Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 11 - Evidence, September 25, 2012
OTTAWA, Tuesday, September 25, 2012
The Standing Senate Committee on Transport and Communications met this day at 9:30 a.m. to study emerging issues related to the Canadian airline industry.
Senator Dennis Dawson (Chair) in the chair.
[English]
The Chair: This morning we are continuing our study on the Canadian airline industry. Over the coming weeks the committee will focus its attention specifically on northern and regional issues.
Appearing before us today from Transport Canada are Colin Stacey, Acting Director General, Air Policy; and Dave Dawson, Director, Airports and Air Navigation Services Policy.
Mr. Stacey and Mr. Dawson, thank you for taking the time to talk to us. The floor is yours. Just to be clear, I have no conflict of interest. I do not know Mr. Dawson.
Colin Stacey, Acting Director General, Air Policy, Transport Canada: Thank you for this opportunity to provide an overview of Transport Canada's general approach to air transport in Northern Canada. The purpose of this presentation is to explain Transport Canada's roles and responsibilities with regard to the North and to aviation specifically. There is a fair amount of detail in the presentation you have before you, so in the interest of time, I will stick to the high points.
As you know, the North is of growing interest to a broad range of players and stakeholders. The federal government's interest has evolved and grown in recent years through, for example, Canada's Northern Strategy, in 2009; Canada's Arctic Foreign Policy, in 2010; and Canada's Economic Action Plan, in 2012, which included a focus on responsible resource development in the North.
Three key factors have been identified as drivers of change in the North. I am looking at slide 4 now. These factors obviously have impacts beyond transportation, but I am focusing specifically on transportation here. First, there are the effects of climate change, which are leading to a requirement to adapt the northern transportation system. Second, there are global trends, such as economic growth in emerging economies, which is increasing demand for natural resources and creating subsequent exploration and extraction opportunities in the North and impacts on transportation. Last, there are domestic and regional trends, including changing demographics in the North.
Many departments and agencies are involved in the implementation of federal policies and programs in the North, each with its specific focus. In some instances, the activities of departments other than Transport Canada may have a direct impact on transportation, including by way of demand for services. One example is the Nutrition North Program headed by Aboriginal Affairs and Northern Development Canada, which ultimately impacts the demand for air cargo services to deliver food.
Looking at slide 6, Transport Canada's mission is to serve the public interest through the promotion of a safe, secure, efficient and environmentally responsible transportation system in Canada. Our focus is on the transport sector at the national level, although our policies and programs have important implications for the North as well. National transportation programs may be tailored to unique circumstances, for example through risk assessment. Transport Canada's role in the North can be grouped into four categories, which are described on this slide, namely legislation, the environment, operations, and partnerships and engagement.
Slide 7 talks about the northern transportation networks and infrastructure. The three territorial governments have a leading role in transportation planning in the North. Aviation is essential in connecting northern communities, especially where land or maritime transport are not available, which is often the case, and where distances are great, which is almost always the case. However, given the distances, infrastructure is also very widely distributed. Of course, that includes airports.
Slide 8 talks about the underlying principles for Transport Canada's or the federal government's treatment of transportation services including air. The essence of Canada's policy with regard to all modes of transport, including air, is established in law by way of the Canada Transportation Act. The act describes the objectives of a national transportation policy and states that these objectives are best met when competition and market forces are the prime agents in providing viable and effective transportation services. The act goes on to say that regulation and strategic policy intervention are only used to achieve economic, safety, security, environmental or social outcomes that cannot otherwise be achieved satisfactorily by competition of market forces. This principle guides our approach to transport in Canada, including in the North.
Of course, the operating environment in the North is subject to distinct challenges. Notably, there is an enormous expanse of land with a widely dispersed population of only about 107,000 people. Also, the North is subject to extremely harsh weather conditions, as you are aware. The North comprises approximately 40 per cent of Canada's land mass, yet contains only about 0.3 per cent of the total population. While some fifteen air carriers are active in the territories, three carriers provide the bulk of services. Their hubs in the territorial capitals provide important bases for operations and represent important sources of local employment. To put things in perspective, the total of "enplaned" and "deplaned" passengers at the three biggest northern airports of Iqaluit, Whitehorse and Yellowknife in 2010 was about 677,000 passengers. In the same year, 2010, the Canada-wide number of enplaned and deplaned passengers was a little over 109 million passengers.
The primary north-south routes are shown on slide 10. Both Yukon and Northwest Territories have one main north-south route each, connecting to Southern Canada from Whitehorse and Yellowknife respectively. Nunavut has two main north-south routes, from Iqaluit and Rankin Inlet.
Slide 11 shows how air transportation fans out from the four key hubs. Flights may make multiple stops before reaching their final destination. In addition, "combi" flights transporting passengers as well as cargo are also a key phenomenon of northern air services.
Slide 12 discusses some of the economic contributions of the northern air industry. The aviation sector is important in the North, not only for the connectivity it provides but also for its contribution to the local economy. This includes the provision of a significant number of relatively high paying jobs, as well as tax revenues.
In the testimony to your committee to date, you have heard the same concerns that we have heard from our stakeholders. These broadly break down into two categories. The first is the impact of increasing competition on the northern air transport system, specifically on the north-south routes. The second is the way that aviation infrastructure in the North will meet future needs, particularly given growing population and new resource development. Various factors come into play here, including the changing market, the regulatory environment, aircraft technology and the realities of operating and developing infrastructure in the North.
Transport Canada has studied these issues, and my comments today reflect the results of this work.
First, with regard to the competitive context — looking at slide 14 — recent years have seen an important increase in interest in serving north-south routes, particularly by southern-based carriers. This has put downward pressure on pricing on north-south routes but has increased costs, to some extent, on some intra-northern routes. Under Canada's economically deregulated framework, this sort of behaviour reflects the market at work. While it has required adjustments, to date northern carriers have adapted to this changed competitive market. Market access and resupply access to the North are being maintained based on market principles.
Slide 15 discusses the infrastructure context. The territorial governments own and operate airports within their jurisdictions and are responsible for prioritizing and meeting future needs. They make significant investments in their airports every year.
Federal programming supports the territories in meeting northern infrastructure needs. For example, Transport Canada's Airports Capital Assistance Program has been in existence since 1995 — not 1996 as it says on the slide — and has provided for safety-related projects. Typically, for a given project, 85 per cent of the funding comes from the Airports Capital Assistance Program, ACAP. The Building Canada Plan has also been an important source of funds for northern airport infrastructure, supporting some 16 airport initiatives in the territories. There are also some targeted activities focusing, for example, on research, such as work that has been done recently by Transport Canada looking at the impact of degrading permafrost on airports.
Recently, Transport Canada and the territorial governments collaborated on an assessment of northern infrastructure needs.
Looking ahead, it is clear that the North is a very dynamic region experiencing important change in its population and economy. This will provide opportunities for air service providers. To date, market forces have provided the basis for meeting current air service needs and we would expect that to continue to be the case in the future. Projected growth will impact on the demand for airport infrastructure, and the department will continue to work with territorial partners and northern stakeholders to examine future needs.
Thank you for listening. My colleagues and I would be pleased to answer any questions you have.
The Chair: Mr. Dawson, do you anything to add?
Dave Dawson, Director, Airports and Air Navigation Services Policy, Transport Canada: No.
[Translation]
The Chair: In that case, we will now go to questions.
[English]
I will introduce you to our members. Senator Housakos is from the Province of Quebec. He used to be my deputy chair and left our committee.
[Translation]
Senator Boisvenu, from the province of Quebec.
[English]
Senator Unger is from Alberta and Senator Doyle is from Newfoundland and Labrador. My deputy chair is Senator Greene.
[Translation]
Senator Josée Verner, from Quebec.
[English]
Senator MacDonald is from Cape Breton, Nova Scotia. Senator Eggleton is from Toronto. Senator Merchant is from Saskatchewan, and Senator Mercer is from Nova Scotia.
[Translation]
Senator Boisvenu, you have the floor.
Senator Boisvenu: Thank you very much, Mr. Chair. I have a few questions.
While the Government of Quebec was led by Mr. Charest who, unfortunately, is no longer in office, it invested great efforts over the past few years into Quebec's Plan Nord. That is in line with your vision regarding the economic development of the North, where raw materials are needed. There is also a lot of pressure from countries — including China — that are in favour of that development. What is Transport Canada's role in the economic development of the North? Have you gotten involved in terms of Quebec's Plan Nord? Have you been consulted or provided any advice regarding that plan?
[English]
Mr. Dawson: On the infrastructure side of things, we have done our own studies. We are focused on identifying the needs. Certainly we would play a role with the provincial government in your case. Specifically, I do not know exactly who is asking who to do what, but we have a group in Transport dealing with northern issues.
[Translation]
Senator Boisvenu: There are three large northern territories. Are there similarities in your approach from one region to another, or is it specific to Quebec or to the rest the Canadian north?
[English]
Mr. Dawson: That is a difficult question because in the identification of the North in Canada there is so much territory — including the territories — that the line becomes blurred. To include only the three territories, sometimes you are missing out on communities in the north of our provinces. Our policy and aim is to look at communities that face common issues, such as difficult challenges in getting to and from one's hometown, as Mr. Stacey pointed out in the presentation.
[Translation]
Senator Boisvenu: For years, a major debate has been held on global warming. It is being said that, eventually, the east-west route will go through Canada, especially when it comes to the maritime corridor.
Panama is currently investing billions into that east-west route for maritime transportation.
How do you view the use of that waterway in terms of environmental friendliness? Are you conducting any research, are you studying the issue?
[English]
Mr. Dawson: I know my co-workers are looking at issues in the North. The issues you are talking about are probably more related to the marine sector. From the air sector, it is more north-south. There are challenges and opportunities for these communities to have new transportation avenues to get their goods to and from their communities, and for the industries and mines to take advantage of the new warmer climates and the new findings in the soil.
[Translation]
Senator Boisvenu: In terms of transportation, is your vision of northern development strictly related to air or is it also related to waterways? What will happen with this future waterway that will be feasible in a mere few years? Is it important for you to approach the economic development of the North with that east-west waterway in mind?
[English]
Mr. Dawson: I think our policy is more generic to all of Canada. It is the competitive market forces. As I said, we are taking part in the northern issues. However, on a day-to-day basis from an economic framework perspective, for Mr. Stacey and I the North has not been —
Senator Boisvenu: You have a general view?
Mr. Dawson: Yes, a general view.
Senator Merchant: I am wondering how many different airlines service the North right now. Are airlines from other countries using the airports as well?
Mr. Stacey: Looking at it for the territories, we cited 15 different carriers that are active. There are three northern- based carriers which are the largest and whose activities are centred primarily on the North. They are Air North, Canadian North and First Air. There are also services provided by West Jet and Air Canada on the north-south corridor routes. I am aware of one international flight that is seasonal into Whitehorse from Germany.
Senator Merchant: You also spoke about changing demographics. Can you elaborate? What did you mean by that? You said those were the three aspects. Early in your presentation you spoke about the climate change, global trends and changing demographics.
Mr. Stacey: Absolutely. Quite simply, our impression is that there is considerable population growth in the North, and obviously that would have an impact on demand for services as well as for infrastructure.
Senator Merchant: We hear so much about climate change. Could you tell us about some of the challenges and be more specific about the kinds of things that are now necessities with infrastructure?
Mr. Dawson: As I mentioned earlier, the climate probably presents opportunities for growth of populations and industry. However, from an air sector perspective, it is mostly the airports. It would mostly be runway degradation. The permafrost that the runways are built on is softening due to higher temperatures. Safety is the most important factor in the air industry. If there are large cracks or bumps forming, that creates hazards and problems. The challenge is to figure out how to build runways differently, make them better or repair them to deal with the problem.
Senator Mercer: I want to continue on the line of questioning with respect to climate change. You made reference to climate change and that you may have an extended shipping season. However, the problem in the North with an extended shipping season is not solved by marine transportation — and it would be logical for all of us to think that — because there is no port in the North that could receive it.
The last time I visited Iqaluit, the discussion was around the difficulties of getting things there by ship, offloading things onto a barge, and then bringing the barge to shore. There was even the story of an Iqaluit hospital's construction being delayed by an entire year because of equipment slippage off a barge in the middle of the shipping season; it took another year to get the same piece of equipment there.
It seems to me that Transport Canada's view of the North needs to be expanded. Air travel is the main focus in the North now. I think your numbers showed 40,000 flights a year going north, if I read your slide correctly. That is a large number of flights going to a small portion of our population, albeit an important one.
I am surprised there is not an overall strategy talking about air travel; it is talking about marine travel. There has been a commitment by successive governments to improve marine transportation. Indeed, the current government had a commitment a few elections ago to establish a new port in the North. We have not seen that.
Is there an overall strategy to talk about integrating air travel and eventually marine travel that has a land base whereby they can dock vessels going north and get supplies there in a more efficient and cheaper way? The costs of products and supplies in the North are exorbitant.
Mr. Dawson: You are addressing all the modes. There is a strategy in the sense that we are working with the territories and the provinces to address those issues.
One of the studies that we note in our presentation looked at the infrastructure needs of all modes, including marine. It takes a current snapshot and looks forward to ask, given all the developments and changes happening, what would the needs be? I did not pay particular attention to the marine portion, as I had to focus on the air part of it. However, they would have identified if the current infrastructures are satisfactory and, if not, they would be noted. It also requires looking forward 25 years and asking, with all the changes happening, will there be enough in place to meet those needs?
Again, I did not have a focus on the marine, but I am sure it would have come out, and I know it was a major part of the study I am referencing.
To finish the thought, it was identified that the territories are doing a fairly good job at maintaining their air transit facilities. They saw a couple of issues coming up that they do not know enough about to know whether those issues will cost them a huge amount of money. For instance, in Iqaluit, they are taking charge; they know they have to invest huge amounts of money. They are doing that. For the smaller airports, the territories are doing their work.
Senator Mercer: The infrastructure in airports in the North and in other parts of the country is very different. Many airports in the North do not have paved runways; they have gravel runways. That leads to a challenge for the airlines in terms of landing and taking off. The runways have a different effect on aircraft than asphalt or cement runways would.
Does the airport improvement program that you referenced in your presentation give special consideration to the fact that these gravel runways require greater maintenance than perhaps what we would consider traditional runways?
Mr. Dawson: ACAP, the program that was referenced, looks at safety-related issues. If I make a mistake, my co- worker will correct me. There are a series of categories. There is a pool of some 200 airports that do not necessarily all apply in a given year, but they are all eligible to apply for funding. The program evaluates each of the proposals.
I do not believe that paving would be valid. I suppose repairing the gravel runway could be considered, but resurfacing not for the purposes of safety is probably not within the valid reasons for giving out funding.
Senator Mercer: You said that 200 airports, nationally, qualify for ACAP.
Mr. Dawson: Yes.
Senator Mercer: We have heard about airports that would like to qualify for ACAP funding but cannot. I would assume, then, that all airports in the North are part of those 200 because of geography and size and that there are no airports in the North that do not qualify. Would I be correct?
Mr. Dawson: I will defer to the experts with me.
The Chair: If you could identify yourself for our members and also for the audience.
[Translation]
Natalie Bossé, Director General, Airport and Port Programs, Transport Canada: Good morning, my name is Natalie Bossé. I am the Director General of the Airport and Port Programs at Transport Canada.
[English]
Your question pertains to the number of eligible airports in the North, does it not?
Senator Mercer: Right.
Ms. Bossé: Essentially, there are certain conditions to the programs. Therefore, not all airports are eligible. Scheduled traffic at the airport must be year-round and there must be a minimum number of passengers. That number is 1,000 scheduled passengers per year. Those are what an airport needs in order to be eligible for ACAP.
There are 45 eligible airports in the North. I have a map here that I can leave with the clerk of the committee, if you wish, that would indicate which airports those are. Does that address your question?
Senator Mercer: Yes.
The Chair: Senator Doyle will be next, but I have another line of questioning.
We have not broached the fact that we know that National Defence has a strong presence in the North and is planning on having an even stronger one in the future. We also know that National Defence and the search and rescue component of that department have a strong role to play in the North.
What is the system for recognizing the particular needs of National Defence and the needs of the communities? How much funding or participation can come out of National Defence, since they have needs that are not necessarily identified as being regular transport needs?
Mr. Stacey: I can only say that it is a very specific issue. Unfortunately, I do not think we have someone here who can speak to it. We can certainly look into it.
The Chair: Please do so and send the information to the clerk. Obviously, it must be a strong component of existing expenses, and a growing one at that.
Senator Doyle: In terms of the 10 remote airports that you talked about, there is a big difference between the revenues they generate, which is only about $8 million per year, and what it takes to keep them operational and viable. What is the difference? What does it take on an annual basis to keep these 10 airports viable and operational?
Mr. Dawson: The ones that are classified as "remote" are either federally owned and/or operated. There are a few issues at play. From a revenue perspective, federal government regulations limit the ability and process in which you go about raising fees. I understand it is quite cumbersome to put that process through; it can take years.
I also understand — but I am not positive — that often the fees are not raised. From a revenue perspective, you have to raise fees to meet your costs. The question is this: If I raise my fees, am I raising them too high to reduce demand to come to my airport?
From a cost perspective, in some cases it is Transport Canada employees; in other cases it is outsourced to a subcontractor. Our group, from an economic perspective, does not look at that. The programs groups in the regions manage that. From what I understand, they have the financial statements; they look at ways to improve efficiencies within the limits that they have, so I will assume that they have the proper staff and that kind of thing.
It is a challenge for other airports as well in Canada, not just those that are remote. Where do I set my price? If I have a lot of market power, I can set my price almost as high as I want to, but if I want people to come to my airport, it will be only the locals. If I do not have tourism or other things to offer, I could scare people away and they will not come to my airport. That is the challenge
Senator Doyle: Are these 10 remote airports all located in the North?
Mr. Dawson: No, none of those 10 you are referencing is in the North. They may be in the northern part of a province, but they are not in the North.
Senator Doyle: Would Wabush and Goose Bay qualify as remote airports? Would they come under these 10?
Mr. Dawson: Goose Bay is not included; Wabush is. Transport Canada's definition of remote airport is that it is the only year-round and dependable method or mode of transport to get to that facility.
I do not know the list off the top of my head, but a couple are on islands, for instance, that do not have ferry services. That is your way in and out.
[Translation]
Senator Verner: Based on the data provided, there are currently 71 regional airports in Canada, 11 of which are located in Quebec. Out of the 11 airports in Quebec, 7 are still managed by Transport Canada and 3 are yet to be transferred.
Is it known why Transport Canada has not transferred those airports to the Government of Quebec?
Is it because no request has been made or because this is the normal course of action?
[English]
Mr. Dawson: Those decisions were started in 1994 with the introduction of the National Airports Policy. At that time, a decision was made to allow communities, who could better run and know the needs of their citizens, to run the airports. It was probably at that time easy to get rid of a Toronto, an Ottawa or a Vancouver. However, as you moved to smaller and smaller airports, it became, from what I understand, more and more difficult because you had to have someone interested in taking over that airport.
We were just talking about remote airports. If it was the only mode of transport for a community at that time, it was probably an even more difficult decision to have the government just say, "If you do not take it, we are going to close it." Those were probably difficult decisions at the time. Since that point, I understand that efforts have been made, but again there has not been an uptake; people have not wanted to take over those airports since.
[Translation]
Senator Verner: Of that number, three are located in Quebec's North Shore — in Sept-Îles, Havre-Saint-Pierre and Natashquan. Those communities are part of an ambitious plan by the former Quebec government. We will look into that later, but this is what is called the Plan Nord.
I would like to ask you a question in light of this context and the fact that Transport Canada still owns those airports. When the Plan Nord was developed, did the Government of Quebec authorities discuss the plan's operation with Transport Canada or even ask for the department's opinion?
[English]
Mr. Dawson: We are monitoring and participating in the Plan Nord development. If those three airports are an integral part of your plan, I suggest that the federal government would probably be interested in you taking them over, if you would like to take them over. However, given that that may not happen, the federal government will continue to work as part of the plan and to continue to operate and meet the needs of the community.
Senator Greene: Are there any privately owned airports in the North?
Mr. Dawson: I think most are municipally owned, but statistically there are well over 1,100 airports in Canada. Ninety-five per cent of the business goes through the top 21 airports. As you get smaller and smaller, most of them are either owned municipally or by individuals in some cases, but I do not know exactly which of the thousand airports.
Senator Greene: What do you mean by "owned municipally?"
Mr. Dawson: A town or a city — for example, Kelowna — own and operate their airport.
Senator Greene: I am talking about the North.
Mr. Dawson: In the North, probably the territories own many of the airports. I am not positive whether any municipalities own an airport in the North. In the rest of Canada, they do.
Senator Greene: There is a mix of community-owned airports, maybe some privately held and also airports owned or operated by the federal government. Is that right?
Mr. Dawson: There are no airports owned by the federal government in the North.
Senator Greene: In Yukon, according to slide 7, you have one international airport, two regional, ten community and sixteen aerodromes. Can you tell me for management purposes what the differences are between a regional airport, a community airport and an aerodrome?
Mr. Dawson: Every airport is an aerodrome in the sense that it can have traffic come in, but as the airport gets larger and larger, it has to be certified by the federal government. An aerodrome does not necessarily have to be; it is recognized as a place to land a plane. As you become larger, you become certified; you become an airport. "Regional" is a classification that says that airport has fewer than 200,000 passengers a year and is self-sufficient.
In economic terms, we do not use the term "community." We use the term "small airports." That is usually down into the level of a couple of thousand passengers a year. It is a method of classifying.
To finish going up to the larger ones, we have what are called NAS airports, which are National Airports System airports, which are the 26 largest airports in Canada. Then there are remote airports, which we already talked about. These are just classifications.
Senator Greene: In the South, under the National Airports System, there is a range of fees and charges, et cetera, on the back of the ticket itself. Are all the airports in the North able to charge fees and are they all the same, or can an airport decide what fee it wants?
Mr. Dawson: Airports in the North are to charge fees as they see fit to meet the costs that they have, including infrastructure costs, if possible.
With respect to airports in the North, the costs of an airport are buried within the base airfare of the airline ticket and to that are added fees and taxes by other entities and also those of the airlines themselves, such as a fuel charge when fuel prices are out of whack.
[Translation]
Senator Boisvenu: Are all northern airports eligible to receive financial assistance from the federal government?
[English]
Mr. Dawson: Do you mean both ACAP and the Building Canada Fund?
[Translation]
Senator Boisvenu: They say the airports are having a very hard time in terms of infrastructure, and many investments need to be made.
Are all 70 or 80 northern airports eligible to receive assistance or does that depend on their classification, whereby some of them are below the threshold and are ineligible?
[English]
Mr. Dawson: For the ACAP funding, we went through that already, so you had to have a minimum of 1,000 scheduled passengers in a year and you are not federally owned. That would capture all the airports in the North. Therefore, they are eligible for ACAP.
[Translation]
Senator Boisvenu: That does not answer my question. Are all northern airports eligible for some sort of an assistance program to support or improve their infrastructure, or do some of them completely fail to meet the criteria for receiving federal assistance?
[English]
Mr. Dawson: I was trying to describe that in the ACAP fund they are all eligible.
In the Building Canada Fund, they were all eligible, but it was determined by their communities and the territories as to whether the investment in the airport was more important than another type of infrastructure such as a roadway or a city sewer. Decision making has to happen at the municipal and territorial level before it ever gets to the federal government.
[Translation]
Senator Boisvenu: Is the government's strategy, in terms of investments, to increase airport capacity or to improve current assets, especially when it comes to the enormous challenge posed by permafrost?
What is Transport Canada's philosophy in terms of investments?
[English]
Mr. Dawson: As Mr. Stacey described in the presentation, at a high level it is to allow the market forces to dictate where services should be supplied, depending on the demand.
The other part of the policy is if a larger city or a smaller community feels it is important to have the airport infrastructure in place, it is up to them to make that decision. We are not stepping in at this point in time in our policy to help one grow more than another. They are all equal, and they will grow at the speed that they are capable of and want to and that the demand will support.
[Translation]
Senator Boisvenu: So my understanding is that you allow the communities a great deal of freedom when it comes to investment decisions.
Mr. Dawson: That is their decision.
[English]
If they ask us and we feel the demand or proposal is warranted, the money is given to the communities. That is their responsibility, if I understand your question.
Senator Unger: On your last slide you say:
Demand for air services in the north is expected to grow over the next decade due to resource development and growing populations.
At what percentage do you expect that growth to continue? Would the market forces driving this change be primarily mining activity?
Mr. Stacey: Starting with the first question, I am not aware of any modelling that provides a specific number in terms of expected growth. Based on demand for natural resources, among other things, you would expect that there would be a significant demand moving into the future. I think that is largely based on demand for natural resources.
Senator Unger: What percentage of cargo is moved to the North on land?
Mr. Dawson: I would venture to guess on land that it would be probably a small percentage in that there are no roadways to get there. I would say it is 90 per cent marine and that 10 per cent or less is by air.
Senator Doyle: That is mostly in the winter.
Senator Unger: Edmonton used to be known as the gateway to the North. That is where I am from. I think that went back to the time when our municipal airport in the heart of the city had a lot of direct flights up North. Does that still hold true?
Mr. Dawson: I thought you were closing your municipal airport.
Senator Unger: Yes, we are, unfortunately, and I suspect Calgary is taking over that role. Do you have a comment?
Mr. Dawson: It could be displaced to the Edmonton International Airport as well. I know that they and Fort McMurray handle a lot of employees and workers coming out of the North and then on to further destinations. That would be dealt with at a more regional level rather than at headquarters in Ottawa.
Regarding the municipal airport in Edmonton, that is a case of a municipal decision to close an airport. I believe that there were some actions by a native community to try to interject or cease that.
Senator Unger: It was to no avail.
Mr. Dawson: That is another issue.
Senator Mercer: Regarding the direct question from Senator Boisvenu about the eligibility of northern airports for some type of government assistance, you referred to ACAP. Earlier in the presentation, as I made a note of it, we were told that only 45 airports in the North were eligible for ACAP funding. If that is correct, my calculations are that there are 70-plus airports in the North. I am confused. I am trying to link Senator Boisvenu's question, which is a good one, to the answer where you said all would be eligible for some type of assistance, but there was a limited number in an earlier response to another question. Could you clarify that for us, please?
Mr. Dawson: I am not the expert on ACAP. I focus in my day-to-day functions on the larger NAS airports for the most part. For the ACAP program, if I misquoted, that is for lack of understanding. I believe you said there were more than 70.
Senator Mercer: According to slide 7, if I go across the three territories and add them up, there are over 70.
Mr. Dawson: I suppose you are saying not all are eligible for the ACAP.
Senator Mercer: I am not saying that.
Mr. Dawson: I am being proven wrong. The other airports that are in the North were eligible through the other infrastructure program we mentioned, the Building Canada Fund.
Senator Mercer: It is a combination of the Building Canada Fund and ACAP plan to cover all the airports.
Mr. Dawson: Yes.
Senator Housakos: Can you tell our committee what role, if any, territorial and regional governments have in terms of funding local airports in the northern part of the country?
Mr. Dawson: They both own and operate. They are paying for operating monies as well. They are to come up with as much capital as they can, and if there are programs available, such as ACAP, they should ask for them if it is safety related.
They also would be responsible for working with other parts of the territorial government through the Building Canada Fund to solicit or propose projects. They are totally responsible for their own infrastructure.
Senator Housakos: I will ask the question another way. What percentage of those local airports spend their money on infrastructure as opposed to federal money?
Mr. Dawson: That would be a good question.
Senator Housakos: Can you get that answer?
Mr. Dawson: Yes.
Senator Housakos: I assume it varies from airport to airport.
Mr. Dawson: One of our problems is that the only airports in Canada we can actually get financial information from are the larger 21 airport authorities. The three territorial airports do not share their data with us, and then I mentioned there are 1,100 airports in Canada. Those airports do not provide us with financial data, and we do not have the power to ask for it either.
Senator Housakos: That is a good opening for my supplementary question. Senator Boisvenu asked you about the ACAP requests being made and who takes the decision in executing the projects, and I think in your response you mentioned that all local authorities execute the projects.
Mr. Dawson: If they are capable and then probably pull in subcontractors as required.
Senator Housakos: The question my colleague was asking and I would like an answer to is this: Once ACAP approves a project, what process does Transport Canada play in it, or do you just turn over the money and the project over to them and that is it?
Mr. Dawson: I will call on my subject matter expert yet again. I am not that familiar with the program at the higher level, sorry.
Ms. Bossé: With regard to ACAP, the process for application has quite a bit of due diligence built in at the front end. Essentially, even before an airport makes an application for an ACAP project, they would call us, and we would work with them in answering the questions from a technical perspective as well as the process for obtaining the funds.
When we at Transport Canada receive the application, there is a due diligence process, a priority setting process, et cetera, to pick the project. Only at the end of this would the contribution agreement be signed with the airport operator, and oftentimes these are provinces or municipalities. There is also oversight in terms of the grants and contributions program. There are audits that take place, et cetera.
If you are asking a question from a safety perspective in terms of the competencies of the project proponent to ensure the safety of the project, Transport Canada also has a regulatory role on the civil aviation side which also kicks in and ensures that the airports are operating safely. A condition of being able to even participate in ACAP is that you have an operating certificate. From a safety perspective, you have the competency to run your airport.
Senator Housakos: Does ACAP request from local authorities or the local airports a certain percentage of the project, or does all the money come from ACAP?
Ms. Bossé: It depends. In the North, 85 per cent of the funds come from ACAP for a particular project, so the rest would probably come from the airport owner. In the rest of the country, there is a sliding scale depending on the airport's ability to pay.
[Translation]
Senator Boisvenu: The information you are giving us is very helpful. Mr. Chair, I would like the witnesses to appear before us again in order to really speak at length about the role Transport Canada plays in northern development.
We know that economic development will be an important issue over the comings decades. A country like China has a specific vision in terms of developing Canadian resources — mines in the East, oil in the West. We know the magnitude of China's appetite for those resources. And what I am noting is that we are practically allowing the communities make decisions on their development.
I understand that municipalities should have their autonomy, but what makes me uncomfortable is that, if countries like China are investing into the development of raw materials in Canada and they have a particular vision — which is different from our unclear vision of northern development — I have a feeling all that will catch up with us.
That was not a question, but rather an observation. I would like the witnesses to appear before the committee again, so that we can discuss the vision of northern development, both in terms of the economy and in terms of means of transportation. That is because we cannot develop northern resources if our means of transportation are not efficient. Without that element, the North would be a bottomless pit for Canadian investments. That is an observation.
The Chair: We will actually be talking about the committee's future later, senator.
[English]
I would like to thank both witnesses for their testimony. As you can see, there is a lot of interest and there are still many questions on the table. You commented on a few things to be sent to the clerk and he will send it to us.
[Translation]
We will now go in camera and informally discuss the committee's future over the coming weeks and months.
(The committee continued in camera.)