mr. Stan Dromisky: In this period of change, is
there anybody in the association, any member, who is
having great difficulty in coping with the changes that
are taking place at the present time, before the dust
Mr. Clifford Mackay: The short answer, sir, is
that some members are having some concerns. I
mentioned First Air.
Mr. Stan Dromisky: You're saying concerns; I'm
talking about difficulties.
Mr. Clifford Mackay: Oh. Well, again, I don't want
to put words into their mouths, but I think when First
Air appears before you they will say they are having
some difficulties. The difficulties really relate to
the nature of their relationship with Air Canada and
how it may change as a result of all this.
I hesitate to get into the detail because I really
think it would be inappropriate. I think you should
hear directly from Mr. Davis and others from First
Air on these matters.
Mr. Stan Dromisky: Okay, very good.
I'd like to finish the sentence that's in the document
here regarding Bearskin Airlines. It states “but
Harvey's company could be seriously affected”.
Maybe both members of the Friesen clan can indicate to
me how Bearskin can be seriously affected by the
Mr. Harvey Friesen: As you mentioned, one area is
the costs. I guess this is in reference to the
potential regulation governing the fares we file. We
do file numerous fares. We have many fares in our
system, and almost daily we're refiling fares to
different communities. If we are to now file these
with the CTA, if have to provide very specific feedback
as to why we did that and then perhaps make
presentations to the committee to justify our
increases, that would put a tremendous burden on our
company. We're not a large company. We don't have the
resources to hire many lawyers and file clerks and
representation to do this. So that is one very
The 120 I spoke about earlier takes a lot of
flexibility away. If we operate into small
communities, we need the flexibility to go in and try
it and to vacate that market if in fact we don't have
the ridership we anticipated having. This will
probably take away the flexibility, and we won't be
going into new markets that we may have tried if this
legislation weren't that restrictive.
Mr. Stan Dromisky: Very good. Thank you.
The Chair: Thank you, Stan.
Ms. Val Meredith: I'm going to follow up on a
number of things. I'd like to thank you all for
appearing before the committee. I'm going to follow up
on something the chairman said and something Mr.
Dromisky referred to.
The chairman sort of went on a discussion—I'll call
it a discussion—on a hidden agenda. He seemed to imply
that there was this unrealistic fear that the
government was going to be doing things that were
inappropriate. I'd like to respond by saying my
experience has been that government often may overreact
to a situation, or their intention isn't to create
this humongous department or agency, but it ends up
becoming that. That's why I asked the questions I did
of the agency before you appeared. I don't know if you
What exactly are the numbers you're talking about, and
do you plan on cutting it back if the complaints aren't
What you see with government is that they start an
agency. I anticipate that there will be an immediate
impact from the monopoly carrier and then it will
dissipate, because no business is going to turn
customers away. There will be an attempt to look after
the customers. The need for that particular issue is
going to dissipate, but the people are still going to
be part of that agency and they will be trying to
create work for themselves to justify their position.
We see this all the time when you get into government
agencies. I can say that because I used to belong to a
provincial government agency where I saw that
I also see where government can overreact. I have had
conversations with Bearskin over a ban to an approach
regulation where I would suggest government
overreacted, or potentially overreacted, to a situation
in Fredericton. The Inter-Canadian thing, this
whole issue of 120 days, really is an overreaction to
what happened with Inter-Canadian and the cargo. There
may be a government overreaction to what's happening in
Iqaluit, where they don't have other ways of getting
cargo up there so perhaps they're paying a little bit
Rather than dealing with issues in isolation, you tend
to come up with a regulatory framework. I share your
concern, and that's why I asked the agency if they are
committed to stepping back if the need dissipates.
One thing this legislation doesn't have is a sunset
clause. It doesn't have anything that indicates that.
It talks in terms of two years and then an expansion of
two years or three years on some of the issues, but it
really doesn't talk about the government recognizing
that this may be an interim situation. There are
sunset clauses put in place to make sure we aren't
creating another bureaucracy.
It wasn't Bearskin that brought the issue to my
concern, Stan. What the government will do by creating
this monitoring by the agency...the reaction is
going to cause a reaction from the airlines. In other
words, if they have ten people working on this, how many
people are going to have to be on each airline to
counteract the additional concern? This is something
Bearskin has raised here. What is their demand going
to be for adding extra staff to deal with the new
regulatory features? That cost will be passed down to
the consumer, to the passengers. What is that
additional cost going to be to the travelling public
because of these sorts of things?
I don't discount what you have said, that we in
government really have to look at this and make sure
our reaction to what is happening is appropriate for
the time and that the reaction is limited to a period
of time at this transition.
I don't know if you want to take this opportunity to
comment about this ban on the approach regulation,
where the government has made a regulation that really
is not appropriate for remote northern communities.
That might be a safety factor on its own. Yet trying
to get that message across to government agencies is
not that easy.
Mr. Clifford Friesen (Bearskin Airlines): Not only
that, but we also serve one-industry communities, which
could have a really negative impact on us when there's
a shutdown of either a mill or a mine. They may not
give anybody the 60 days or the 30 days. As Ms.
Desjarlais would say, that announcement is overnight.
So that has an impact on us. To try to
operate now for another 120 days would be very
The other thing I was going to say could have an
impact on it—and we're pleased that it is being
addressed—is the Competition Act, predatory actions on
the part of, say, what you perceive to be a monopoly
carrier.... That certainly may help a lot of the
smaller airlines or other airlines to compete.
For us, we're looking at an airline that has just
started a flight right over top of us up in Dryden,
where we were all competing at different times.
Certainly one carrier now has gone right up on top of
us, so we have what other people call “wasteful
duplication”. We're all leaving at the same time.
However, at one point there were three to four flights
at different times. Now there are four flights, but at
the same time.
The Chair: Thank you, Val.
One of the nice things about being chair is that you
can always have the last word on the opposition.
Ms. Val Meredith: Just like the media.
The Chair: I just wanted to come back with a
couple of things. One is that this is the reason we
have hearings: so that we can get input from the
industry. When people come before us I try to at least
get a single nugget out of whatever it is a witness has
offered us in order to make for change—if that change
Contrary to what Val might think, the government does
demonstrate flexibility—and is now demonstrating it and
has demonstrated it in the past—when it comes to their
legislation. There have been many bills I've been
involved with that have received government amendments
to respond to what the witnesses have told us. Some of
them made the witnesses very happy. Some of them went
the other way and displeased the witnesses. But at
least there was the flexibility there.
On the 120-day matter, I'm just wondering if it makes
any difference to you. I'm not sure if you're
aware of it, Mr. Mackay, or whether your members are
aware of it, but, for example, the CTA, the Canadian
Transportation Agency, was just before us.
Mr. Friesen, you raised a very important matter. You
have a small community up north that you may think you
can provide a service to. That community may have a
mine in it. You are not sure if that mine is going to
be successful a year from now, but you want to fly into
that community and provide the services and maybe even
just cargo to that community. But unbeknownst to you,
the mine may not cut it; it may close down. That puts
you out of business, but the government says, sorry,
Mr. Friesen, but you have to operate for 120 days. I
see your point there.
But are you aware of the fact that when you ask to fly
into that northern community that has a mine in it, you
can go to the CTA and explain to them the circumstances
of your flights into that community? You can explain
that you're reliant on that mine in that community and
you can actually make an application to the agency for
a reduction in the amount of time on the notice period.
So it's not as though we're saying “120 or nothing”.
If you can demonstrate to the CTA that your trip there
is reliant on that mine staying open, so therefore can
you get some relief from the 120 and bring it down to
60...? The CTA can respond and will have the authority
to say to you that they understand the situation, no
problem, that they'll make you 60. Does that give you
a better comfort level?
Mr. Harvey Friesen: Well, I guess in some cases it
certainly does provide a level of comfort. However, I
guess I have to ask the question: Have there been
problems created by the 60 days that are in existence
right now? Is there a need to change it? I know we do
The Chair: Just to set you straight on that,
extraordinary circumstances require some extraordinary
measures, and that's where we're at today with the
possibility of a monopoly.
Look, the 120 days is probably geared—let's make no
secret of this—to the big boys, to Air Canada and the
virtual monopoly airline. If they want to start
playing in small communities and then pulling out, hey,
they're going to have to pay the penalty of 120.
But the CTA does have the provision to make sure that
you, on application, say, look, we're going to try this
because the community needs us to fly in there, but we
want 60 or less, not 120—and the CTA says fine.
Mr. Harvey Friesen: I guess it certainly does give
us a level of comfort for small communities, small
airlines. Obviously we have a lot less capital to play
with. If we were stuck in a 120...that could perhaps
bankrupt some companies of our size or smaller than us.
It certainly would be a significant decision as to
whether we are even going to try that route and develop
The Chair: Well, I can assure you that aside from
the CTA's provision of allowing you to make the
application for 60 or less, I think we will certainly
raise it with the minister and say that maybe we can
make a provision that says if you're only flying a
certain size of aircraft with so many people in a week
or whatever it is.... We can set some criteria that,
say, give the smaller airlines the opportunity to
provide service to remote communities and that will
maybe even provide competition amongst two smaller
airlines into a small community, on the rare occasion
that exists—and not have to worry about the 120 at
At least you know that the CTA does have that option
Mr. Harvey Friesen: Okay.
The Chair: Sorry to interrupt.
Mr. Joe Comuzzi: I really see this in a different
light, and I thank you gentlemen for talking about that
60 days and 120 days. I think our reason when it
went in was to protect the small communities from
withdrawal of service. I think Charlie put that
But we forgot one thing. We forgot that the same
reason may take away the initiative from private
entrepreneurs to go in and test the market. What is
it? I think that's a very real consideration that maybe
we've overlooked. That 120 could be a detriment to
testing a market.
I'm going to suggest that—with your permission, Mr.
Chair—you draft something for the committee that would
take care of the safety for the small communities and
would also not take away the entrepreneurial spirit to
go out and test the market. There'll be conditions.
Just off the top of my head, I'm thinking that
Bearskin has a hell of a good track record. Maybe if
someone's going to go in and test the market and a
particular area of service, they look at the fact that
Bearskin.... It's not ABC company that's coming in,
starting up tonight, and hasn't got 60 days of cash to
operate. Bearskin would have the reputation to put on
the table, and you want to test the market. Maybe
there should be some consideration given for those
types of people in this type of situation, along with
the protection for the community.
Would you mind?
Mr. Clifford Mackay: I'd be very happy to do that.
Mr. Joe Comuzzi: Could you distribute that to the
Mr. Clifford Mackay: We'll send it to the clerk.
We'll try to get it done for you in the next couple of
The Chair: Thanks very much, Mr. Comuzzi.
Gentlemen, thank you very much for your appearance
before the committee. We appreciate the input.
Colleagues, thank you very much. We will resume
tomorrow morning at 9 o'clock.