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Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 20 - Fifth Report of the Committee

THURSDAY June 15, 2000

The Standing Senate Committee on Transport and Communications has the honour to present its


Your Committee, to which was referred 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 has, in obedience to the Order of Reference of Tuesday, May 30, 2000, examined the said Bill and now reports the same without amendment, but with observations which are appended to this report.

Respectfully submitted,





Appendix to the Fifth Report of the Standing Senate Committee on Transport and Communications

While the Committee considers the bill to be helpful in dealing with the problems raised by the Air Canada takeover of Canadian Airlines International, it nevertheless still has a number of concerns which it wishes to register at this time.

It has concerns about fares, both low and high. With regard to high fares on routes where there is no competition, it is not altogether clear to the Committee that the provisions of clause 4 which replace section 66 of the Canada Transportation Act will be sufficient to deal with unreasonably high fares. On the low side, some examples have been illustrated that appear to indicate that predatory pricing may be being practiced now, Thus it becomes very important that amendments to the Competition Act included in this bill which would allow orders to terminate such practices result in a process which is quick and effective, backed up by a set of GIC approved regulations which will do the job.

The Committee was made aware by witnesses of a number of other anti-competitive issues which may necessitate a strengthening of the draft regulations on predatory pricing which the Competition Bureau made available to it. Typical are the concerns which other international carriers stated relative to the use, or denial of use, of frequent flyer program points. The Committee intends to hold hearings on the adequacy of these regulations later in the year.

The Committee also has concerns about service. It appears that recent reductions in flight capacity on some routes serving small communities are surprisingly high, and it will be important that the commitments given by Air Canada with regard to service levels are monitored to ensure that not only the letter but the spirit of these commitments are honoured.

Particular importance is attached to Northern routes, where there are often no alternatives to air travel. It is noted that in certain cases it is possible that the commitments made by Air Canada with regard to serving some remote routes may work against the interests of some smaller carriers such as First Air. Where this is the case, the government should review the dominant carrier commitments with a view to changing some of them.

On related matters, the Committee heard again about the seemingly ever increasing prices and rental charges at small airports and their resulting impact on air fares. The Committee raised this matter in its December 1999 report on airline restructuring. It intends to investigate this matter in the Fall as a matter of priority.

While the Committee recognizes the additional protection which travel agents receive through this bill in terms of their negotiating position with the dominant carrier, the Committee asks that the government pay particular attention to this important sector, with a view to facilitating the resolution of a number of other problem areas which they made known to the Committee. A particular concern is the addition of a process for resolving disputes between travel agents and the dominant carrier.

The Committee has serious concerns about the welfare of the employees of Canadian Regional Airlines as they wait for a resolution of their status either as an independent carrier or an ongoing member of the Air Canada regional airline family. A quick resolution of this matter is urged, so that unsettling times may be brought to a rapid conclusion. The Committee notes that in the case of Canadian Regional Airlines, the government's decision to offer them for sale has left them worse off than if it left them to be integrated into the Air Canada regional network, a situation which it considers unacceptable.

The Committee was also made aware of a number of issues relating to compliance with the Official Languages Act as it relates to Air Canada and its subsidiaries. It asks that the government do all it can to promote in air transport in Canada a respect for linguistic equilibrium representative of the Canadian reality, both as it applies to services to clients and to the avoidance of discrimination in hiring practices. The Committee recommends that the government begin discussions with Air Canada with a view to establishing a plan to bring about a resolution of this matter, a plan incorporating measurable goals. Based on the testimony of Air Canada and its Regional Carrier group before the Committee, it was somewhat encouraged that there may now be a willingness in the company to tackle this matter. The government is urged to act soon to follow up these sentiments. The Committee further requests that those reporters and observers that the Minister appoints to take follow up action on this legislation generally, give full weight to official languages matters.

Finally the Committee believes that the whole airline restructuring situation must be monitored very carefully particularly over the next 2 years, and that the reports of all those concerned with this monitoring be taken most seriously and that the findings, when known, be made available expeditiously to the Minister of Transport and to both Houses of Parliament. It is also essential that any remedial action required as a result of these reports be taken by the government as quickly as possible.

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