THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Wednesday, February 28, 2018
The Standing Senate Committee on Transport and Communications, to which was referred to Bill C-49, An Act to amend the Canada Transportation Act and other Acts respecting transportation and to make related and consequential amendments to other Acts, met this day at 6:45 p.m. to give consideration to the bill.
Senator David Tkachuk (Chair) in the chair.
[English]
The Chair: This evening the committee is examining Bill C-49, the transportation modernization act.
We have two panels of witnesses tonight. For the first panel, I would like to welcome Mr. Massimo Bergamini, President and Chief Executive Officer of the National Airlines Council of Canada; and Mr. Daniel-Robert Gooch, President of the Canadian Airports Council. Thank you for being here.
The International Air Transport Association and the Air Transport Association could not attend our meeting tonight. They will provide written testimony.
Mr. Bergamini, if you could begin, Mr. Gooch will follow and the floor will then be open for questions.
Massimo Bergamini, President and Chief Executive Officer, National Airlines Council of Canada: Good afternoon, honourable chair and honourable committee members. My name is Massimo Bergamini and I am President and CEO of the National Airlines Council of Canada.
I want to thank you for the opportunity to appear today to provide my organization’s perspective on Bill C-49. But before I begin, allow me to say a few words about our organization and our industry.
[Translation]
The National Airlines Council of Canada was created in 2008 by Canada’s four largest airlines — Air Canada, Air Transat, WestJet and Jazz Aviation — to advocate for policies, regulations and legislation that foster a safe and competitive air transportation system. Collectively, our members carry over 92 per cent of Canada’s domestic air traffic and 65 per cent of its international air traffic.
[English]
According to a Conference Board of Canada study in 2012, our industry contributed almost $35 billion to Canada’s GDP.
Those are significant numbers that speak to the role that a strong, competitive aviation industry plays in Canada’s economic prosperity. But more to the point of our discussion today, commercial aviation has become the only practical way for millions of Canadians to travel to be with family, for work or simply to explore their country, and travel they do.
According to Stats Canada, the total number of passengers emplaned and deplaned in Canada increased by 30 per cent between 2008 and 2016. There’s no doubt that the era of elite jet-setters is long past. In our country, the freedom to travel is considered a given, and air transport has become an essential link between people and communities.
That is why a competitive air industry is so important. That is why aviation policy is so important. And that is why getting it right is so important.
[Translation]
To be clear, while we find that some aspects of the bill require clarification — and I know that my colleagues shared some of their suggestions with you yesterday — in no way do we oppose its adoption. We are, however, concerned that the government’s overall approach is inadequate in two principal ways.
First, it fails to acknowledge the unique economic, geographic and demographic context in which Canada’s commercial aviation evolves. It also fails to recognize our user pay system, which pits aviation against other modes of passenger transportation that are for the most part heavily subsidized. The Emerson report — to which this bill constitutes a partial response — identified both as core issues.
[English]
By failing to address the impact of government policies and Canada’s unique competitive environment on passengers, this bill of rights also fails to recognize the economic right of air passengers to equitable modal treatment and to airfares that are, to paraphrase Minister Garneau, free of the litany of government fees and charges.
Second, while the bill does a good job of putting a black hat on the airline industry, it fails to recognize the role that the myriad of players involved in commercial aviation play in the successful movement of passengers.
There is no doubt that sometimes, in this complex system, capacity is stretched, mistakes are made and flights are delayed, luggage is lost and connections are missed. Clarifying and codifying the right of passengers is a positive measure that will lead to more certainty in the marketplace. But there are a lot of moving parts in getting a passenger successfully to a destination. It involves the coordinated efforts of hundreds of dedicated people working in government, in airlines, in airports, air traffic control, air security and border services.
Everyone involved in the movement of passengers has a role in that success, and that role must be recognized and reflected in policies and in law. To suggest it could be otherwise would be to engage in magical thinking. Thank you.
Daniel-Robert Gooch, President, Canadian Airports Council: Thank you for the invitation to appear before you as part of your committee’s study of Bill C-49, the transportation modernization act. My name is Daniel-Robert Gooch, President of the Canadian Airports Council.
[Translation]
The Canadian Airports Council, or CAC for short, has 52 members operating more than 100 airports across Canada, including all privately operated National Airports System airports. They handle more than 90 per cent of the commercial air traffic in Canada, and an even greater share of international traffic.
[English]
Canada’s airports today are experiencing strong growth. Passenger volumes were up 6.3 per cent last year and international traffic had an even stronger growth, at 9.8 per cent. Air travel is booming and government can take some credit. Investments in visas are making it earlier for foreign tourists to come to Canada. Investments are being made in tourism promotion through Destination Canada, which is doing a fantastic job. We’re working with colleagues across several departments to improve international connections through our airports.
The Canada-China Year of Tourism is raising our profile in that market, although an increase in air traffic rights is needed to fully realize our potential there.
[Translation]
Airports are very busy, which is a good problem to have. They are making infrastructure investments to ensure they have the capacity to facilitate the smooth flow of passengers. As you have heard from our colleagues in the industry, government has a role to play as well.
[English]
Budget 2018 contained some good news, with $236 million in additional funding allocated to CATSA, the screening authority, to help manage increased passenger volumes. Additional funding is also being allocated to CBSA, our Border Services Agency. These investments will help, but as the CATSA funding only maintains the Crown corporation’s current service target, we do expect long wait times at screening will continue during peak travel periods until permanent reforms can be introduced.
We are encouraged that the Government of Canada is looking at restructuring CATSA to make its funding more responsive to growth in air travel. Budget 2018 provides some stability for CATSA so that this work can proceed cautiously and in full discussion with Canada’s airports and our industry partners.
Canada’s airports and major air carriers have submitted to Minister Garneau a service-level recommendation that would see 95 per cent of originating passengers at the eighth-largest airports screened in under 10 minutes, with even quicker standards for connecting passengers and with no passenger waiting more than 20 minutes. But we are a bit far from this today, which is where our concerns with Bill C-49 come in.
Bill C-49 provides a framework for CATSA to administer new or additional screening services on a cost-recovery basis. This will provide added flexibility for airports to supplement security screening services for business reasons, such as to give a higher level of service for connecting travellers or a separate check-in area for premium travellers. However, until an acceptable service standard is put in place with proper financial support, there are concerns that some airports will feel pressure to pay for basic CATSA services that are supposed to be funded out of the air traveller security charge.
Airports on a not-for-profit basis. Any additional costs have to be absorbed and recovered through higher fees to travellers or air carriers, or through other revenue streams that airports use to keep costs low such as non-aeronautical businesses, restaurants and shops.
Toronto Pearson Airport and Vancouver International Airport have already spent an additional $14 million last year to supplement government funding to maintain CATSA’s target of moving 85 per cent of passengers through screening in 15 minutes or less. With an expected 6 million more passengers this year, there will be more demands placed at security screening and at our air borders.
As you consider the traveller rights aspects of Bill C-49, we urge you to keep this in mind. We have been listening to the testimony at your committee with respect to traveller rights and the interrelated roles of stakeholders in the travel value chain. The federal government’s own role in the provision of security screening by CATSA and border services by CBSA must be part of your considerations as these contribute to passengers missing flights, departure delays and even delayed disembarkation at the end of a long flight, causing tarmac delays.
Airports will do what they can do to ensure people get to where they want to go, get there on time and in a pleasant environment, but government certainly has a central role to play as well. Thank you for your time.
[Translation]
Senator Boisvenu: Good evening, gentlemen, and welcome to the Senate. Your presentations were very clear. I do have a few questions, though. The first somewhat stems from my personal mission of helping victims of crime. Sometimes, when people are in a foreign country, unfortunate events can occur such as someone dying. My office receives a number of calls from people reporting that airline passengers are not properly informed about the procedure to bring back a person’s remains or ashes.
I would have liked Bill C-49 to impose an obligation on airlines to inform, but it’s not possible to include everything we’d like in the bill. Are airlines doing everything they can, or can they do more, to ensure travelling families and couples are well informed of the steps to take in these circumstances? That way, when something unfortunate does occur, passengers won’t have the additional burden of dealing with the airline companies, which provide little to no relevant information or services.
Mr. Bergamini: That’s an important and interesting question. It’s hard for me to speak for the industry on that. That kind of issue boils down to the competitive landscape in which we operate. That’s more or less what the companies you heard from yesterday told you. Airline fares are published and do include relevant details.
In addition, for the past two years, we have seen an increased commitment by airlines to provide information to customers and passengers using social media and digital platforms. Our members have taken steps in that regard and, individually, have committed to being more transparent and doing a better job of communicating information. Therefore, I would say that the answer to your question is yes.
That said, I suggest that you share your views and concerns with the airlines directly. I can assure you, however, that I will pass on the message.
Senator Boisvenu: It seems to me that it should be a key principle in a passenger bill of rights, especially with the increasing frequency of terrorist acts around the world. Entire families are affected, and they end up being caught off guard. I would like to see efforts made to change that.
We also discussed joint ventures with the airline representatives, and their views on the subject were quite mixed. The people from Air Transat were of the opinion that joint ventures bordered on mergers, resulting in unfair competition given that the routes and clienteles are often the same. I’d like to hear what you think of joint ventures under this bill, which takes power away from the Commissioner of Competition and gives it to the minister. The Competition Bureau would strictly have an advisory role, and that worries people in the aerospace industry.
[English]
The Chair: Mr. Bergamini, before you answer that, perhaps you can list who your organization represents exactly so that the people who are watching are aware.
Mr. Bergamini: It’s Air Canada, Air Transat, WestJet and Jazz.
[Translation]
In response to the senator’s question, I will say that our organization, a bit like my colleague’s, works on a consensual basis. Clearly, when it comes to issues around competition, our organization does not take a position, although we are well aware of our members’ positions on the subject. Unfortunately, it’s not something I can comment on.
[English]
Senator Dawson: I had the occasion to run into both of you. You expressed that you were hoping this would be phase 1 of transport modification, as far as you’re concerned. I don’t want to talk about shipping or trains. I hope the trains don’t come back for a few years. We’ll pass them for now.
I certainly understand from some of the ministers’ speeches, and from your request, that you’re hoping for Emerson 2 in the sense that a lot of the recommendations Emerson made concerned airport management and governance of airports. We know that the model is now 25 years old. We know that we don’t distinguish between the four very major airports and the small ones. They all have the same one-size-fits-all, but we did a report a few years ago that said one size doesn’t fit all. You cannot compare Vancouver and some of the smaller airports insofar as the rules and regulations about governance are concerned.
I was wondering how you will be processing to be sure that there is a second phase. I hope the first phase finishes soon but that the second phase starts as quickly as possible.
Mr. Bergamini: Yes, senator. That is an excellent question. I may be one of those few people that was actually happy not to see more details in yesterday’s budget because, frankly, that means we still have time to move forward on some pretty significant public policy issues.
As my colleague indicated, the CATSA question is a case in point. This year there’s sufficient funding, as we understand, to ensure that the current service level is maintained. And we say that is simply not adequate.
In the works, as part of that phase 2 and perhaps driven by fiscal considerations, is a plan to change the governance and business model of CATSA. That’s under way.
From our perspective, that’s welcomed. We’ve suggested that perhaps a model akin to a Nav Canada model might be the way to go, but fundamental questions need to be looked at in terms of who is going to pay for that. That’s the phase 2 that needs to be looked at. That’s the tough debate. It’s the user-pay system under which we operate that colours everything.
To move to a Nav Canada model and then expect the users,the passengers, to pick up the cost of increased service levels -- why has the government not put in higher service levels? Because there would be a requirement for additional funds. Who is going to pay for it? It’s the traveller; it’s the user. What is the impact going to be on the demand for air services? What is the impact going to be on marginal services? What is the impact going to be on airports?
All of these things need to be looked at. It is a massive debate that needs to take place outside of the silos in which some of these discussions operate.
We will be pushing politically — let’s say we’re kicking it off today — to make sure that there is a phase 2 and that it’s meaningful.
Mr. Gooch: Thank you for the question, senator. It’s great to see some familiar faces from that time. I really appreciate the report.
My colleague and I already spoke to CATSA, where the government had made commitments on service level standards, reforming the organization’s funding model to hold it to a service level standard. The budget yesterday gave us some money to work on this for the next bit. It’s going to take time. It is complex and it is something that should be worked out through discussions with airports and our other partners in the industry.
In the Emerson report and in your report, there is a basket of other files that we’ve done presentations on before and that we would love to see some movement on. We have seen some measures put in place to allow small airports, for example, to apply for infrastructure funding which they’d been barred from. The small airports have been barred. There has been some progress there, but more work could be done.
Airport rent is about $340 million and growing. We put presentations forward about how that complicates decision making about business lines for airports, how for the smallest of airports it really didn’t make sense to be charging rent.
There was no movement on that in the budget announced yesterday, but we met with government up until a few weeks ago. We do hope to see some progress on that in the future.
Senator Mitchell: You mentioned that we do expect long wait times and that screening will continue during peak travel periods until permanent reforms can be introduced.
I would like to say that Edmonton, where I travel to and from a lot, is very good, and so is Ottawa by and large. Congratulations on that at least.
What would the permanent reforms be that you’re contemplating in that statement?
Mr. Gooch: The challenge is that CATSA is not set up like a normal business which has control or the ability to influence both the cost and revenue side. CATSA is dependent on annual appropriations from government in the budget. Every year we and CATSA and everybody else in the industry spends a lot of time putting forward representations on how CATSA should be funded, and then a few months later we start it all over again.
Traffic has been growing very strongly, over 35 per cent growth in about the last five years. The funding is not kept pace. Air traveller security charges a user fee. When it was first set up, there were promises made that the funds would go to fund the service. Not all the funds go to fund the service today and it’s not automatic.
We need a more nimble approach, a structure that allows for resources raised by travellers, as travellers go up, to fund the service that travellers need. It’s not able to respond to changing traffic demands.
Senator Mitchell: Now it goes to general revenue and then you beg for money?
Mr. Gooch: That’s correct, sir.
Senator Mitchell: So you’d rather have a direct cashflow to you, which would at least gear it to the level or volume of traffic.
Mr. Gooch: Not to us, but to fund the service going to travellers, whether that be by CATSA or another organization.
The Chair: When you purchase your ticket, that’s where the fee is charged for security, but it just goes to general revenue?
Mr. Gooch: That’s correct.
Senator Mitchell: It’s a tax.
The Chair: I want to know how big a tax it is.
Senator Mitchell: Exactly.
My other question is quite specific. I think it would be for Mr. Bergamini.
You talked about the charter idea. One of the issues that has arisen is that under some tariffs, or most tariffs, there was a 90-minute delay threshold on the tarmac. Now that idea will apparently be formalized in this charter, and it will three hours.
It seems to me you’re somewhat ambivalent about how this charter is implemented. But do the 90 minutes extra, or the three hours, do you feel that gives you greater leeway given that the consequences of not meeting it are going to be much more intense?
Mr. Bergamini: In terms of the time differential, I really can’t speak to it from a substantive point of view.
I can tell you that the process that will possibly follow the adoption of this bill, the regulatory development process is where the details will be worked out. That’s where we’re going to get a lot of our answers.
This approach has been likened by some as a blend between the EU, U.S. fairly rigid, penalty-driven approach and a lighter approach that we see in Australia, China and some other countries.
If the consequences and the approach mirror what has been happening in EU countries, we have a lot to worry about, because we have seen judicial interpretation of the rules create a situation where even mechanical problems for delays are deemed not to be valid, whereby their charter supercedes even safety regulations.
So when you think about the implications of this as an economic lever , airlines will never sacrifice safety, but that’s the bias injected into it.
Likewise in the U.S., the penalty-driven, punitive system has resulted in fewer tarmac delays but also more flight cancellations because of the level of penalties.
Those are some of the unintended consequences that we really have to guard against.
Senator Mitchell: It goes from 90 minutes to three hours at least.
Mr. Bergamini: That’s part of it.
That's why we have to recognize in legislation and policy that it’s not just the airlines. This is what the bill does and the way it was framed does. That’s why I say it puts a black hat on the industry, and it’s very successful in doing that, but it doesn’t address the fundamental problem.
If the goal of the legislation is to punish, to seek retribution, that’s easy. If it’s to improve passenger air travel, then it’s more complex.
Senator Mercer: Senator Mitchell has introduced the notion of three hours, but I’m not quite sure where that came from.
I’m also confused by the fact that we’re talking a lot about the passenger bill of rights. It doesn’t appear in this bill. There is a reference to it and that it’s going to go into the regulations at a later date, and when it goes into regulations, that’s not coming before this committee. What bothers me the most is it should be in the bill. There should be a bill that talks about the passenger bill of rights that will come before a committee in the House of Commons and a committee in the Senate, and we’ll have an opportunity to have our say and consult with many witnesses.
The reference to CATSA funding, that’s a major issue. It has become a cash cow, not a fee for service.
Is there somewhere we can look at the amount of money collected under the CATSA fee and the amount of money spent out of that fee for the actual service?
Mr. Gooch: Senator, one of the challenges we’ve had is there is not a lot of transparency around the money. Sometimes we are talking with individuals in the government who don’t know the delta between what is collected and what is spent. But it certainly could be a lot better.
The challenge when airports are funding it is that, as my colleague said, it ends up being absorbed into the cost structure and so it gets passed on to passengers. Travellers are paying a fee for service and they deserve value for money not only on the security side but in terms of the traveller experience.
Our recommendation is to get out of this cycle and to get to something where the funding is more transparent and the resources are better matched to demands.
Senator Mercer: It seems to be a bit of a shell game. The money is coming in and gets moved around, and you don’t know exactly what came in and what was spent.
The other issue is the modernization of airports across the country has been revolutionary in the last few years. Many airports have been modernized. I fly in and out of Halifax weekly, and it’s constantly being modernized and changed. I know that happens across the country. But the more travellers there are, the more demand there is for service, both of CATSA, but also more demands for things like parking, restaurants and other services offered at the airports. Airports are supposed to be non-profit, but they’re taking a fair amount of the money that in other circumstances would have been profit and putting it into constant modernization and changes.
I don’t know how many times I’ve gone through an airport and what was there last week is not there now. There’s something new. That’s generating revenue for the airport all of the time, we hope, but that money is constantly being reinvested in the airport, not in the service for the passengers who are the main reason the airport exists. The airport exists to carry those passengers to and from wherever they are going.
Mr. Gooch: I’m not sure I understand the question. A lot of the investments you’re seeing on the travellers’ side is for restaurants, shops and services; they are there for the benefit of the travellers.
Screening is the government, so the money is not going to go to that, but it does get poured back into the airport across the operations so the charges made to air carriers can be as low as possible to keep the airport competitive. When we see investments in a hotel going up on the property or additional restaurants, all of that is generating money used to offset the charges that need to go to air carriers. That’s a very positive development for everybody in the industry.
Senator Mercer: You mentioned that airport rent is high. That puts us at a distinct disadvantage all across the border. How many times has this committee heard testimony that people are driving from Ottawa to upstate New York to catch a plane because it’s cheaper? I can name a half a dozen people I know who do it, some on a regular basis. But it seems to me that when you have that kind of competition, you respond to it. You don’t respond to it by putting your prices up. You respond to it by becoming more efficient, keeping your prices lower and trying to attract those customers back.
There doesn’t seem to be an attitude here that this is what we want to do. It just seems that we want to continue to do the same things, that the prices are going to go and the service of CATSA is not going to grow to meet the demand.
I’m expressing the frustration of the air traveller because I am one. It seems to me that by putting some of these things into regulations and not into legislation is a major setback in proper service to air travellers in this country.
Mr. Gooch: I can address the comment on airport rent. That’s a revenue stream for the federal government. It is something airports are required to pay under the terms of their leases with the federal government.
If that money is reduced or eliminated, airports have committed to passing that on to users, whether it be through lower airport improvement fees, lower landing charges or other methods, but all of that would go back to users. We have said that at the very least it should be eliminated for airports with fewer than 3 million passengers, which is most of the airports that pay rent. It would be tremendously valuable for them.
If airport rent is to continue to be charged, though, at least the money should be going back to fund the services used by travellers, most notably improving the level of service at CATSA and, if needed, improving of the level of service at CBSA. I completely agree that that money should be going to benefit travellers.
[Translation]
Senator Gagné: I’d like you to clarify something for me in relation to Senator Mitchell’s question. I’d like to get a better sense of the dynamic between airlines and airports. In a situation where an airline receives a complaint about a delay that was caused by airport staff, who will be compensated and how?
Mr. Bergamini: The relationship between the passenger and the airline is currently governed by the contract between the passenger and the airline. In a dispute, the Canadian Transportation Agency decides. You will recall that, in the Air Transat case, the agency was the one who made the decision.
Without going into the details, one of the things that came out of the discussion, a rather new element, was the complexity of the events that occurred. Ultimately, rightly or wrongly, the airline was the one who had to pay a fine with the option of paying an equivalent amount to passengers.
To pick up on the senator’s comment on the regulations being developed by the agency, I would say we are concerned that, under the regulations, it could be very difficult for airlines to avoid complaints in cases where the delay could be caused by other factors. I’m going to switch to English, if you don’t mind.
[English]
Because of the complexity of the system, we’re talking about transparency and making sure that the passengers understand their rights, but imagine being caught in a tarmac delay. You don’t know the cause. Often the pilot himself doesn’t know the cause because information is shifting so rapidly. Was it caused because there was an air traffic decision to ground planes? Was it a mechanical failure? What was the cause? Was it a security issue?
The passenger just knows they’ve been delayed. They might have missed their connection. How will they find themselves in the system? This is one of the failures of this approach, and this is why I say it amounts to magical thinking to believe that the complexity of this system can be easily codified in a way that will lead to justice and, more important, to improvements in the system.
We know Minister Garneau, when introducing this legislation, spoke at length about the United Airlines incident. It was global news. It was an awful story. That incident occurred in the United States, in a system governed by a set of passenger rights we’re trying to emulate. So you will never ensure 100 per cent that there will be — in that case, it was the airport police who had overstepped their bounds.
I’m not sure I can answer your question effectively. But our concern is that the complexity of the system is simply not captured in this approach, and that will lead to confusion and frustration. The regulatory process that will follow needs to capture that to ensure there are safeguards for everybody.
[Translation]
Senator Cormier: My question is for Mr. Bergamini. It has to do with passenger rights. I noticed that, in your opening statement, you mentioned the Emerson report, which highlights the need to clarify the obligations of airlines to provide service in both official languages. We have heard from people in communities across the country how important it is to be served in both official languages, not just by Air Canada, but also by other companies, to be sure.
If a language obligation were imposed by law, how long do you think airlines would need to comply?
Mr. Bergamini: I’m going to have to answer the same way I did in response to Senator Boisvenu’s question earlier. Unfortunately, our organization adopts policy positions on a consensual basis. When issues give rise to competitive considerations, our organization does not take a position. It is up to the airlines, individually, to do what they feel is right in terms of the best course of action.
Air Transat is a Quebec company, and Air Canada’s responsibilities are governed by a legislative framework. WestJet has actually made huge strides in the area. I know it has set some fairly high standards around bilingualism. Efforts are constantly being made to adequately represent the country’s linguistic needs and deliver first-rate service.
[English]
The Chair: Senator Gagné will ask a supplementary, and then we’ll come back to you again.
[Translation]
Senator Gagné: My question is about official languages as well. Do airlines, including Air Canada, which is subject to the Official Languages Act, have to meet language obligations further to other rules, for example, safety directives?
Mr. Bergamini: That’s a good question. I don’t have an answer for you off the top of my head, but I can get back to you with the information this week.
[English]
The Chair: You can communicate it to the clerk.
[Translation]
Senator Cormier: I’d like to say one last thing. From what you’ve told us, my understanding is that, since an initiative is already under way, if the obligation were included in the bill, airlines would comply and take the necessary steps.
Mr. Bergamini: I wouldn’t go so far as to say that. Let’s just say that the airlines take the issue very seriously.
[English]
Senator Housakos: I have a couple of comments and a couple of questions tied to each case.
Clearly, this bill is an attempt to respond to a particular incident and media attention a while back, as governments tend to do. Knee jerk reaction, something makes the news; we try to deal with it. It’s nice to call it, “Here we have a bill of rights and we’ve addressed the issue.” I know you have a perspective because you represent particular stakeholders, but I find it a little disturbing as a parliamentarian, but as somebody who travels from time to time as well, that airline carriers in this country that are the chosen children — I mean, they are supported by government legislation. There are a number of pieces of legislation that we put into place and things we don’t do in this country in order to support our national airline companies, particularly Air Canada, and we’ve all understood that. But I find it amazing that, over the last couple of decades, these companies are not preoccupied, as they should be, with their bottom line — and their bottom lines are going to be affected by air carriers’ obligations to their passengers — rather than being preoccupied with what the passengers’ rights are when they get screwed at the end of the day. Pardon my English.
I don’t know if the government is looking at it maybe backwards, where they should be focused on a bill of obligations of the carriers toward their passengers rather than a bill of rights of passengers who, to be frank with you, are busy. When they can’t get on a flight or when they’re stuck in a particular predicament, they get off the plane. They’re frustrated for a period of time, and then they move on.
So I’d like to have your view of an air carrier’s bill of obligations towards their passengers rather than the passengers’ bill of rights.
I want to go back to Senator Mercer’s questions because I think I understand where he was going with his line of questioning. We also have invested a great deal of time in creating these independent airport authorities across the country that have built these great Taj Mahals. In some instances, you go through them, and they’re better than some of the five-star hotels around the country. They’ve done that by indebting themselves; a lot of airports are grossly in debt. Pearson Airport in Toronto is over a billion dollars plus in debt.
We have given the airport authorities the very good concept of making them arm’s length from the government, and the idea was that they would run more efficiently. Clearly, some of them are not being run more efficiently. For the government, they’ve become cash cows, and they put pressure on airline companies to provide the best possible service because it’s a source of revenue.
So we have the government, on one side, responding publicly, saying “We’ll have a bill of rights, and, if you have complaints, you can you file the complaints with the transit authorities,” and so on. On the other side, they’re going to the airport authorities and saying, “We’re going to tax you to death.” We know, as parliamentarians, when we tax them to death, it means the passengers are being charged to death.
I think the burden of responsibility still should be on the shoulders of the government in looking at airports the way they look at them as a revenue source rather than a service that they should be providing to the nation, and a bunch of airline carriers that are looking at their passengers right now not in the manner they should, where they should be looking at them as, “We have an obligation to them.”
When a passenger shows up at an airport in Montreal, like I did a couple of weeks ago, to take an 8 a.m. flight to get myself to Hartford, I get to the counter — and I won’t mention the airline carrier — and they say, “Sorry, your flight has been cancelled.” I haven’t been called. I haven’t been emailed. I haven’t been informed in advance. It was a beautiful, crystal day, so the cancellation had nothing to do with weather. It was the third time that particular flight had been cancelled in the last nine months.
Customers show up at the counter. Quite frankly, the customers don’t care what their bill of rights are. They want to know what the airline company feels their obligation is toward them rather than, “Well, we’ll reimburse you or give you an upgrade,” or whatever it may be.
I know I’ve gone through a long preamble, and I apologize. The question is: Do you think this bill should be done in reverse — instead of a passenger bill of rights, obligations towards the carriers more so than it does?
Mr. Bergamini: I’ll try to deal with each part in turn. Let me start with the airports, and perhaps my colleague will want to jump in on that as well.
I think we should all be quite proud that our airports are considered among the best in the world. That is a Canadian advantage.
Having said that, Senator Dawson mentioned the next phase regarding the need to put in place a new governance system. We do believe that the current system is highly idiosyncratic and is not befitting a national or a pan-Canadian policy. As a result, there are wild variances by region, by province and so on. We desperately want to see a system that takes into account the perspective of the users, airlines notably, in terms of future direction and growth.
Airlines work on five- to ten-year capital plans based on market projections. Airports work on the same thing. Why can’t they work together? It shouldn’t be an adversarial relationship, which is the case now. The new policy should enshrine the spirit and a sense of collaboration and partnership. That’s one point. We’re looking for that.
With respect to the bill of rights, I want to say a couple of things. First of all, the minister and the government are responding to the Emerson report, so I will not impute motives. They’ve decided this is the way they’re going to do it.
With regard to a bill of rights, bill of obligations, at the end of the day, this is creating a prescriptive framework on airlines. No less a capitalist haven than China favours a market approach to passengers. Their approach is all about transparency. Carriers have to publicize. There’s a great deal of transparency. The consumer chooses, and it works. I just leave that with you.
I’m not sure that the solution is to impose more government-mandated standards on airlines. My sense is we improve the economic context in which they operate, improve modal equity and allow them to fight it out amongst themselves and deliver the best possible service.
Mr. Gooch: Thank you for the question. Airports are very capital intensive. That’s certain. I think it’s a fair analogy to say they are sometimes like icebergs in that what you see as a passenger is really just the tip -- runways, safety equipment. It is an ongoing investment.
The other big distinction that has to be pointed out is that the nature of the infrastructure investments at airports are so large that airports have to look 10, 20 years out when they’re making these plans.
Airports that have been criticized in the past for overbuilding may have been a little empty when the project first came online, but many of these airports are full now and are having to look at additional investments. They became full much earlier than they were anticipating.
It’s also important to note that these investments are not made in a vacuum or in a boardroom behind closed doors. Airports have requirements under their leases, under public accountability principles. They consult extensively with their communities. They consult extensively with their stakeholders, including the air carriers’ communities. Air carriers do have the ability to say, “Hold off on this project; we don’t think it’s needed.” But that has not been exercised more than once or twice in the 25 years since airports were in the business.
It’s a complex, capital-intensive business, and we have airports with the capacity to grow. So I think our airports have done a pretty good job of balancing the various stakeholders that they have to consider — air carriers and travellers but also the communities that they serve.
[Translation]
Senator Boisvenu: I’d like to discuss regional transportation. We are talking about a passenger bill of rights, which should, in my view, provide for services that are accessible and affordable. Regional transportation services throughout the country have been getting steadily worse for years, especially in Quebec and the Maritimes. When a new competitor would enter the market to provide a basic service, the existing large carrier would drop their prices to compete with the small newcomer.
The Government of Quebec is in the midst of a very important examination related to the lack of transportation in some parts of the Côte-Nord region, in particular the Magdalen Islands. These are isolated areas, and I think the air carriers are shirking their civic duty to do what is necessary to serve these populations, who rely on air carriers. The only way out of these regions is by plane. Are you aware of the problem? Is there a plan to save residents from having to pay the price of a return ticket from Sept-Îles to Montreal? It costs the same as a trip to Cuba. This is 2018, after all, and it should be possible to provide adequate service to these populations.
Mr. Bergamini: That’s a very topical question. Again, it’s up to the airlines to determine their level of service on specific routes. I won’t comment, except to say that WestJet is increasing its service in Quebec.
I’d like to pick up on what we were discussing earlier. Outside the Quebec City-Windsor corridor, the demographic and geographic reality plays an important role when it comes to population density. It affects air carriers’ costs, as well as the costs of all passenger carriers. The Government of Canada, as part of this second phase, should undertake an effort aimed at eliminating or reducing carriers’ costs and fostering new competition. The economic climate used to be much more favourable. One reason the so-called ultra-low-cost carriers don’t last is that they aren’t able to operate in the economic climate of Canada’s marketplace. The costs are simply too high. That’s one of the issues facing the industry.
Earlier I said that policies were made in silos. Yesterday’s budget contained a veiled reference, on page 316, to subsidies for VIA Rail to purchase new rolling stock. Further subsidizing rail transportation in that corridor will really cause trouble in the regions and create competition with the airlines, which will have to lower their prices. Where are the costs going up in the current system? In the regions. That is totally inconsistent with the air transportation policies being developed at the national level. That’s the biggest challenge we have to deal with. I hope it’s an issue the committee will focus on. Thank you.
[English]
The Chair: Thank you to the witnesses for participating tonight.
I’d now like to welcome Ian Jack, Managing Director, Communications and Government Relations, Public Affairs, Canadian Automobile Association; John Lawford, Executive Director and General Counsel, Public Interest Advocacy Centre; Jacob Charbonneau, Co-founder and Chief Executive Officer, Flight Claim Canada; and Richard Vanderlubbe, Chair, Canada Transportation Act Review Committee, Association of Canadian Travel Agencies.
Thank you for coming, gentlemen.
Ian Jack, Managing Director, Communications and Government Relations, Public Affairs, Canadian Automobile Association: Thank you, honourable senators, for the invitation to join you tonight to comment on Bill C-49, specifically as it relates to air passenger rights.
I’ll begin my remarks by providing some background on why the CAA has been pleased to be a leading voice in the air passenger rights discussion.
[Translation]
CAA was founded in 1913 as a non-profit advocacy organization to represent the interests of motorists, but the world has evolved since then and so has CAA. Today, we have more than six million members from coast to coast, and the services we offer them extend well beyond emergency roadside assistance.
[English]
In fact CAA, through our store network and online, is one of Canada’s largest leisure travel agencies with over 150 retail locations from coast to coast. But we also remain a non-profit, member-driven organization that is at its heart an advocate for the Canadian traveller.
Our travel agents work with air passengers every day. We understand the business. This allows us to take a strong, informed position in favour of air passenger rights, while at the same time recognizing that the consumer interest is best served by a healthy and competitive industry.
Honourable senators, the passenger protection regime in Canada has been untouched for many years, leading to a widening discrepancy between how U.S. and European air travellers are treated on one side and Canadians on the other.
It is time that we do better when it comes to protecting Canadian air travellers, and we view this legislation as a welcome step in this direction.
[Translation]
The public is very supportive. CAA polling has found that an overwhelming 91 per cent of Canadians agree it is time Canada has its own national airline consumer code.
[English]
Bill C-49 contains many of the improvements that we have been calling for over the past several years. Of course, many of the things that consumers care about most will only be determined through the regulation-writing process that would follow passage of Bill C-49. For example, the definitions of passenger treatment in specific situations and the levels of compensation for specific infractions will need to be set out clearly, as will the definition of what constitutes a mechanical defect, for example, within the control of an air carrier.
Honourable senators, a well-intentioned bill will end up having no positive impact for Canadians if the end result is minuscule compensation available in exceptionally narrow circumstances and not easily accessible to members of the general public. We must all work to ensure that that does not happen.
[Translation]
CAA recognizes that one of the most critical elements of an air passenger regime will be ensuring that travellers know their rights. The regime put in place to protect travellers must be clear, transparent, fair and consistent. Furthermore, the process for passengers to claim their rights with the airlines must be simple and proactive in nature. When compensation is due, respecting travellers rights should be the airlines’ default approach.
[English]
CAA has been pleased to see that both Minister Garneau and CTA Chair and CEO Scott Streiner agree that the air passenger rights regime will be designed as a proactive one where airlines are expected to compensate consumers when compensation is due. Consumers should only have to turn to the CTA for redress as a last resort if airlines fail. An added benefit of such a system is that the CTA should be able to focus on more complex complaints and to perform proactive compliance audits to ensure consumers’ rights are being observed.
Indeed, a recent report by the EU consumer association found that only 25 per cent of EU flyers are getting the compensation they are due for lengthy delays because airlines are not required to proactively provide it. This is the nightmare scenario for all of us who have worked hard to get to this point.
Lastly, one further area I want to touch on is the importance of airline performance reporting with respect to the key metrics in the passenger protection regime. In the United States, these statistics are published month by month. This information does not just allow consumers and stakeholders to monitor performance, although of course it does; it also causes airlines to compete against each other in these areas to not have the worst record. This translates into better service and treatment for travellers. The data collected should track the legislation and must be disclosed publicly and in a timely manner. Sunshine is, after all, the best disinfectant.
[Translation]
CAA supports the provisions of Bill C-49 related to air passenger rights. We will be participating in the regulation-making process to make sure the consumer interest continues to be heard loud and clear. In order for Canadians to judge the new system a success, we must get this right.
[English]
The average middle-class passenger in this country who also happens to be our customer at CAA does not typically have the protections that come with premium status or full-fare tickets. This legislation, if the accompanying regulations get it right, will help these passengers most of all.
We urge this committee to stay engaged even beyond these hearings to make sure that the eventual system is one that works well for all Canadian air passengers.
[Translation]
Thank you for your attention, and I look forward to your questions.
[English]
Thank you, and I look forward to your questions.
John Lawford, Executive Director and General Counsel, Public Interest Advocacy Centre: Thank you, Mr. Chair and senators. The Public Interest Advocacy Centre is a national non-profit organization and registered charity. We provide legal and research services on behalf of consumers, in particular vulnerable consumers in the provision of important public services such as airlines.
PIAC has been active on consumer airline travel since the late 1980s and through the Air Canada-Canadian Airlines merger in 1999-2000, through the initial iteration of the air transport commissioner of complaints and its eventual demise, and now through this lead-up to the first serious airline consumer protection effort, Bill C-49.
Our message today is simple: We support Bill C-49 as written. It will vastly improve airline travel for average Canadians and will likely provide acceptable levels of redress for consumers that are mistreated by airlines.
How will Bill C-49 achieve these goals? First, it will provide consistent, clear baseline consumer protections, including minimum standards of treatment and minimum compensation for two of the most common airline travel complaints: delayed and cancelled flights, and denial of boarding. Different scales of treatment and compensation will likely be provided in the forthcoming regulations, depending on whether the cause of these problems is within the control of the airline or for safety or other reasons such as weather. We anticipate the rules arrived at will be fair to consumers and to airlines and that they will promote good airline practices.
Second, airlines will have to pay consistent minimum compensation for lost or damaged baggage, a stubborn air travel failure. Tarmac delays, yet another consumer nightmare, will be consistently treated so that passengers can get information and help and hopefully a clear right to return to the terminal and disembark after a reasonable, humane time.
Third — and notice my underlining the word “consistent” — Bill C-49 will override the Byzantine tariffs now filed by airlines, which are all different and which no average consumer has any hope of ever finding, let alone using to achieve resolution of his or her complaint. Present tariffs are so complex that for-profit entities seized a business opportunity for consumers that simply should not exist.
Having consistent, simpler rules under Bill C-49’s structure will empower consumers who are not treated to this standard to seek redress through effective dispute resolution that is consumer self-directed.
As you’ve heard, other countries have better air travel protection regimes than Canada. Europe has extensive passenger protections, including set compensation for delayed and cancelled flights, and the U.S. has serious fines for tarmac delays. There’s no reason for Canadians not to enjoy world-standard consumer protection in the essential service of air travel. It’s well overdue.
I must admit our bias in this debate. PIAC drafted a report to the Emerson committee on the lack of consumer protections in air travel in the Canadian transportation review. What is in Bill C-49 is very close to what we recommended and is reflected in the Emerson report.
To see that work thrown aside, should this committee or another so recommend, would be a rejection of years of work on behalf of consumers in an industry that has proved itself to be allergic to treating its own customers with dignity.
The lack of consumer protection in air travel presently looks a lot like telecommunications and banking industries did prior to the creation of their ombudsman services, namely, the Commission for Complaints for Telecom-television Services and the Ombudsman for Banking Services and Investments respectively.
Why should airlines not be similarly regulated to other major consumer essential services? We can tell you that a bill of rights or consumer code, or what have you, coupled with an ombudsman, such as the CTA, to hear complaints are effective and are the standard in federally regulated industries now.
All Bill C-49 does, therefore, is to give air travel consumers baseline standards of treatment and redress. Airlines would prefer not to have such clear and effective rules, but they have been proving themselves unable to operate humanely without such rules. Consumers deserve what Bill C-49 will bring.
Thank you very much for allowing us to appear and we look forward to your questions.
The Chair: Mr. Charbonneau.
[Translation]
Jacob Charbonneau, Cofounder and Chief Executive Officer, Flight Claim Canada: Hello. My name is Jacob Charbonneau. I am the cofounder and CEO of Flight Claim Canada. We are proud and honoured to have been invited to testify before the Senate committee regarding Bill C-49. The new legislation and regulations resulting from this bill must contain clear and unambiguous provisions to limit differences of interpretation resulting from grey areas. This new legislation will make it easier for passengers to assert their individual rights and will help restore traveller confidence.
We have taken into account current trends and international best practices, and today we are proposing three amendments to Bill C-49 that will position Canada as a leader in traveller protection.
The first proposed amendment concerns tarmac delays. The current version of the bill is a matter of:
“…respecting the carrier’s obligations in the case of tarmac delays over three hours…”.
We propose replacing “over three hours” with “over 90 minutes”. Our suggestion is consistent with the current tariff conditions for airlines in Canada. We believe that the current wording, “over three hours”, is a step in the wrong direction since tariff conditions already give passengers the option to deplane after 90 minutes. Passengers would be less protected under the new legislation.
The second proposed amendment concerns minimum compensation. The current version of the bill concerns minimum standards to be respected. We propose clarifying the application details when a passenger arrives at the final destination more than two hours late in the case of all domestic flights, or more than three hours in the case of all international flights due to a delay, cancellation or denied boarding. We strongly believe that the minimum standards to be respected should not be delegated to a third party, like the Canada Transportation Agency. They should be incorporated into the bill and approved by the elected representatives of the population.
The third amendment concerns mechanical malfunctions. In the current wording, the bill talks about the minimum standards of treatment of passengers that the carrier is required to meet when the delay, cancellation or denial of boarding is within the carrier’s control, but is required for safety purposes, including in situations of mechanical malfunctions. We propose replacing the words “for safety purposes, including in situations of mechanical malfunctions” with “in extraordinary circumstances”. The air carrier is exempted from paying the compensation referred to if it can prove that the cancellation or delay is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken and these circumstances are not inherent in the normal exercise of the activity of the carrier.
On this matter, the Court of Justice of the European Union has ruled numerous times on the meaning of “extraordinary circumstances” under the European regulation. For example, for a mechanical breakdown, the court ruled that, and I quote:
… since the functioning of aircraft inevitably gives rise to technical problems, air carriers are confronted as a matter of course in the exercise of their activity with such problems. In that connection, technical problems which come to light during maintenance of aircraft or on account of failure to carry out such maintenance cannot constitute, in themselves, “extraordinary circumstances”…
This is because the technical problems are not inherent in the normal exercise of the activity of the air carrier.
In conclusion, we firmly believe that the government should adopt legislation that is as generous and transparent as that existing at the international level. More than anything, the law should be humane, protective and should facilitate access to compensation. A clear and unambiguous law that reduces the grey areas as much as possible and leaves little room for interpretation. This legislation is needed to restore travellers’ confidence in air carriers. These measures make it possible to follow best international practices and trends in consumer protection. They will position Canada as a leader in the protection of air passengers.
Thank you for your attention. I will be pleased to answer any questions you may have.
[English]
Richard Vanderlubbe, Chair, Canada Transportation Act Review Committee, Association of Canadian Travel Agencies: Thank you to the committee for having me here.
The Association of Canadian Travel Agencies is an association of 1,200 voluntary members of travel agencies that employ 12,000 travel agents. Travel agencies sell almost 40 per cent of airline tickets in Canada. We have a front-line perspective of some of the challenges that Canadians face in air travel in dealing with customers closely, but we also have an understanding of the limitations that the airlines can have.
Overall, we’re supportive of Bill C-49, specifically around a carrier’s obligation towards passengers and the competition within the airline industry, with a few tweaks. We believe it closes a gap for Canadian travellers and passenger bills of rights in the U.S. and Europe already in existence.
We think it’s important that Canadian regulations do not conflict with other jurisdictions or create barriers for Canadians to make a claim, or that airlines end up dealing with the same claim or compensating in multiple jurisdictions. There is definitely an imbalance in power between airlines and individual consumers that we think is an appropriate role for government regulation.
Canadians will all pay a little more on each ticket because of this legislation, as it imposes costs on airlines and it’s really how Canadians want to be treated when things don’t go as expected.
We also agree to leave as many of the specifics in the regulations so that we can stay current with the market reality, which changes in travel very quickly. Specifically, there are things that are hard-wired into the legislation, like the age of children for seating with families, number of delays on the tarmac, or even a specific call-out for musical instruments, which we found a little strange. Maybe it should be related more to sensitive baggage or held under the baggage conditions that may be better in the regulations. However, we have a concern that the legislation does not define what is within the carrier’s control and to what extent a mechanical or security problem is within the carrier’s control or not. We do not want to see passenger safety compromised because of pressure to avoid costs and penalties associated with a delay.
Many things can cause delays, as the other witnesses have talked about: slowdowns in security, slowdowns with customs, U.S. immigration, air traffic control, including where the aircraft is originating from in other jurisdictions; gate readiness, de-icing. It goes on. While we agree the detail should be in the regulations, this will be a sensitive definition, and it will either saddle airlines with penalties better applied to another offending organization or leave Canadians with uncompensated losses that are not caused by the airlines.
We also think that downgrading seats should be added to the denial of boarding section where compensation should be regulated. Downgrading is when a premium seat — either business class, premium economy or any upgrade in the seat — is purchased but is lost due to aircraft configuration change resulting either from a cancellation or a change of aircraft.
In terms of competition, no matter where the shareholders live, we believe competition in air travel is a good thing, so long as it’s fair and sustained competition. Canadians have suffered financially and have been inconvenienced by the failure of many upstart airlines. Their success rate is very low. This is often due to undercapitalization or sometimes even predatory response from existing players.
Airlines take consumer monies in advance of the service, and there is no regulation of airline financials in Bill C-49 or even, at the very least, the advance purchase funds that are given to them by consumers. We believe that the financial protection of the Canadian travelling public is entirely missing from Bill C-49 and is something the federal government and the provinces need to look at as a national strategy to close those gaps.
[Translation]
Senator Cormier: Thank you very much for your presentations. My questions will be for Mr. Charbonneau. However, I would like to make a comment about your remarks relating to musical instruments. I worked as a musician, in the music industry, for over 20 years. I travelled a lot using airlines. I do not have any statistics to this effect, but I cannot count the number of musical instruments that were destroyed by carriers. That is probably why this aspect also appears specifically in the bill.
Mr. Charbonneau, you spoke to us about three amendments tonight: tarmac delays, minimum compensation and mechanical malfunctions. In the report you submitted to us, you also raised some very relevant questions about the distribution and accessibility of information, based on the obligations of the companies to passengers. Could you tell us more about your concerns regarding access to information and what role the Canadian Transportation Agency, or another government body, could play in ensuring better access to this information?
Mr. Charbonneau: Thank you. That’s an excellent question. In the many requests and complaints we receive, we see two difficulties with information. The first is the cost of events where passengers are given very little information about what is happening, why and what will happen, how they will be helped and delivered to their destination.
The second problem is related to the conditions in order to obtain compensation, based on the European model. Depending on the reasons, the flight will be eligible for compensation or not. People are often told anything. However, when written reasons are requested, the real reasons often come out. We have seen it often this winter, given the weather conditions. Verbally, we are always given weather conditions. However, when we get the hard evidence, we realize that sometimes it was a crew shortage.
This information is difficult for the client to obtain. Therefore, we propose that, as soon as the flight is delayed, cancelled or there is a denied boarding, passengers are given a written note explaining the reasons.
In the second part of your question, you asked what role the Canadian Transportation Agency could play. In this case, it could make sure the airlines follow the guidelines.
Senator Cormier: During our meeting with the previous panel of experts, Senator Boisvenu talked about regional transportation. I am from an official language minority community and region. My question is this: do you see the lack of official languages regulations as a potential barrier to access to information and passenger safety? In other words, is the linguistic question an issue for you with respect to access to information and passenger safety?
Mr. Charbonneau: At the moment, what we are seeing is that it is not a language-related issue, but an access to information issue.
[English]
Senator Mercer: I keep seeing talk about the passenger bill of rights and all of these rules and regulations. None of this stuff actually exists in the bill. It will come out in regulations later on. So I have one question for everyone: Do you think it would be better if we weren't sitting here talking about something that’s going to happen in the future but rather sitting here looking at the actual regulations the government is going to propose to go into the air travellers bill of rights? We’re all suggesting what it might be and what it should be, but we’re not looking at what it’s going to be. We could then have an opportunity to have organizations such as yours and members of the public, the actual air travellers, saying this will work or this will not work.
It frustrates me that we’re talking about something that doesn’t exist. The regulations don’t exist. They’re not here in front of us and we don’t know when they will be.
Mr. Jack: I share your frustration. This is a file that we’ve been working on for some years, and we’d love to have all the details in front of us right now. On the other hand, it does make sense to us that, as a colleague at the far end observed, the industry does change. We see before us a piece of legislation that contains many provisions and that is taking many months to make its way through Parliament. I wouldn’t want to see us delayed years down the road when we want to shift something that’s a $250-compensation to a $500-dollar compensation because it gets wrapped up in debates about other things and has to be amended through legislation.
There’s a bit of a leap of faith here, but I think you’re seeing that a number of groups will be keeping the pressure up on the government and on the agency to make sure that what is in the regulations represents what Canadians want to see. I think that there will be enough public attention on this issue as well so that if that does not happen, there will be a hue and cry. Indeed, in our own remarks, we encouraged you to call officials before you down the road and go through any questions you might have at that point.
Mr. Lawford: I think the bill does as much as it can to get you down that road. I understand from a legislator’s point of view that it’s uncomfortable to be in this position, but it does talk about having minimum standards and compensation for cancellations and denial of boarding. That’s a huge step forward. I don’t think anyone can write a regulation that doesn’t provide some money or minimum standards, meaning that overnight stays are looked after, that sort of thing, for denial of boarding. I just don’t believe that the Canadian Transportation Agency, which has committed to hearing the public on this in a very rapid manner, is going to produce nothing given the language in the bill. In other words, I think the bill is strong enough that you can have some comfort that the regulations will do what we’re asking.
The Chair: In your brief, did you suggest this format?
Mr. Lawford: We suggested that these questions be worked out and that they would require public consultation and industry input, obviously. As some members have pointed out, Senator Tkachuk, somewhere between Europe and the United States, but we did not say this exact structure. However, we did say we wanted to have all of these issues that they’ve actually said there will be minimum standards on. We said those have to be in the consumer bill.
The Chair: So you will be pretty happy with what they’ve done because this is kind of what you recommended.
Mr. Lawford: Yes.
The Chair: You didn’t want to have all the regulations in the bill.
Mr. Lawford: Correct because it would probably not get this far.
[Translation]
Mr. Charbonneau: I share your opinion. What we propose is adding as much detail as possible to the legislation and leaving it to the agency to improve it after the fact. However, the minimum rules and circumstances to which they apply will have to be clearly described in the bill and determined by the people who represent the population. It is important to avoid leaving room for surprises or implementing legislation that does not take into account future impacts but inserts the impacts into the legislation.
[English]
Mr. Vanderlubbe: I’m satisfied to leave the regulations to the CTA. I think one example where they did a good job was on the federal airline advertising rules, which were also drafted broadly. They did extensive consultations and did a good job.
The industry changes very quickly. Whenever these things are hard-wired into legislation, they quickly get out of date.
I think the legislation should be clearer regarding the intention in terms of public policy about what is a carrier’s responsibility and what isn’t. I think that’s an area where it would be better to have clarity. Consumers right now are left with small claims. That’s time consuming and they end up just giving up. It’s a big deal.
I think that it will do a good job for a lot of the irritants that are in air travel, and I believe the CTA will do a good job.
Senator Bovey: I appreciate the comment about information on planes. In the last 10 days, I think I’ve been on five planes and not one was on time. On one of the flights from Vancouver to Winnipeg, I was fascinated. We got on late. As we were about to take off late, the pilot came on and said, “Thanks for being patient. I can’t tell you why we’re late because I don’t know. It may be because of a change of aircraft because the airline oversold the flight.” That was not particularly helpful.
You’ve commented on taking a look at passenger rights, looking at the ones in the EU. I’m aware of one situation. It happened to be my son-in-law who is a competitive cyclist. He was racing in Europe. The plane was late leaving and the bags didn’t make it onto the plane. He wasn’t fussed because he knew he’d get compensation because of the rules in the EU. What surprised him, however, was when the cheque came, months later, it was one third of what it should have been, so he had to request the rest of it. Another third came a number of months later, and then he had to request another bit. That third came another three months later. It took at least nine months for the compensation to come.
He happens to be a journalist and on the ball; he knew how to ask and push and push. What about the passengers who don’t know? What about the passengers who don’t have the fortitude or the interest in pushing or maybe think that that one-third cheque was it? So they get a cheque and therefore they’re happy?
If we base the regulations on Europe and they talk about how much, are we also going to talk in the regulations about when and does the payment come in one lump sum? What about the person who thinks they’ve got all they’re going to get? I still want to know about the money left on the table that passengers never claimed.
[Translation]
Mr. Charbonneau: You raise some very relevant aspects. These are things we see every day, because we receive requests and provide a turnkey service to passengers to get compensation. When we started the company and began looking at the market, we realized that in North America, less than 2 per cent of people ask for compensation, because they do not know their rights or they do not want to fight the airlines. Today, 20 per cent of our customers have approached an airline and been denied, and they come back to us afterwards. So, there really is work to be done to educate people and also on the airline side. It is not normal for people who make claims to be turned down because the airlines know that when they say no, 95 per cent of people will not go further.
In addition, I am very worried about the whole notion of customer information. Our advertising at the Montreal airport was withdrawn as a result of pressure from the airlines. We displayed the rights of consumers in a public place. Of course, that is an area that worries me a lot. We cannot inform people in public places because airlines are putting pressure on airports. It worries me because passengers have rights but cannot use them because they do not know them.
[English]
The Chair: How bad is the problem? I travel all the time. Sometimes planes are late and you have a terrible time, but considering the amount of travel I’ve done, most of the time I’m a pretty happy guy. How bad is this problem, or are we just a nation of whiners and complainers?
[Translation]
Mr. Charbonneau: When we propose going for compensation for flight delays of more than three hours, and more than two hours within Canada, when we look at the statistics from 2014 to 2016, that represents less than 1 per cent of people.
However, from 2014 to 2016, the number of delays increased in Canada year after year. It went from 10.8 per cent in 2014 to 14.1 per cent in 2016. For cancellations, there was an increase year over year from 1.2 per cent in 2014 to 1.4 per cent in 2016. In the case of cancellations, when we look at flights subject to European compensation, we are talking about 0.4 per cent, or four times less.
[English]
The Chair: Yes, but we have terrible winters. Let's think about this. I mean, Paris to London is 25 miles, or whatever it is. It's not big deal. In Canada, you’re travelling from Montreal, which has one type of weather, to Toronto, which has something totally different, all the way to Saskatoon, where it is 30 below zero. I’m surprised that’s all there is, actually. When you think about what people have to put up with and the airlines have to put up with, that’s not very much, is it? I know you’re making a living promoting this.
Mr. Lawford: You can take a look at the same thing on banking or telecom before they had their ombudsman. You would say they had no complaints. Well, as soon as they set up an ombudsman, it went from a thousand to 10,000, and now telecom receives 30,000 complaints a year.
When the system is simple and people have a consistent set of rights, I think you’ll see that people realize they do have some claims. I’m glad you’ve been lucky so far in getting across the country, but a lot of the people who call us are quite distressed almost every flight they take.
Mr. Vanderlubbe: The other thing is, I think, the status of people around the table. It was pointed out by Mr. Jack that for average Canadians in economy travelling in overbooking situations or downgrades in aircraft — I’m not talking about weather — it is a real inconvenience and it is a disruption that occurs frequently.
The vast majority of the transactions go perfectly well, for sure, but when they do go bad, it leaves consumers with very few remedies because it is too costly and too time-consuming to even do it; and yet in their view the agreement has been breached.
I’m a travel agency owner. We had a customer who was denied boarding on a discounted business-class ticket to Sydney, Australia, because two letters were wrong. It was an international carrier that pretty much wanted to charge extortion amounts to try to remedy the situation.
So while the lion’s share, the vast majority, goes smoothly, when it does go wrong, it leaves the consumer with no real remedies.
[Translation]
Senator Gagné: I was surprised, Mr. Lawford and Mr. Charbonneau, that you did not refer to the fact that the bill adds a new section — section 67.3. It states that only the persons affected can file a complaint against an airline regarding their rights, to the exclusion of third parties like you. What is your reaction to that proposal?
Mr. Charbonneau: We talk a lot about it in our brief. It does not necessarily concern us because the people are represented by lawyers, and it is a constitutional right in Canada. It is more about non-profit agencies that come to defend the rights of consumers. We talk about it at length in our brief. Indeed, people should have the right to be represented. We are introducing an amendment to that effect to the bill.
Senator Gagné: Are you familiar with the situation of Delta Air Lines Inc. v. Lukács?
Mr. Charbonneau: Yes.
Senator Gagné: In short, the Supreme Court found the exclusion unreasonable.
Mr. Charbonneau: Right.
Senator Gagné: Thank you.
[English]
Senator Mitchell: Thank you very much for your presentations.
As I was listening, you reflected something that happens in chambers that review legislation. On the one hand, there is a concern that there is too much in a bill, which means it’s an omnibus bill. On the other hand, there is a concern that there is not enough and we have to stuff it full of regulations. You can’t have it both ways, but it ends up, to some extent, being reflected here.
Mr. Charbonneau, I’m afraid to say that I actually buy the argument that the hard-wire problem is a big problem and can actually hamstring quick responsiveness and, therefore, better client service.
I want to underline the points that the other three of you made in that regard, but I also want to confirm something that seems implicit in what you’re saying. You have no doubt you are going to be consulted extensively in the development of those regulations. It’s not like they’re going to be done behind closed doors without industry and representative groups having input. They’re not going to be secret; they’re going to be public.
While there is some concern that they’ll never come before this Senate committee, we can call them before this committee and do a review any time we want.
Mr. Lawford: We do expect to be consulted publicly, yes.
The Chair: Thank you very much, gentlemen.
(The committee adjourned.)