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Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 4 - Evidence - March 25, 2004

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OTTAWA, Thursday, March 25, 2004

The Standing Senate Committee on Transport and Communications, to which was referred Bill C-7, to amend certain Acts of Canada, and to enact measures for implementing the Biological and Toxin Weapons Convention, in order to enhance public safety, met this day at 10:47 a.m. to give consideration to the bill.

Senator Joan Fraser (Chairman) in the Chair.

[English]

The Chairman: Welcome to our witnesses and members of the public who have joined us for this hearing of the Standing Senate Committee on Transport and Communications.

We are continuing our study of Bill C-7, to amend certain acts of Canada, and to enact measures for implementing the Biological and Toxin Weapons Convention, in order to enhance public safety.

We have today, as you can see, an array of witnesses representing a number of major actors in the air transport sector. I will read them carefully.

We have with us today, Mr. Brian Racine, Renée Smith-Valade and Yves Duguay from Air Canada. From the Air Transport Association of Canada, Warren Everson. They are joined by George Petsikas from Air Transat and Gérard Chouest from Paterson, MacDougall. Welcome to all of you.

[Translation]

Thank you very much for coming, in spite of the inclement weather. We are delighted to welcome you to the committee. You have a few minutes to make your presentation before we proceed to questions.

[English]

Mr. Warren Everson, Vice-President, Policy and Strategic Planning, Air Transport Association of Canada: Thank you, Madam Chair and honourable senators, for agreeing to see us on this issue this morning. The bill has engendered some concern among our membership and it is important to have an opportunity to discuss it with you.

Following the terrorist attacks of 9/11, the airline industry has of course been involved in a massive effort to upgrade aviation security. That effort has included everybody in our association, from the international carriers through to the flight schools, cargo operators, airports and even private pilots. We continue to co-operate every day with Canadian and international authorities.

Safety is central to our business. The survival of our industry depends on security. We are here today to criticize some parts of this proposed legislation, and it is not because we are indifferent to safety and the security of our passengers.

Our chief concern lies with proposed sections 4.81 and 4.82, which, as you know, empower the Minister of Transport, the Director of CSIS and the Commissioner of the RCMP to require any operator of an aviation reservation system or air carrier to provide, within the time and manner specified, information concerning the persons on board or expected to be on board an aircraft.

The proposed legislation specifies that only information that is in the air carrier's or operators' control can be requested, but in fact, the testimony that you have been hearing from officials makes it clear that they plan to oblige airlines to gather much more information than they currently do. The crux of our argument lies therein.

The security agencies want to go fishing for criminals in the ocean of our passenger population. That is fine. We support that. That is their job.

However, the net that they want to use does not actually exist right now. The wording of this proposed legislation means that airlines will be compelled to build that net and do the fishing for them at their own expense. We are asking the Senate to protect us from that situation.

Domestic airline data are not like international airline data, with which we have a great deal of familiarity. They are not today in a form that is likely to be very easily used by security agencies.

The passengers provide our reservation data. They are not verified. They may be extremely limited. They may be kept in a variety of forms, either paper or electronic.

What do air carriers know about domestic passengers? We know how they paid for their ticket, whether they have checked a bag, we know what name they chose to give us, and now, with new regulations introduced a couple of years ago, we also know that they have a picture ID in that name.

The government officials who have appeared before you in the past two weeks have talked about airlines providing data through electronic systems. I want to make it clear that many airlines in Canada do not use electronic reservation systems. Most use manual systems and are not able to transmit passenger data to the RCMP, or anyone else.

We have met with the security agencies in the past and warned them about this situation. When John Read of Transport Canada was testifying, he was complaining that people can buy tickets on the Internet, check in using an electronic kiosk, have possessions screened only at the security point, and, at time of boarding, show any document with both a picture and the name that was used to buy the ticket.

That is the trend in passenger processing in the airline business. That is the information the airlines need to run their businesses today. If we were obliged to collect more information than that, it would not be to run the airline service; it would be to execute a public duty.

Transport Canada regards air travel as secure today. The committee should remember that since 9/11, we have had this major program to improve security. We have increased passenger-screening expenditures by about 400 per cent. We have better equipment, better training of screeners and better screening of baggage. The cockpit is segregated from the passengers now by a bulletproof door. There are armed police officers on some flights, but no one knows on which ones.

Nonetheless, if the security agencies need information about the passengers to do their jobs, we think that is fine. They should be empowered to get that information, but they should not be entitled to oblige private companies to spend millions of dollars collecting it for them.

This is not a hypothetical concern on our part. After 9/11, state governments began demanding data about passengers for international travel. I was deeply involved in that process. When the state governments learned that our data were deficient for their purposes, authorities in the United States, then in Europe and now in other countries, simply ordered the airlines to collect new data, manage them in new ways and transmit them in new forms. The expenditure in the industry was in the tens of millions of dollars. The expenditure in Canada was in the millions of dollars. Our experience with that convinces us that immediately after the passage of this proposed legislation, regulations will be drafted to compel airlines to overhaul their data systems so they can serve as more effective agents for the security services.

The provision concerning the Commissioner of the RCMP or Director of CSIS is not restricted in the way that the provision concerning the Minister of Transport is. They have wide discretion to demand data for general purposes that may have nothing to do with aviation at all. The commissioner was emphasizing the safety of the flight and the security of aviation when he appeared, but the law says they can use this information to simply execute an outstanding warrant.

It should be stressed that air carriers can collect, and we can be obliged to collect, a considerable amount of information about our passengers. We do that for international flights. Passengers can be compelled to give us quite a lot of information.

The committee has been addressing the privacy implications of this bill. We have been reading your proceedings. We are asking you today to consider the more mundane issue of cost, and to amend the bill to ensure the cost is borne, as it should be, by security agencies and general taxpayers. A project to comprehensively screen domestic passengers in Canada would cost somebody millions, or tens of millions, of dollars. The government should pay that cost.

Specifically, the committee should amend the bill to introduce the following principle: Air carriers and reservation system operators must provide security agencies with the access they need to examine the data, but this access and examination must be at the expense of the security agencies involved, which must utilize the data in the form the air carriers or reservation operators possess them for their own business purposes.

Accordingly, we propose an amendment that is in the written brief. It simply says that those data are the data in the carriers' control and of the sort that air carriers normally collect for the purpose of operating an air service. By making that explicit, the committee would ensure that air carriers and reservation operators are not obliged to take on substantial public duties that may have little to do with the security of their aircraft or passengers.

That is our main point. We have two other small points to raise.

First, the bill does not oblige either the RCMP or CSIS to report potential threats to aviation safety to the Minister of Transport. It permits them to do so if they think they should, but it does not oblige them to do it. If there is a credible threat, the public and the airlines are entitled to a warning.

While this proposed legislation is here in Parliament, we have a case on the West Coast concerning Air India, in which security agencies did not, evidently, cooperate. We think this duty should be obligatory in the bill.

Second, proposed section 4.85 creates a straightforward issue for us. It requires air carriers not to carry people or goods unless they have been screened in accordance with the regulations. The passage of legislation two years ago that established CATSA took away our screening responsibility. We have no way to assess whether or not a passenger has been screened in accordance with regulations. We are not a party to the screening of passengers at all.

The bill would have the effect of reintroducing a role for air carriers in passenger screening that the government does not intend us to have. It would reopen our liability for improper screening.

I turn the floor over to my colleague, Ms. Smith-Valade.

Ms. Renée Smith-Valade, Director, Corporate Affairs and Government Relations, Air Canada: Air Canada is pleased to have the opportunity to address you this morning on the important matter of Bill C-7.

From the outset, I would like to reiterate comments that were made by a former colleague of mine over a year ago today: Air Canada pledges its complete support for the spirit and the intent of this proposed legislation.

[Translation]

What we offer to this committee for its consideration are some pointed observations and suggestions based on our airline security operational experience which, we believe, would serve to improve the efficacy and fairness of many of the provisions of the bill.

[English]

The provisions in Part 1 of the bill, allowing for emergency security directions of 72 hours in duration to be made, are reasonable in consideration of immediate threats. However, we would ask the committee to consider the financial impact on air carriers of such orders. For example, how often will this power be used, by whom, and to what degree? These are matters of primary importance to air carriers operating, as we are at Air Canada, on razor-thin margins. We would suggest that the bill should be amended to define this provision further to, first, include a substantive role for air carriers in the assessment of potential threats and, second, to provide financial reimbursement to air carriers when operational losses are incurred due to the use of such orders.

As my colleague from ATAC mentioned, clause 4.81, which requires air carriers to provide to Transport Canada specific information about a passenger expected to be onboard a given flight to which there is an immediate threat, should be strengthened to allow for air carriers to be advised of the nature of any such threat. If an individual is a security threat to a given flight, then the airline carrying that person should be empowered to make an informed operational decision about that flight, including its possible cancellation.

Both clauses 4.82 and 4.83 require air carriers to provide information to the RCMP and to CSIS in a time and manner prescribed by such authorities about individuals for whom there could be outstanding warrants. You will recall that this bill's primary purpose is to enhance the security of the travelling public against terrorist threats. We would respectfully suggest that sourcing our database of passengers to find common criminals falls outside this scope and places air carriers in the difficult position of being used as agents of the Crown, again with no consideration for the financial and operational burden that this would entail and with no reciprocal rights of carriers to be made aware of who these persons are.

The bill also does not recognize the difficulties involved in positively identifying these individuals. Furthermore, the bill calls for penalties, but no due process mechanisms whereby air carriers could either appeal or contest such requests by the authorities.

On this point, 4.82(15) requires that both the RCMP and CSIS audit the retention period of information they collect from air carriers, but there is no such requirement to audit both the quality and quantity of this information. This, of course, will result in a real lack of due process for air carriers.

We have similar concerns with subclauses 4.81(1), 4.82(4) and (5), which require air carriers to identify any individuals specified by Transport Canada, the RCMP or CSIS, and to provide any and all requested information within a time frame and manner prescribed. Again, we would ask: Who pays for these measures? What limits will be placed on what information is requested, and by whom?

Will each of Transport Canada, the RCMP and CSIS ask for numerous pieces of data on untold numbers of passengers, some of which we may not even have on hand? In fact, you will be interested to know that more than one third of the information items identified in the schedule to the bill are not to be found in most of our passenger name records, or PNRs, as we call them.

Clause 25 of the bill allows the Crown to enter into agreements with local airport authorities to assist with the costs of policing. Nonetheless, the primary financial responsibility for these services rests with the airport authority and, ultimately, with the airlines and their passengers.

At Air Canada, we believe that policing, and indeed air security generally, is a matter of fundamental public security and therefore should be entirely the responsibility of the public treasury. We cannot understand why police protection on the sidewalk adjacent to the airport is a public right, yet becomes a privilege to be paid for once the citizen steps onto airport property.

[Translation]

The provisions in Part 2 relating to CATSA can and should be strengthened to include the possibility for air carriers to participate in a meaningful consultation process to ensure that any and all security measures are both effective and efficient.

Similarly, it is in the government's interest to include air carriers in the security assessment process. We, more than anyone, are interested in the safety and security of our flights.

It only stands to reason that the Government of Canada would benefit from the unique, airline-specific, experience of our own security department.

[English]

In addition, there are several disturbing aspects within the schedule of this bill, which describes the kind of information that can be requested from air carrier systems. Requirements for certain pieces of information presume that air carriers collect them in the first place. In particular, information on date of birth, citizenship, or even gender is not always collected, depending on the nature of the flight. We would also note that we are not responsible for bookings such as those that come from travel agencies. Also, some segments of a passenger's itinerary may be provided by other air carriers, and we have no control over these bookings and the information they contain.

Requirements, where applicable, concerning the notation of a passenger who arrives at a departure gate with no reservation would not be found on our reservation system. By its very nature, our reservation system tracks only passengers who make reservations.

[Translation]

Requirements for access to passenger's seat numbers and baggage quantities will not be satisfied by access to Reservations Systems. These data types are stored in a separate Departure Control System, which tracks day-of-flight activity. Presumably then, the government is also proposing having access to this system as well.

This requirement, as well as those on section 4.81, imposes a significant financial burden on airlines.

We will now need to invest in additional people and resources to make both systems available to these government requests and, most importantly, we will be exposing two of our core business systems to significant IT risks, including potential corruption or loss of data.

[English]

Finally, the bill proposes to add the power to make regulations for air carriers to implement a security management system. Various governments have formulated similar requests, not only for security management systems but also for security programs. We would ask that the Canadian government adopt international standards proposed by ICAO and IATA.

Madam Chair, our position can be summed up as follows. Air Canada supports the intent and the purpose of Bill C- 7, but submits respectfully for your consideration that it should and could be substantively improved by treating air carriers as true partners in security by ensuring that we are provided with full information as to any potential threats affecting our operations, and by including us as consultative partners in the security threat assessment process that is foreseen in this bill.

Although we have no reason to believe that the vast powers in the bill would be abused, there are no safeguards, audit processes or appeal mechanisms proposed that would protect air carriers from abuse of process or inadvertent data corruption.

[Translation]

Moreover, air carriers should be compensated for the cost burdens imposed upon them by the provisions of the bill.

Put simply, we cannot afford any more costs. We are in the middle of a painful restructuring exercise designed to reduce our operating costs.

[English]

Let me conclude by giving due credit to the federal government on security matters. Air Canada has an excellent, ongoing working relationship with the different security agencies of the federal government. In fact, the government recently responded to air carriers' requests by creating a Criminal Code offence of interference with crew members on a flight. We thank them for their efforts and hope that the cooperative tone set in those discussions will manifest itself as we work together to develop a working process for the provisions in this bill.

We look forward to answering any questions you may have.

The Chairman: Thank you very much. I draw to the attention of senators a document that has been circulated. It is a document we had asked for, comparing the provisions in this bill with the features of the proposed American CAPPS II system.

That may or may not be pertinent to the questions you want to ask.

Senator Andreychuk: Will we be hearing from the other witnesses or are there just the two presentations?

The Chairman: It was my understanding that it was these two witnesses who were to make a formal presentation and the rest were here for support purposes.

Senator Andreychuk: I thank you for the information. When we had the department officials here, they continued to indicate that you would be able to answer some of our concerns. What you have done is to raise a concern about cost and the fragility of the air transport system in Canada, particularly domestically.

I have a general question to start. To what extent were you consulted, what conversations did you have with government officials to ensure that these cost issues were raised and did the government understand the full implications of what they were proposing in terms of the financial burden and also the responsibility?

Mr. Everson: I attended one meeting with the full array of security agencies last year. I cannot remember exactly when it was. That was the only meeting except for the opportunity ATAC has had to talk about the application of these rules for domestic flights. We have had very extensive dialogue with customs and CIC on advance passenger information for transborder and international flights. In the one meeting we attended, we had a vigorous conversation in which the points we raise here today were brought forward, chiefly the deficiency of the data and the possible cost of making data more useful.

Senator Andreychuk: I have some specific questions. The first is on international carriers. I do not know who can answer this. Information is being given about passengers, and the point has been made that if this is actually required for our security, so be it, but we should limit it to safety and security issues. We should have some reasonable assurance that these data cannot be manipulated for other purposes.

On international flights, the data that are collected can be given to other governments. To what extent is that the case today? Are all other governments of countries into which our airlines fly requesting this information from Canada?

Mr. Everson: Not all are. We provide a lot of information to the United States. We have negotiations ongoing with the British, who are attempting to construct an advance passenger information program. Many other countries have started the process and have signalled that they will have balanced legislation. The Spanish, the Mexicans, the Haitians and the Koreans are very active. The best in the world is Canada, because they take the data we have in the form we have them. The process is ongoing and the requirements are growing. Different countries require different information.

Senator Andreychuk: If the requirement is there and you wish to fly into that country, you must comply.

Mr. Everson: There are large financial penalties for failure to comply.

Senator Andreychuk: To what extent are passengers aware that this is happening? If I board a plane going to Beijing, China, on China Air, for example, am I made aware that the country is asking for the information? How do you let the customer know, and what assurances do you get from these receiving countries that the data are being used only for security reasons?

Mr. Everson: I invite anyone to contradict me if I am wrong, but we do not give any information to passengers. We do not officially inform them that their data are being transmitted. We did have a dialogue about this during the passage of Bill C-44, which is the Commons bill that permitted us to give the information. It actually exempted us from the privacy law in terms of the passage of information to states to which the Government of Canada authorized us to give that information.

I am not aware of any constraint on what those states can do with the data once they have them.

Mr. George Petsikas, Director, Government and Industry Affairs, Air Transat: My understanding is that a safeguard has been negotiated with the United States, because of the provisions regarding travel to Cuba. These, of course, do not apply to Canadian citizens. The information that is collected by carriers for flights inbound into Canada is filtered with respect to any previous travel, such as travel to Cuba. It could be an American individual, a U.S. citizen, who may be travelling from London Heathrow to Toronto, and for whatever reason, went from Havana to London. We have some safeguards in that sense. That information would not be used to apply the Helms-Burton legislation, which of course Canada does not support. Other than that, governments do not offer us safeguards with respect to what they do with that information. It is essentially, where it exists, a sine qua non condition of operating there. There is much activity, but the number of countries that are actually doing this is not very great at this point. It is really just Canada and the United States. Australia is almost there. Europe is talking about it. The United Kingdom will probably be first up. There is a huge privacy issue, as you may have heard, in Europe with respect to all provision of information by European carrier services to the United States. That will be a hot-button issue.

Mr. Brian Racine, Manager, Facilitation and Domestic Regulatory Affairs, Air Canada: All countries that require the information are developing their own legislation. I agree with my colleagues, the three countries to which we are providing information are Canada, the United States and Australia. It is also important to differentiate between the information that we provide and information they have access to in the reservation system, like what is on a passport, because, de facto, a passenger going to a certain country will provide that information sooner or later in order to gain entry. Your passport is something that you give voluntarily in order to cross a border.

There are two separate issues. All the countries that have the requirement also have legislation, with a number of safeguards within it, enacted by their own governments. It indicates how long they can keep the information, where it is stored, how it is stored and who has access to it. We would be aware of those particular conditions when we give up the information.

Senator Andreychuk: Therefore, you are aware of what the governments are stating to you they will do with it, but you have no mechanisms of oversight in these countries. In other words, you do not have access to a review to see that they are complying with their undertakings.

Mr. Racine: That is correct, to a point. We do, speaking for Air Canada, have a safeguard check to see that they are not accessing information that they do not require under legislation. As far as the United States is concerned, they are not. In Canada, the same check can be made to ensure that they are not accessing data that are outside the legislation. We have had no instances of either the United States or Canada accessing information that is outside the scope of their legislation.

Senator Andreychuk: My question was not so much about accessing it but using it. Once they identify the information that they are looking for, how do you confirm that they only use it for security purposes and not for all the other purposes for which they may wish to know something about the person?

Mr. Racine: Speaking for our group, we have no way of confirming that.

Senator Andreychuk: You have made a compelling case on the amendments you think should be made.

My concern is, you have told me something that I had not heard before in testimony. You will now be obliged to provide information to security authorities because of a security risk, but they do not share those security risks with you when they are imminent. That is very troubling; as you say, people are getting on airplanes, there may be someone who knows something about a passenger or the plane, but you do not. You may find out after the fact.

If you are not getting information from CSIS, the RCMP or the Ministry of Transport, except on a voluntary basis, what systems do you have in place to safeguard passenger security?

Mr. Everson: I will start. The centre of aviation security is physical security. The government takes the position that regardless of what people may have in their minds, if they do not have a weapon, cannot access the flight deck and are not in possession of explosives in their baggage, their capacity to damage the flight is limited. I suppose anyone can be a threat to the people sitting beside them, but that is true in a movie theatre, for example, or anywhere else.

As I say, there has been an enormous amount of money spent in the last two years to increase the screening sophistication, and to put air marshals, air protective officers, on airplanes, so that there is an armed police officer on board.

We do not deny that having information about passengers may be extremely useful, both to corporate security and to the state's security. The bill does not make it clear how the Crown wants to proceed.

If they want something like CAPPS II, the American government envisions a continuous, ongoing, constant monitoring of all aircraft reservations to screen every person's name against whatever lists and data sources that they have. That is a very sophisticated electronic design, and it would have something to do with aviation security, but it would chiefly have to do with security and law enforcement generally. If they do not want to do that, but they do want to pick names from some source and ask us for information, that would involve an entirely different methodology. We are anxious, of course, because we do not know what methodology they have in mind.

Ms. Smith-Valade: We would really like to see this as a partnership between the air carrier and the organization that has access to the information so that we can work together.

Mr. Yves Duguay, Senior Director, Corporate Security and Risk Management, Air Canada: There is presently an informal exchange of information with regard to general threats. Thankfully, our colleagues from Transport Canada do supply this information. However, there is nothing in the bill to ensure that this reciprocity would be part of the formal exchange that would take place between the carriers and the security authorities.

The best way for us right now to ensure the safety and security of our passengers is to strictly and fully apply the security measures that have been enacted by both Transport Canada and other agencies. You raised a very important point, in that security should be about standards and consistency. There are actually two blocs of regulators right now, the Americans and their TSA and the Department of Homeland Security, and the European Union, and we fear that they are being very aggressive in the way they are developing security measures.

To give you a sense of the issue of data disclosure, we are being asked to provide APIS, APP, which is another form of APIS information, the PNR and DCS records, which are relevant to Bill C-7, flight crew manifest and cargo manifest. We are being asked to provide that kind of information from a commercial system that was built to collect but not disclose information; and we are being asked to provide that in a time frame and manner prescribed by the various governments that are making those requests.

One of our biggest fears as an international carrier, and it is shared by my colleagues from IATA, is that there is a lack of standards. We are hoping that the Canadian government will take a leadership role to establish those standards to make sure that it will not have an impact on our reservation system, but most importantly, that passengers will be safe and secure.

The Chairman: You are hoping that the Canadian government will take a leadership role in developing these standards. I gather they do not exist at the moment to the degree you would like.

Mr. Duguay: As my colleague noted in her comments at the beginning, ICAO and IATA have developed some standards. Those would be ideal as a starting point for this process of developing international standards, or at least regional standards, that would minimize the impact on the carriers.

The Chairman: We cannot use Canadian legislation to impose international standards on the rest of the world. We will be hearing from the minister, and we can ask him about Canada's plans for leadership or otherwise in this, but I wanted to clarify that in my own mind.

Mr. Everson: We want the Canadian government to endorse and include the standards of ICAO, to which it is a party, when it drafts legislation for domestic application.

Senator Phalen: In her testimony to this committee, Jennifer Stoddart, the Privacy Commissioner for Canada, stated that one of the reasons her office strongly objected to this bill was that it co-opted private sector organizations by pressing them into service in support of law enforcement activities. Do you agree with that statement?

Mr. Everson: It does do that. Whether or not we object is another question. Airlines have traditionally been served with warrants and so forth when police agencies want information from us and we have always cooperated, as have the telecommunications companies.

Senator Phalen: I would like to know if this proposed legislation would result in your employees having access to passenger information that they did not previously have. Is there something new here that causes you to go deeper in your questioning?

Mr. Everson: You cannot know that from the bill itself, but common sense tells you that we will be asked to provide more information than we currently do. For example, the police do a criminal record check based on date of birth. Are we interested in the date of birth of our passengers? We would have to collect that information through a system that could put it into electronic form, and we do not have that now.

Senator Phalen: I understand that the passenger information you will be required to provide to law enforcement authorities contains up to 34 elements, and those are in the back two pages of the bill.

How do you gather that information? Will you ask 34 questions?

Mr. Everson: Others may want to speak to this. The Canadian government has approached this, in fairness, on the assumption that we have information about our domestic passengers similar to that we have on the international passengers. Of course, that is not the case. International air passengers, and indeed international travellers on the ground, have always had to provide a certain amount of information about themselves on their passport and visa applications. Therefore, it was always relatively easy for us to provide advance passenger information, or to allow the state authorities into our passenger reservation systems to see what was there. There is more information in the case of international travel.

The amount of information we have on domestic passengers can be very small indeed. Our concern is that the state authorities will compel us to collect more on every passenger so their system will work effectively.

Senator Phalen: When I go to an airport I am asked a couple of questions — did I pack my own bags, did I leave them unattended for a certain period of time — but I am not asked the types of questions included in this bill. I am wondering at what point and by whom these question will be asked, and will the same information be asked of travel agencies?

Ms. Smith-Valade: Madam Chair, I will respond on behalf of Air Canada generally, but I would invite Yves Duguay to speak to this as well.

We have a commercial imperative at Air Canada to make your progress through the airport as quick as possible. We do everything we can, whether it is through express checking kiosks, which I am sure you have all used, or express baggage drop-off, to expedite your movement through the airport.

Certainly we will comply with whatever the bill ultimately requires us to gather. We will be very taxed to find an expeditious way to collect that information and not significantly delay passage through the airport.

Mr. Duguay: One other important point that we have not mentioned today is that the information we collect is not validated. It is coming from call centres, airport centres and, very often, the Web. We do not require those 34 elements. The bill is a little vague, as we said in our comments, because it says, ``in our possession and under our control.'' We are hoping it does not mean we will be required to collect those elements. My colleague, Mr. Racine, has been heading the project at Air Canada with regard to the collection of data and I will ask him to make a few comments.

Mr. Racine: I should start by stating I have reviewed all the elements, and in meetings with the various agencies, I have outlined specifically what we can provide for each of the elements. In a very general way, let me discuss the data.

It falls into four categories. One is data we do not normally collect, certainly for domestic travel. For example, we do not collect passport data, as everybody is aware, because you do not need a passport for that.

The other type of data that we would collect if we made the sale are such things as credit card information, where the ticket was bought, and the passenger's full itinerary. That would apply to only 25 per cent of the passengers we carry. Tickets for some 75 per cent of the passengers we carry are still either sold through a travel agency or another carrier. We receive in our computer system only the information we need to carry the passengers — who are the people, when they will get on our airplane, where they will get off and where are they going next; that is all we know. We do not receive any payment from the passenger so we have no form of payment information, any of those sorts of thing that are indicated here.

The reality is, therefore, that we will frequently not carry the information in our system. The people to ask where the information comes from are the various agencies, because the only way that I am aware of to get the information is to go back to all the information systems around the world that collect this information. Go back to the original sale data. I know they have looked at that, but I do not know how they do it and it is not an issue about which I can speak knowledgeably.

The last part of this would be information that we have some of the time but not all of the time, because we would not necessarily have collected it in order to make either a commercial sale or to carry the passenger. For example, passengers could have two completely different records of their flights. They could book a flight on Air Canada and a subsequent flight on Lufthansa. If we were not part of one journey, we would not know where they are going, nor if it were intermodal — for example, if they booked a flight on Air Canada and the next part of the journey was by ship, train or car. We do not know their true destination or origin. We know where they will get on and off our airplane. I hope that simplifies the issue.

Senator Phalen: If you were to collect information with respect to these 34 points and I bought a ticket through a travel agency, would you then have that information?

Mr. Racine: That is correct. Madam Chair, I have to point out that we would only receive the information we require to perform our operations. The rest of the information that would be collected would remain with the travel agent.

Senator Phalen: I am trying to follow this through to make sense of it. If you were asked for information by a foreign country, you would not have all the information to comply with this?

Mr. Racine: That is correct, and that is the situation today with, for example, the United States and Australia, as well as Canada.

Senator Phalen: What plans do you have to ensure that your employees will be appropriately trained to protect the privacy rights of Canadians? Will there be any training here?

Mr. Petsikas: Perhaps I can answer that question. We have implemented a protection of personal data policy within our corporation as per the requirements of the legislation, as you know. We are actively training our employees right now with respect to the handling, use and disclosure of that information to third parties, et cetera. We are actively implementing new measures to ensure the security of the actual data, both paper data and, of course, electronic data in terms of access to computer systems.

We are actively doing that as per the legislation. There is something in place in that respect.

Ms. Smith-Valade: Might I answer on behalf of Air Canada? We have a full-time privacy manager at Air Canada who is responsible for ensuring that staff that handle information from our passengers treat it in compliance with the Privacy Act. We also conduct regular audits of the treatment of that information to ensure it is not being used in any way that contravenes the act.

Senator Phalen: When Air Canada appeared before the House of Commons committee on this proposed legislation during the last session of Parliament, they expressed concerns that the lack of cooperation between the Canadian government and other governments and agencies could result in unnecessary duplication and strain on their reservation systems. Do you still have that concern? Are there any changes that could be made to this proposed legislation to address your concerns?

Ms. Smith-Valade: I will speak to that generally, but I will ask Mr. Racine to address it as well.

We are certainly not in a position financially, and I am sure I do not need to elaborate on that, to add new, expensive technology to our current systems. We have systems that perform the functions for which they were designed, and at this point, if we are asked to add information or to provide synergies with government data systems, the cost implications would be significant.

I will ask Mr. Racine to speak directly to the issue of duplication of information, and I would reinforce that we would prefer to proceed in a form of partnership with the government on this bill to ensure that that type of duplication does not occur.

Mr. Racine: It was probably my words that you were reading. I testified before the House on this bill last summer.

We still have concerns. Speaking just on the U.S.-Canada example, we are getting closer to harmonizing how and when we collect the information. On a worldwide basis, I think Canada, as we stated earlier, needs to be very aware and try to influence how we do this in a worldwide system. For example, countries now frequently want not only information on the passengers arriving in their country, but also those leaving. The U.S. is a good example of that. It is called exit information. We send the information on a flight departing from Philadelphia for Toronto, for example, to both the U.S. and Canada. As other countries begin to require exit information, we will be sending information to two different sources. We would like the information to be in the same computerized format so we do not have to have several different systems. We would like the information to be transmitted at the same point in time. Some countries are talking about wanting the information after the plane has departed. Some want it before the plane departs. Some want part of the information that is in the reservation system while others want all of it. We would like to see harmonization. As we speak today, a meeting is taking place in Cairo that you are undoubtedly aware of, with Canadian representatives discussing this at a forum of the International Civil Aviation Organization, ICAO. We know that Canada has a position on this and we are hoping that that position prevails.

We need a common standard around the world or we will be incurring great costs and increasingly difficult procedural operations. Remember that our flights are handled around the world by other carriers — in Japan, the U.K., Germany and Singapore — wherever we fly. That would be true of any international carrier, including those of my colleagues here.

Those people have to be given procedures and made aware of how the information is to be sent, and where and in what format. We definitely need harmonization here to ensure cost control, secure the data that are being sent and to ensure they are properly encrypted in transmission.

The Chairman: Is it because you do not know yet exactly what your obligations will be that you are quite vague as to the extra costs you fear you are facing? There is a big gap between $2 million and many tens of millions of dollars. As far as you know now, is the bulk of that upfront capital costs for new technology, with comparatively little operational cost as the information flows?

Mr. Everson: It is a clever question and of course the answer is we do not know; the legislation says, in the form that they prescribe. People in Transport Canada and the RCMP are not fools. They will not make unreasonable requests from the first day. Our experience over the last two years on the international front was that state authorities had very little compunction about ordering carriers to make large expenditures to fix the data stream. It worked. Right after 9/ 11, I went to Washington, to a meeting with the customs officers there, and asked, ``Do you really think our data will be that helpful to you in their current form?'' They smiled at me and said that they will be. Within two years, they were helpful. Therefore, would it be capital or operating costs? It could be both, which is a serious concern. I do not know which one we are more concerned about. There would be similar capital costs to those we incurred on the international level. There could be a situation whereby you had to collect new data you do not have currently and build a computer software program to accommodate extra fields of information; that can be done over time. The concern for all of us, but especially for the smaller carriers, is the gathering of the data at the check-in point. We are concerned that this will happen to us. As the senator said, we could be compelled to collect a certain number of data elements that we do not get from somewhere else. For example, the relationship between travel agents and air carriers is not always close. If we do not have the data coming to us, we will have to get them from the passenger at the airport. With all the attendant problems of language, clarity and group bookings, that is a source of some anxiety.

Ms. Smith-Valade: May I invite Mr. Duguay to speak directly to the cost?

Mr. Duguay: As an ex-RCMP officer, I am sure my ex-colleagues will be reasonable in their requests.

Having said that, I will give you a sense of the general cost to airlines for increased security measures. Last year, IATA estimated that the cost to the air carriers with regard to global security could be $5 billion. I will follow up on the comments my colleague, Mr. Everson, made about not really knowing how we will proceed. With regard to the disclosure of information and before we set up some MOU with different agencies, there is the compounded cost of multiple requests and multiple pipelines into our system. This will create duplication of costs and also an increased risk for our IT system. It is difficult to estimate the cost until we have a chance to see with what we will be dealing. There could be one pipeline of information going to the Canadian government, or five pipelines of information.

Senator Eyton: I want to pick up on the cost element. I am quite astonished by some of the points you have made here today.

You have existing systems that collect information. Air Canada, for example, has made the point that it cannot afford to provide some of this additional information gratis. However, it seems to me you cannot say that unless you can point to existing systems that will have to be upgraded and additional personnel that will have to be dedicated to this. You have to give us some sense of what you are talking about. Is it a $200-million problem initially, and then $5 million to run it after that, or is it something different? We need something to go on. It is not helpful to be given a $5- billion global cost. Surely someone has taken the time to narrow it down and try to quantify what is involved in broad terms. You do not have to be precise. In broad terms, what kind of dollar amount would we be talking about initially and then for the running of the system?

Mr. Racine: I will reiterate the numbers I used last year. After 9/11 and up until 2003, Air Canada incurred a $60- million capital cost and a $40-million annualized operating cost increase to provide the increased security systems.

That includes items for which we later received some reimbursement, for example, the reinforcement of cabin doors.

For example, in order to provide APIS passport information internationally, we ran into three distinct levels of cost. The first, the least expensive, was to obtain readers. This is an electronic system by which, when you go through an airport, you can swipe your passport and the information is collected. We had to go to that system because it takes about a minute to collect the information manually. We often have an hour between connecting flights, and we have 300 to 400 passengers, but we do not have 300 to 400 additional minutes to move them from point A to B in the airport. We had to automate it. We discovered that the systems we had in Europe, the platform for hardware, would not take readers. It was outdated. We had to buy a new platform, a new piece of hardware, on which to install the reader. You can see that we quickly ended up spending millions of dollars in hardware and software upgrades for basically no commercial reason. If there had been a commercial imperative to do this and a standard return on investment, the airline would have done it years ago, before our current difficulties. They would have spent the money if they were commercially viable upgrades. We are adding capital costs in systems and hardware. We are adding labour costs as well, because it takes more people. Regardless of whether you automate, not all passports are machine- readable. It slows down the process, and when that happens, passengers miss their connections. That costs us money and causes the travelling public a lot of inconvenience. If we have to delay the flight, it costs us a lot of money. As those of you who have had the misfortune to be on a delayed flight know, when you arrive at an airport they are probably not ready for you, and you spend much time waiting to get to the gate and get off the airplane. Also, this airplane is then not available for its next mission, which puts our whole system behind the eight ball.

There are obvious costs, such as for software, hardware and additional labour. There are others that are not so obvious that cause our system to be at less than full performance. Therefore, we spent $60 million in capital costs post- 9/11 up until 2003, and we spent about $40 million on annualized costs for additional staff, implementation, training and the building of new facilities and new counters, et cetera, at airports to collect this type of information.

Senator Eyton: Are you suggesting that this bill may create costs of the same kind of quantum, the $60 million and the $40 million; is that realistic for the requirements of this bill in general terms?

Mr. Racine: To be honest, Madam Chairman, we do not know. I have taken the initial data requests to our IT people. We know very well that if the agencies wanted to scan our database on a daily basis, we would need to buy a new mainframe for that purpose only. I do not know the size and the cost. I am not talking about a few more PCs and a few more servers. I am talking about a full-sized mainframe that people of my generation still remember. It would be a lot of money.

Again, to put it in perspective, on a daily basis, we activate between 25,000 and 40,000 records of people travelling. Multiply that by the date range of our reservations, which is 360 days, and you have an idea of how many records they would have to test if they were looking for someone who had a booking on Air Canada.

We cannot do that ourselves today on our existing system. We would have to buy an additional computer just to fulfil the obligations of that type of data search.

Mr. Petsikas: May I add quickly that although you addressed the question to Air Canada and referred to existing systems, there are many carriers that would be starting from nothing, frankly, because the system does not exist. Our model of operation for the vast majority of our passengers is that we do not have what would be considered a traditional, in-house reservation system with a lot of the information contained in these 34 elements. We are wholly dependent on third parties such as charter tour operators who put together packages for us and sell our seats. Speaking frankly — we saw this with the API exercise — we were literally looking at having to start from zero and build the whole system just for the requirements that were being imposed on us.

The commercial benefit was zero, because it had nothing to do with our way of doing business and added no value in that sense. Secondly, you cannot even capture a lot of the information, even if you are not automated. We have a manual system; we do not have automated DCS systems in many of our airports, so we could not even know what seat the person was occupying unless we built that capacity into all our airports and our platforms.

Therefore, it is very hard to say that it will cost this amount of money. We are not trying to evade the question. I think it is a question of starting from nothing and making your best guess.

Ms. Smith-Valade: If I may add something, my colleague and I have mentioned the commercial imperative. We certainly recognize at Air Canada — and I would underline this — that safety and security is, and has always been, our number one priority. We know that when passengers buy tickets on Air Canada that is a significant part of what they are buying — safe and secure travel. It is not so much that it is not part of our commercial imperative, it is simply that we truly need to work in partnership with the federal government in delivering the information that will ensure that and is required through this bill.

Senator Spivak: After listening to you, I am wondering if we are taking the right approach here. You may be getting too much information, which is, perhaps, as useless as no information. Perhaps someone needs to go back to the drawing board, look at all these different agencies and see what is really required. That is not a question to you. It is just a response to what you are talking about. This is ridiculous.

The second comment I have is that it now costs, as my colleague pointed out, $3,000 to fly from one place in Canada to another in economy class. These costs will become exorbitant.

On page 2 of your brief you talk about the requirement for air carriers to provide Transport Canada with specific information about a passenger expected to be on board a given flight to which there is an immediate threat, and you say it should be strengthened to allow for air carriers to be advised of the nature of such a threat. How is this possible? How is it possible that when they know of something that is a threat, you are not given that information? You should be able to cancel that flight if it is sufficiently threatening.

How does this work? Where are they getting the information? This is extremely puzzling. Maybe I do not understand it, but there is something puzzling about this. They are asking you for information about an immediate threat. Where is that information coming from, and why do you not know about it? What is going on here?

Ms. Smith-Valade: It is an excellent question and I will ask Mr. Duguay, our director of corporate security, to answer that.

Mr. Duguay: Fortunately, there have not been very many documented incidents so far. However, if we look back at events during the Christmas holidays, flights were cancelled between Europe and the United States for security reasons that were never disclosed. The carrier did make a choice at that time to cancel the operation.

Senator Spivak: Did they know what it was?

Mr. Duguay: We assume they knew there was a specific threat and decided to cancel the flight, which is exactly our position. We understand we cannot be taken into the confidence of the authorities in terms of certain information that is in their hands, and we are not asking for that. We are asking for reciprocity. We trust the authorities in terms of the assessment they will make, as long as we are part of the assessment and are told that there is a specific threat. At that time, we will make a decision in terms of safety and security.

Senator Spivak: Is this not the whole point? Of course, you will not have many incidents like that, but is this not the whole point of the safety and security question? We do not want an airliner to blow up in midair. Normally, it will not happen. However, if it is a possibility, is this not the whole point? Where are they getting their information?

Obviously, Transport Canada is getting information from the security agencies or whatever; is that correct? Therefore, it seems to me that that is a body of information that would be very useful for the airlines to have, because then they can automatically check-off that person. It is just like the situation at Customs and Immigration Canada, where they have a list of people who are not allowed into the country. I do not understand what is going on here. That is it, Madam Chair. I have no further questions.

Mr. Duguay: I am not certain as to the source of information. I understand that the basis of this is a global sharing of information. Some government authorities have moved aggressively with regard to prohibiting certain passengers from flying. The Americans issue prevent-departure notices and so on. We are not too sure, from what we have read in the bill, where we are going with this in Canada. Our major point again —

Senator Spivak: However, you do not have that information. Your people at the entrance or exit point do not have that information, so people could easily slip through and defeat the whole point of this proposed legislation.

Mr. Duguay: I have to say that security is multi-layered; this is one layer among many others. We also have to be very careful that all of the other measures are strictly applied.

Senator Day: You are familiar with Part IV of this bill, which creates a criminal offence for a hoax regarding terrorist activity? Do you object to that amendment to the Criminal Code with respect to people who say, for example, that there is a bomb on a plane when there is not, and that kind of hoax?

Mr. Duguay: No, we do not oppose this. It will be a little easier for the authorities, the police forces at the airport, to take action because now it will be clear.

Senator Day: It will be clear what to charge someone with now; is that correct?

Mr. Duguay: Yes.

Senator Day: If this bill were written such that it said that air carriers and reservation agencies were required to give up whatever information they may have in their control, I suspect that this committee would be very unhappy with that. It is too vague.

Another approach could have been to require air carriers and travel agencies to gather all of the information that is in the schedule at the back, but that would have been onerous and difficult for you. Therefore, the compromise is that the bill defines the general kinds of information, the parameters around the information, which is the schedule. It does not say that you have to collect all of that information; it says you may be required to divulge such information as you have in your control. That seems clear to me — ``that is in the air carrier or operator's control concerning...''

Senator Andreychuk: Which clause?

Senator Day: It is in several clauses. It is on pages 9 and 12; it is in 4.81 and 4.82.

Therefore, I do not understand your concern. I would have thought that was a reasonable compromise.

Mr. Gérard Chouest, Barrister and Solicitor, Paterson, MacDougall, LLP: I think there is an interesting legal issue here. The word ``control,'' as lawyers understand it, is a very broad concept. It is considerably broader than ``possession,'' for example.

Information in my control includes any information that my agents, for example, might have and that I have a legal right to require. Typically, in law, irrespective of whether I have a piece of information or not, if I have a legal right of some sort to get that information, either by going to my agent and saying, ``You have it, provide it to me,'' or by telling my passenger, ``You want to travel on my flight, as a condition of doing so, you must give me this information,'' it is information in my control. That is why Mr. Everson suggested in his opening remarks that some additional qualifications, such as information in the control of the carrier that the carrier typically collects for the purposes of operating a commercial air service, something to that effect, would be required to place some reasonable restraints on this very broad legal concept.

Senator Day: Thank you. I understand it now.

I am not sure who said it, but one of you, in your opening remarks, stated that Canada is the best currently in collecting information. Did I hear that correctly? Could you explain and elaborate on that?

Mr. Everson: We found that of the states that we had to talk to about advance passenger information and access to our passenger name records, the Canadians were the most reasonable and pragmatic. The Australians have a different kind of system but it is an extremely aggressive one. The Americans were the ones who led the charge in saying ``Your data are insufficient, so fix your data,'' and were the slowest in providing us, or anyone else, with any kind of protections of the data. Canada has been pragmatic, in part because we have Air Canada, which is a very electronic airline. We have some low-cost carriers, which have very few electronic systems. Then we have dozens and dozens of airlines that are a lot smaller and have none and rely on manual systems, and they cross borders. Canada wanted data in advance, the Americans wanted data in advance, from all those operators, so they had to be pragmatic. That is why we complimented the Canadians, because we found them the most reasonable to work with and we have a good system working now.

Senator Day: Could you tell me what you are doing now in terms of giving information and to whom you are giving it? The example that was given was a flight from Philadelphia to Canada. Some information is being sent to Canada. To whom is that being sent now?

Mr. Everson: Transborder flights are Air Canada flights, so why do they not answer that, and if I want to add to it, I will.

Mr. Racine: Certainly. If I may, I will work through the example, Madam Chairman. We would collect the passport information from the passengers at the check-in in Philadelphia. That information — unless you wish, I will not go into the specific details — is what is on your passport. It would be sent to two places. It would be sent almost simultaneously, by use of a secure electronic transmission system, encrypted and so forth and with normal safeguards, to somewhere in Virginia. I do not remember exactly where the U.S. computers that receive the information are located. This would be for passengers departing the United States.

It is sent in Canada to a computer system maintained by what was the Canada Customs and Revenue Agency, CCRA. I will use the old terms because that is from where the legislation emanates. As you know, under the old system, they in turn acted on behalf of Canada Customs and Immigration, so there is a symbiotic relationship between the two. Under both countries' legislation, that information would be sent when the airplane was in the air.

Both countries would also have access to the passenger name records and the lists of people who would be on the plane. They could also access those while the plane was flying, or before it took off, for that matter, because to a certain extent, we know who will be on the airplane ahead of time. Obviously, there are people who will not show up and some who will show up at the last minute, and they will be outside the scope of our reservation system.

Senator Day: Presumably, that information now goes to the Canada Border Services Agency, which took over CCRA's functions and some of the immigration functions. Was any of that information sent to, or is it now being sent to, the RCMP, CSIS or Transport Canada?

Mr. Racine: I cannot really speak to that. That would be a question properly put to the Canadian border protection group. The original legislation did not — I stand to be corrected — contemplate that.

Senator Day: Does Air Canada send that to any agency in Canada other than the new manifestation of the CCRA?

Mr. Racine: No, senator, we do not.

Senator Day: My final question is what is happening domestically in the United States, Europe and Australia?

Mr. Everson: I am not sure if I can answer comprehensively, but if the FBI in the United States were to show up at Delta Airlines and say that they want to know details of a passenger's reservation for a flight from Atlanta, which is their hub, to Denver, Delta would ask for a warrant. They have no legal rights beyond the powers that the police forces have now.

Having said that, they routinely do show up with warrants and get this kind of information.

In Europe, there is no domestic passenger reporting. I think that is right. In Canada, of course, as I said in my comments, you can show up for a domestic flight and say, ``My name is Spike. Here is my cash. I do not have a bag. Put me on a plane.'' As long as you have government-issued photo ID that says ``Spike,'' we have no further interest in you.

Senator Day: There is nothing in this proposed legislation that would require you to gather more information than that?

Mr. Everson: That is possibly all of the information. We may have lots more information on our passengers. We might have frequent-flyer data, if they are members of that program. We do not want to imply that our data are useless to the security agencies or that we think they should be denied them. We do have information. However, given the logic of what the commissioner said when he was here, for example, when applied to our data, it is quite clear we would have to collect more. They cannot make much use of Spike. We do not even record what photo ID was shown when people get on board the aircraft. The gate agents look at your name on the ticket, at the name on the photo ID to ensure they are the same, and at the photo to make sure you are that person. They do not record that information now, so presumably one of the first things they would want us to do is record whether it was a driver's licence, voter registration card or whatever. They would want that as the record of travel because we do not use a passport for domestic travel. As I said, I think date of birth would be an essential requirement for police agencies because that is how they run their checks.

Senator Day: You are speculating now as to what might happen. There is nothing in this bill that would require you to do that.

Mr. Everson: Our pitch to the Senate is to make sure they are not at liberty to invent what they might need. We would like some protection in terms of how we will proceed.

Senator Day: You have already pointed out your concern about the word ``control.''

Mr. Everson: Air carriers can be ordered to get more information from their passengers under a security order of Transport Canada. I think that is in the Aeronautics Act. I do not want to sound conspiratorial, but there is nothing to stop the agencies from saying the information will be in our control because they are now ordering us, under other legislation, to collect it. For example, the requirement to show photo ID is a post-9/11 requirement. Once people are required to show photo ID, I do not suppose it would be very difficult for them to say that we must record the photo ID and build that into our data systems.

The Chairman: Not much may be required now for domestic flights in the United States, but under the CAPPS II system it would be.

Mr. Everson: That is correct.

The Chairman: They are looking, as are we, at a more elaborate system for screening domestic passengers?

Mr. Everson: That is right. As you know, the debate between carriers and Congress on how to proceed with CAPPS II is a very heated one.

Senator Phalen: There are 34 elements. They are not yet in effect. Will you have to ask these questions?

Mr. Everson: They will not be asked at this time.

Senator Andreychuk: It was stated in testimony, certainly informally, if not formally, that part of the need for this proposed legislation is to comply with CAPPS II. Is your understanding the same as mine, that the methodology and the technology of CAPPS II is not yet formulated and the debate in Congress is still raging? We are not quite sure what we are fitting into.

Mr. Everson: The carriers in the United States are all waiting to see what the regulatory requirement of CAPPS II will be. They do not know when it will be published.

Senator Day: Suppose this proposed legislation does not get passed, how does Bill C-44, which is already law, impact on CAPPS II? Do we need this proposed legislation in order to continue our business of air travel within the United States? Is that already provided for, in terms of disclosure, under a piece of legislation that has been passed?

Mr. Everson: Bill C-44 permitted us to give information to other countries, the United States in particular, about passengers who would be crossing the border. The United States is not entitled to any information about passengers in domestic transit in Canada, nor is any Canadian security agency. If this bill does not pass, what impact would that have on CAPPS II? I do not believe our carriers will be participating in CAPPS II because we already provide information for transportation purposes and we are not entitled to fly domestically in the United States.

Senator Day: That is my point.

Mr. Everson: Someone else may want to elaborate on that.

Senator Merchant: I am a little bothered about this information we are collecting on people. You say Canada is number one in collecting the information. Does this correlate with Canada being the safest place? How is all this information really making us any safer?

Mr. Everson: I did not want to imply that Canada collected the most information. It is clear that Australia and the United States collect more. We found the Canadian authorities to be the best with which to deal. They were the most pragmatic and helpful to us as we struggled with the challenge of providing data from the very primitive information systems of the smaller carriers and from the challenging, complex reservation system of Air Canada. We are happy that we have to deal mostly with the Canadian authorities. Most of the information that we collect on passengers is needed to provide the service for which we are contracted. Most of the information we collect on passengers is destroyed quite quickly after the flight. We do not maintain large databases on our passengers. The one exception is the frequent-flyer members, for whom we maintain an account. We have some information on their preferences.

Senator Merchant: North American and South American air travel is not that safe. I know that Israel and Germany have very safe systems. They have had them for a long time, long before we started collecting all this information.

Do we know how our systems compare with theirs? You mentioned some countries. Munich, Germany, became very safety conscious.

Mr. Everson: Canada's safety record is outstanding. Clearly, we have had the safest aviation environment in the world over the last number of years. Our expenditure on security per passenger was substantially lower than Israel's until 9/11. We are now approaching — and CATSA could speak to this — the same dollar per passenger expenditure for security and screening as Israel. Our security tax is pretty much the highest in the world, although there was some adjustment to it in the budget.

Maybe my colleagues would like to speak to it. The key thing about security, especially against a terrorist threat, is that you can never assume that you are all right. You never want to be sanguine about it. Canada has made an enormous effort to make aviation a much harder target for terrorists. If I were a terrorist, I would not target aviation in Canada, I would go after something else, because there are a lot of uncertainties as to how to approach the target and the security is quite good. Certainly we, including many senators, who travel abroad and then return to Canada, will find immediately that the wristwatch or the pack of keys that passed through security in New York will proceed to beep in Toronto. Screening systems in Canada are aggressive.

Senator Merchant: I do not know how we can say that. After 9/11, when we were tested, we were lacking. Obviously terrorists were able to penetrate our security systems. I am not just talking about the Canadian systems but North American systems. We have not been affected the way some of those countries have.

Mr. Everson: That is probably true, although I do not know if we would necessarily know if the RCMP had arrested someone. I do not want to waste a lot of the committee's time. September 11 was a unique circumstance. People took advantage of the rules and were able to take small weapons on board the aircraft. Those rules have been changed. They did not fool the security systems. They just complied with the security regulations and encountered a population that had been trained for decades to not fight terrorists. They were instructed to do what they were told, to get the plane down. They had to negotiate.

Of course, this was one of the few times that the world has encountered people who did not have the slightest interest in negotiating because they were going to die that day. Would it happen again? If anyone gets up on an airplane that I am on and starts to attack the flight crew, I will not sit back. If they say that they will take the plane hostage, I do not think passengers will respond in the way they might have previously. Flight crews are now being trained not to comply. I would like to offer an opportunity for someone else to speak on this point.

Mr. Duguay: You are quite right, senator, security measures do vary around the world, but only slightly as far as air carriers are concerned. Where we see a difference is in the airport operators. You mentioned Israel. Their security system is comprehensive. It is integrated and tailored to a specifically higher risk than we face here. European airports establish standards in the way they approach physical security on the ground.

Fortunately, there is a push towards the harmonization of security measures. The exception is probably the Americans. Government-issued security measures are very similar when it comes to air carriers.

Senator Adams: Thank you, Madam Chairman. Since 9/11, airlines have lost quite a lot of business. Some people do not want to fly any more. Is it being promoted a little more now? Is it getting better now? Do we need Bill C-7?

Mr. Everson: The market is better. Volumes are improving at all Canadian airports and so carriers are seeing more passengers, which is a great relief after the last two years. Yields are not particularly good, because we are selling the product too cheaply.

Bill C-7 is an omnibus bill that security agencies put forward and has very sweeping implications. We do not hold a position on the passage of the bill. As I said at the beginning, we co-operate with security agencies — we need to — and so we are not opposed to the bill passing. We are not opposed to the state agencies having access to our data, provided it is done in a manner that does not cripple us, target us for some enormous costs and cause enormous operational problems in the airports.

Senator Adams: We heard from some of the witnesses that Bill C-7 is not really needed by Canada, it is mostly the Americans who want it. Is that true?

Mr. Everson: I am not qualified to know.

Senator Adams: In the meantime, does the airline have an insurance policy or something like that?

Mr. Everson: We have insurance, and the cost has risen dramatically since 9/11. It is a big preoccupation in the industry.

Senator Adams: That is why I am asking about it. Maybe it would protect you more. Air Canada has mostly American passengers. In addition to my own insurance policy, if I am suing you for a few million dollars more because you are not operating the security system properly and terrorists got on an airplane, do you have some kind of outside insurance for protection?

Mr. Everson: If we look at this bill as being like insurance, because it is costly but it might increase the security of our aircraft, I do not disagree. There may be a lot of things in Bill C-7 that can help us. However, when we buy insurance, we know what we are buying; we know what it will cost, we know the extent of our coverage.

We should have the same kind of relationship in terms of this bill. We should have had a lot of consultation with state agencies before the presentation of this bill, so that we understood exactly what they were planning to ask us to do and what it would cost us. Then we could answer Senator Eyton's question — what will all this cost?

To the extent that more passenger information makes the airplane safer, of course, that is an excellent thing from our point of view. There will be differences of opinion on how far that is the case.

To the extent that it makes Canada safer because it allows the police to do a better job of tracking down people against whom they have a warrant, or improves the security service because they can look for individuals who are threats to Canada, which I presume are terrorists, it is a common responsibility of taxpayers. That is national security. It is not the private responsibility of owners of airlines. We have said is that if we are to co-operate with all of this and a lot money will have to be spent, in all fairness, the community should spend it and not just the private operators.

Senator Adams: We heard this morning on the news that Air Canada was doing more screening on luggage. Who will pay for that? Will the taxpayer or the airline pay for it?

Mr. Everson: Most of the new cargo security provisions that have been imposed since 9/11 have been at the operator's cost. That is the next major area of security that we have been busy on in the last year — moving from the passengers, where the problem was obviously identified, to the cargo — and we have been spending a great deal of time on it.

Ms. Smith-Valade: If you are speaking to the issue of checked baggage —

Senator Adams: Right now, I think you have a system where you can sniff the bomb in the luggage?

Ms. Smith-Valade: Yes, that is correct.

Senator Adams: That is my question. About 10 years ago, this same committee went to London, and we went through a system like that, with a luggage carousel and an X-ray machine to look at the baggage that dropped down. Are you bringing in the same system?

Ms. Smith-Valade: It is strictly a system operated by CATSA. It was formerly the responsibility of Air Canada and other carriers who fly internationally, but that is no longer managed by us. To be completely honest, our business is flying; and, appropriately, other agencies — CATSA in this particular case — have taken on the responsibility for what they do well, which is security.

The Chairman: Is that cargo as well as baggage?

Mr. Duguay: That is for checked baggage. Canada is moving toward a five-step process, which the senator witnessed in London — it is very similar. Checked baggage is the responsibility of CATSA. Right now, as my colleague was saying, cargo security measures are strictly the responsibility of the carriers.

Senator Phalen: I want to ask a supplementary to an earlier question on these 34 elements. If someone buys a ticket from a travel agency, that means, even if you followed those 34 elements, you would not have all the information for that flight. Is that correct?

Mr. Everson: The carrier would not likely have that information. The travel agent would.

Senator Phalen: Does the RCMP or CSIS or some other organization like that get that information from the travel agency?

Mr. Everson: I presume so. The bill specifies anyone who operates an aviation reservation system.

Senator Phalen: If they get that information, would they feed it to you so you would have complete passenger information for the flight?

Mr. Everson: No, I do not think so.

Senator Phalen: If a country requests the information from you, it would not be complete, is that right?

Mr. Everson: If another country did, no, it would not be complete. The distinction here is the people who make the sale have a customer and want to keep that customer. They do not want to give the information to anyone else, and travel agents do not readily turn around and give all the contact information to the airline, because the airline will just market directly to the customer the next time.

Senator Phalen: However, they would have to give it to the RCMP?

Mr. Everson: That is correct.

Senator Phalen: My question is would the RCMP or CSIS give that information to you so you would have complete information on the entire passenger list?

Mr. Everson: No, they would not. If it had to be given to the Americans, a carrier in Canada would be responsible for gathering the data themselves.

Senator Phalen: There could be a pretty big hole in your information.

Mr. Everson: Yes.

Senator Andreychuk: Right now, when you live in a place like Regina, Saskatchewan, there are very few flights, the weather and operations, et cetera, being what they are in Canada. If you miss a flight, you often look for an alternative. Air Canada's flight left so you will try WestJet or something. Have there been any talks with the government about what happens to that kind of business?

Generally, they are business travellers who do that. They are the ones in the air. They have a meeting, they want to catch an earlier flight, and they will take one with any airline. Therefore, it is a competitive part of your business, but it is also where business thrives.

After 9/11, a lot of businesses moved away from having meetings ``eyeball to eyeball,'' as they said. They are finding other ways because travel is more difficult, so your business goes down. Obviously, other people were afraid to fly.

Have you discussed how many people are coming up to the counter, paying their money and providing whatever information, and will this inhibit that kind of travel availability, particularly for business? If you have to bear the cost, how do you see that segment of your business being affected?

That is the on-the-spot business. How will it be affected? If you have to collect all this information, will this business die away? I can go 15 or 20 minutes before flight time, others 45 minutes. How much more time will this add, and how much loss will be incurred in that kind of business?

Ms. Smith-Valade: If I understand correctly, you are referring to passengers who arrive at an Air Canada counter for whom we do not have a current reservation because they have either chosen to fly at the last minute, or they have come from another carrier?

Senator Andreychuk: Or for whatever reason they want to purchase a ticket at the counter.

Ms. Smith-Valade: Or because they might like to fly on our brand-new Vancouver-Regina non-stop flight.

Senator Andreychuk: On the way to Ottawa, sure.

Ms. Smith-Valade: Obviously, you are correct. It is very true that our systems are designed to maximize the revenue opportunity that is presented by the last-minute traveller. You are right. Time is money for those travellers, and I will ask Mr. Racine to speak to the implications of the collection of that data at the counter because it is in the case of the last-minute passenger that it becomes onerous.

Mr. Racine: It is a very good question. The reality is that for either a business traveller or an irregular operation, as we call it — perhaps you have had that unpleasant experience — when a carrier cannot operate its aircraft and transfers all its passengers to another carrier, all we get is a name. We have a mechanism to do a settlement and adjust the money, et cetera. Even if you are not a business passenger, your ticket is available for use on any carrier. In some instances, if that is the only way to get the passengers to their next destination, a carrier will move 30 to 100 passengers to other carriers to get them on their way the same day rather than keep them overnight. It depends on the situation.

In those instances, the passengers just come over with a name, you are correct. We know those passengers are on our aircraft and we assign them a seat. We deliver them to their next destination and that is all we know. We know enough to collect the money from whoever actually made the sale. That is about all we really need to know from a commercial viewpoint.

If we had to collect more information, those types of systems would no longer work. If I may go back to the collecting of passport information in Europe, you will recall that I said we could not do it manually because it takes too long. If Air Canada could not operate a flight from Regina for whatever reason, there was another flight available and we moved 50 passengers over, if it took a minute per passenger to collect more information — which is not an unreasonable amount of time — that is 50 minutes we do not have. Your 15-minute scenario would not work. It has to be an automated collection system, whereby you simply put a document through some kind of reader, or it does not work. That is one example out of a myriad of examples of where the current operations of airlines around the world will not work if we have to collect a lot of information at the last minute. Our schedules do not permit that, we are not equipped for it and we do not have the automation — in fact in some cases, the automation does not exist, at any cost. It is a real concern and it is a good question.

The Chairman: It has been an extremely interesting session, with a lot of very detailed information. We are grateful to you.

You are now liberated.

Senators, our next public meeting will be on Tuesday, March 30, in room 505 of the Victoria Building, when we will hear from the Honourable Anne McLellan, the Honourable Tony Valeri and officials.

That concludes the public session of this committee meeting. We will resume in camera in five minutes for consideration of the draft interim report on the media study. I would therefore ask everyone except senators and committee staff to leave the room.

The committee continued in camera.

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