THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Tuesday, May 16, 2023
The Standing Senate Committee on Transport and Communications met with videoconference this day at 9 a.m. [ET] to examine the subject matter of elements contained in Division 2 of Part 3, and Divisions 22 and 23 of Part 4 of Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.
Senator Leo Housakos (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I am Leo Housakos, senator from Quebec and Chair of the Standing Senate Committee on Transport and Communications. I would like to invite my colleagues to introduce themselves, starting on my left.
[English]
Senator Simons: Paula Simons, Alberta, Treaty 6 territory.
[Translation]
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
Senator Cormier: René Cormier from New Brunswick.
[English]
Senator Manning: Fabian Manning from Newfoundland and Labrador.
[Translation]
Senator Clement: Bernadette Clement from Ontario.
[English]
Senator Harder: Peter Harder, Ontario.
Senator Cardozo: Andrew Cardozo, Ontario.
Senator Quinn: Jim Quinn, New Brunswick.
Senator Dasko: Donna Dasko, Ontario.
Senator Wallin: Pamela Wallin, Saskatchewan.
The Chair: Honourable senators, on April 27, the Senate authorized the Standing Senate Committee on Transport and Communications to examine the subject matter of elements contained in Division 2 of Part 3 and Divisions 22 and 23 of Part 4 of Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023, and to submit its final report to the Senate no later than June 2, 2023.
For our first panel this morning, we have with us from the Canadian Transportation Agency, France Pégeot, Chair and Chief Executive Officer, and Tom Oommen, Director General, Analysis and Outreach Branch. From the Canadian Air Transport Security Authority, we have Neil Parry, Senior Vice-President, Operations, and Nancy Fitchett, Vice-President, Corporate Affairs and Chief Financial Officer.
We’ll begin with opening remarks from the Canadian Transportation Agency followed by the Canadian Air Transport Security Authority. You each have five minutes for your opening remarks and then we will turn it over to Q&A. The Canadian Transportation Agency can commence.
[Translation]
France Pégeot, Chair and Chief Executive Officer, Canadian Transportation Agency: Good morning, senators. I’d like to thank you for the invitation to appear before you this morning. First, I will briefly state our mandate and then I will talk more about the issue in the budget bill.
The CTA’s mandate is based on the Canada Transportation Act and it contributes to the national transportation policy, which aims to establish
. . . an accessible, competitive, economic and efficient transportation system that serves the needs of participants and communities, and in which people trust.
We make sure that the national transportation system runs efficiently and smoothly in the interests of all Canadians, especially rail and marine transportation. We provide consumer protection for air passengers. We protect the fundamental right of persons with disabilities to an accessible transportation network.
The agency has a dual role. First, we are the economic regulator for the transportation industry. We establish and implement the regulatory framework. We make determinations, on Canadian ownership of airlines, for example. We monitor and enforce laws and regulations.
Second, we are an administrative tribunal; we provide access to justice by resolving various disputes between the regulated industry and its users, informally or through a formal decision process.
Through regulations, dispute resolution and other instruments, we implement the legislative framework established by Parliament.
The budget implementation bill tabled by the government contains many proposals that will affect the mandate and operations of the Canadian Transportation Agency, as well as the regulations for which the agency is responsible. Here are three of those proposals.
[English]
First, the budget implementation act, or BIA, would change the policy framework for air passenger protection. Under the existing framework, passenger entitlements depend on how a flight disruption is categorized: within airline control, within airline control but required for safety or outside airline control. This makes it difficult for passengers and airlines to know what passengers are entitled to and makes the regulations difficult to enforce. I have shared those comments previously with your colleagues from the House of Commons.
The BIA would eliminate the three categories of flight disruptions. Under the new simplified framework, air carriers would be required to compensate passengers unless there were an exceptional situation, which the agency would define in new air passenger protection regulations. Importantly, as soon as the relevant provisions of the BIA come into force, the burden of proof would be changed and the onus would be on the airline to prove that compensation is not due to a passenger.
Secondly, the BIA, should it be approved, would modify the existing agency process for resolving air passenger complaints from the current court-like approach to a more streamlined claim resolution process. This would allow the agency to resolve complaints faster. This proposal was made in previous annual reports by the agency.
Currently, the dispute resolution process for air passenger complaints has three stages that culminate in a court-like adjudication, during which the Governor-in-Council-appointed members of the agency weigh the evidence and issue a decision. During the first two stages, there are no fixed timelines. Informal dispute resolution is attempted, but the agency has no power to decide the case. Only agency members can make a final decision in adjudication.
The new process would have simplified steps. The process would start with determining eligibility of a complaint, based on the criteria proposed in the BIA. If the complaint is not eligible, for example, because it is clear that the passenger already received what they are entitled to or because their complaint is not within the scope of issues that the agency can resolve under the legislation, then it will proceed no further.
If a complaint is eligible, an agency complaints resolution officer, a public servant or a member of agency staff would attempt to mediate a solution between the passenger and the airline. Mediation would need to start within 30 days of a complaint being filed. Should this not succeed, the same complaints resolution officer would issue a decision on the air passenger complaint within 60 days of the start of mediation.
As I just mentioned, decision makers in the new process would be public servants employed by the agency, as is the case in other tribunals such as the Immigration and Refugee Board of Canada. These public servants, who we are calling complaints resolution officers for now, will be able to deal with the entire process. It will be a kind of one-stop shop. The new process, based on the proposed date in the BIA, would come into effect on September 30, 2023.
Lastly, in regard to railways, the BIA would establish an 18‑month pilot during which rail interswitching would be extended from 30 kilometres to 160 kilometres in the three prairie provinces. The agency would have 90 days to publish the interswitching rates that would apply to extended interswitching. I would be happy to provide more information on that, if you wish.
Thank you very much. I would be happy to respond to your questions.
The Chair: Now I turn the floor over to Canadian Air Transport Security Authority.
Nancy Fitchett, Vice-President, Corporate Affairs and Chief Financial Officer, Canadian Air Transport Security Authority: Good morning, Chair and honourable senators. My name is Nancy Fitchett, and I am the Vice-President, Corporate Affairs and Chief Financial Officer at the Canadian Air Transport Security Authority, or CATSA. I am joined by my colleague Neil Parry, the Senior Vice-President, Operations.
CATSA was established in response to the events of September 11, 2001, and is a Crown corporation funded by parliamentary appropriations. CATSA delivers the mandate of security screening at 89 designated airports across the country through a third-party screening contractor model. Playing a key role in Canada’s air transportation system, CATSA is responsible for the delivery of pre-board screening, hold baggage screening, non-passenger screening and the restricted area identity card program. Our priority is to offer the highest level of aviation security to the travelling public.
[Translation]
Thank you for inviting us to appear before the committee today as part of your examination of certain elements of Bill C-47.
[English]
I would like to recognize the proposed amendments to the Canada Transportation Act introduced as part of Bill C-47 that aim to strengthen air passenger rights and simplify the complaint resolution process.
CATSA operates in a highly regulated and integrated domestic environment in collaboration with our regulator, Transport Canada. The proposed changes to the Canada Transportation Act do not directly impact existing regulatory requirements for CATSA or our reporting obligations as set out by Transport Canada. We affirm that information and data sharing with the public and with our partners is an important part of our existing collaboration efforts. This will continue to be a priority.
I would also like to address the proposed increase to the Air Travellers Security Charge, the ATSC. This fee is not set by, collected by or remitted to CATSA. Air carriers collect the fee from passengers and remit it to the Canada Revenue Agency.
[Translation]
Since 2015, CATSA has relied on annual supplemental funding from the Government of Canada to carry out its mandated activities while advancing the efficiency and effectiveness of operations and service delivery.
[English]
As part of Budget 2023, CATSA would be provided with approximately $1.8 billion supplemental funding over three years, which presents an important element of stability for the organization, providing funding for CATSA to continue to deliver its mandate. The proposed funding from the Government of Canada will greatly support the development and implementation of several initiatives aimed to enhance service delivery.
CATSA’s mandate is to ensure the security of the travelling public, and alongside our partners, we will continue to work to find efficiencies that facilitate a seamless passenger experience while maintaining the highest level of security.
We strive to improve practices, policies and procedures to meet the challenges of today, while anticipating the needs of tomorrow. The proposed funding in the 2023 budget is critical to providing CATSA with the ability to do just that.
Thank you again for the opportunity to be here with you today. We look forward to answering your questions.
The Chair: Thank you very much.
Senator Simons: As someone who flies every week, I have a long list of anecdotal stories of woe of what it has been like to be a regular airline passenger over the past two years, but I am cheered by these changes to the passengers’ rights. I want to zero in on the idea of creating a minimum standard for passenger treatment.
Oftentimes in Canada a flight is delayed because of weather conditions, for which the airline takes no responsibility. But it has been the experience of many Canadians that the airlines provide them with nothing — no food, no water, no arrangement of accommodation — if they are forced to overnight some place. In the worst instances, people have been trapped on planes for 7, 8, 12 or 18 hours, unable to access food, water or working toilets.
Can you tell us what will be the rights of passengers in conditions where they have been denied humanitarian access to food, water and working toilets for up to 15, 18 hours?
Ms. Pégeot: Under the current regulatory framework, when the situation is outside the power of the company, like you said, a weather event, there is no obligation for the airline to provide assistance, whether it be food or accommodation for passengers. The current legislation before Parliament does not address that issue. But we note it, and that’s certainly something that we can look into, as we would have to — assuming the legislation goes through — review the regulation.
Senator Simons: This is the problem. Everybody understands that sometimes things happen. Where passengers become frustrated is when no one is answering the phones at customer service, it’s impossible to rebook because there are no passenger agents. Those are factors well within the company’s control. To blame everything on the weather in a country where we have a lot of weather is insufficient.
Now, as a prairie senator and as the deputy chair of the Agriculture Committee, I want to talk about interswitching, which I know is not sexy but matters. When I speak to stakeholders from the rail system, they tell me that interswitching to extend the length will be inefficient and will cause supply chain delays. When I speak to farmers, they say that this is absolutely necessary; with the elimination of local elevators, they require this in order to get their grain shipped efficiently and at a better rate for them.
I wonder if you could explain a little bit. The rail stakeholders say that this is far too long a distance for efficient interswitching. Can you explain the rationale for the government choosing this distance?
Tom Oommen, Director General, Analysis and Outreach Branch, Canadian Transportation Agency: Chair, a quick reminder to everyone, the purpose of interswitching as it is now is to provide a captive shipper — that is a shipper with only one railway to choose from — an alternative. If there is another railway in the current system that is up to 30 kilometres away, the shipper can actually access that other railway because the railway that it has access to is obliged to cover those 30 kilometres at a lower rate to get them to the other railway.
What is proposed in the BIA is that 30 kilometres is increased to 160 kilometres. As long as there is another railway within 160 kilometres, they would have access to it at a lower rate.
Understandably, I’m not surprised by the reactions that the senator mentioned. Railways are understandably reluctant to provide access to a competitor that is some distance away. And, of course, alternatively, shippers seek that extra access, and there has been commentary that it should be even a longer distance. What I can say, of course, is that whatever legislation is eventually approved by Parliament, the agency will implement.
Senator Simons: Why that number? Why 160 as opposed to 100 or 50 or 200?
Mr. Oommen: Chair, I would opine that the reason for that number is because we have experience with that number. Some around the table may remember the grain crisis of 2014-2017 during which time there were serious difficulties in getting grain to market. During that time, a similar regime was implemented which extended interswitching to 160 kilometres for that period, which is why it’s being resurrected in that form.
[Translation]
Senator Cormier: Hello and thank you to the witnesses.
My questions are for Ms. Pégeot. They relate to matters of transparency throughout the complaints process, particularly with respect to the issue of process confidentiality, the issue of guidelines and the issue of orders based on the information. When it comes to the handling of complaints, how will the CTA ensure the confidentiality of the process? Will there be any confidentiality agreements between complainants and airlines? What are the consequences if the complainant should disclose the content of the agreements?
I will ask you my second question on guidelines immediately. I understand this is an internal process. Have you held any consultations related to these guidelines? Are they made public so that complainants can understand the guidelines given to officers?
When it comes to orders based on the information, that information doesn’t constitute evidence. How can agents base themselves solely on that information? Is a more thorough analysis done to ensure the veracity of the information?
Those are the three points of interest to me with respect to transparency.
Ms. Pégeot: Okay, thank you.
Informal processes such as mediation or an agreement between a company and a passenger, basically all informal processes, involve the organizations that use those processes to resolve disputes. They are confidential so that people can have frank discussions and come to an agreement.
I want to specify that when we talk about confidentiality, we’re also looking to ensure that the information some passengers would not want made public is not released.
Right now, we know that some passengers won’t go any further in the process because they don’t want their name or the details of their trip to be released. They don’t want certain interactions with airport staff or the airlines made public. In some cases, that means the passenger doesn’t wish to go any further.
I want to clarify what we’re going to do: We’ll take the flight number for which there is a complaint and a resolution, and we’ll indicate the nature of the problem and if the passenger was compensated or not. This information will be available on our website.
Senator Cormier: I’m sorry to interrupt you, but doesn’t the issue of confidentiality work to the airlines’ advantage more than the complainant’s?
Ms. Pégeot: Not necessarily; two factors determine what remains confidential, I want to clarify that. There is the informality; it is informal. In some cases, we ourselves don’t know how the complaint was resolved, and that’s fine. That’s how this needs to happen, that’s the very nature of the informal aspect.
When the agency makes a decision through our complaint officers, the outcome will be made public. The only thing that won’t be made public are the details of a confidential nature, which are the passenger’s name and the various stages of their trip. However, we will know the flight number and the issue that’s been discussed, and we will know whether or not the passenger received compensation; that information will be made public.
Senator Cormier: What about the guidelines?
Ms. Pégeot: Guidelines are essentially authority that all regulatory agencies have. They bring clarity to those who have to implement the regulations. It’s part of the authority that most regulatory agencies have, and we haven’t ever had that to date. The authority will be exercised within the regulatory and legislative framework.
Senator Cormier: Okay, thank you.
[English]
Senator Wallin: As Senator Simons has said, there are so many issues here, beyond the major issues that she stressed of people being trapped on airplanes without food or water or access to bathrooms. We’ve got a daily regime of the cost of airlines not functioning properly and there not being any consequences. Flights are late consistently. You miss connections. You miss work. You miss meetings. You miss funerals. You miss weddings. There may be no Wi-Fi. There is usually no Wi-Fi so that you might be able to connect with people and explain your situation. You have got people waiting at the airport for you. You are paying those bills. The list is long, and we have to find some way of the airlines becoming functional. There needs to be pressure on the airlines to become functional.
On the passenger rights issues, there is now supposed to be a new system, but we’re removing the right of appeal to any higher authority, to a federal court, which will now make this even, in my mind, weaker. On the CATSA front, the application of security screening across this country is completely inconsistent. In some places, you are basically stripping down, and, in the next airport you are going through, you can’t — it’s impossible. For those of us who fly all the time, we are more aware of this. But you are standing in line with people who don’t know they have to still strip down 23 years after 9/11.
On the interswitching issue, the railway companies say this will be very expensive and that cost will be passed on to farmers, which will be passed on to consumers, which is, of course — we are already dealing with food inflation.
I would be happy to hear any comments on any of those issues and whether any of these matters are going to address any of those. Furthermore, are you satisfied that these things are being shoehorned into a budget bill where there is no proper ability to look at these very fundamental changes to both the security of passengers in Canada and the functioning of airlines in Canada? Thank you.
Ms. Pégeot: I would be happy to talk about the substance of the bill in front of you, but whether or not it’s appropriate to have those issues in the budget implementation bill, unfortunately, I don’t have views on that.
Senator Wallin: Well, then, could we talk about why there is no appropriate bill to be dealing with these? We seem to be doing bits and pieces rather than, in the post 9/11-, post-COVID world, doing a complete rethink, including adding fundamental competition in this industry, which I think everyone on the planet agrees is one of the most basic issues. This is why the airlines get away with what they get away with, because they are the only game in town.
Ms. Pégeot: Again, I am sorry not to be able to answer your questions, but this is, essentially, a bill that has been put forward by the government —
Senator Wallin: Why don’t we try discussing removing the right of appeal to the federal court, then?
Ms. Pégeot: Well, what we currently have is two mechanisms to appeal our decisions, and what is being proposed is, like other regulatory agencies, to have access to a judicial review. So there is still an appeal possible, and it simplifies the process.
Senator Wallin: Is there any contemplation of adding some of these other factors into what is compensable, things like missing work, missing connections and missing crucial meetings, because planes are consistently late? So that would involve an expansion of the things that can be challenged and compensated for.
Ms. Pégeot: Essentially, the regime is there to compensate passengers when something happens and there are flight disruptions. It is based currently, and will continue to be based, on the number of hours that the flight is late. There are differences between small airlines and large airlines, but it depends upon how late you arrive at the destination, and it is based on the legislation in front of you. If there are exceptional circumstances defined by regulation, then airlines would have to compensate passengers. So that is irrespective of —
Senator Wallin: If the plane is an hour late going out of Saskatoon and I miss my connection to Ottawa and therefore miss my involvement here at the transportation committee, which is my job, is that something that should be considered?
Ms. Pégeot: One hour late would not be enough. It depends. There are different levels of compensation.
Senator Wallin: When you have just got a connection. Like, the number of flights, as you know, is reduced. If the flight out of Saskatoon —
[Translation]
Senator Quinn: Thank you to the witnesses for being here with us today.
[English]
Senator Quinn: I can sympathize or empathize, really, with Ms. Pégeot not being able to really respond to questions, because you are in the system. I am not in the system any longer. I find that this BIA in particular and the sections that we are looking at are a little bit difficult to comprehend in the sense that we are looking at so many topics: air travellers, amendments to the security act, data sharing, interswitching, air travel complaints and administrative and monetary penalties. I can emphasize with the difficult position you are in, not being able to answer direct questions because the government has put this into the BIA, whether it emanated from the agency or not.
A quick question for CATSA. The 30% increase in costs, does that show up at the passenger level, or is that a combination of government and passenger? At the end of the day, the passengers will pay more for security services. Is that correct?
Ms. Fitchett: Are you referring to the 30% increase in ATSC?
Senator Quinn: Yes.
Ms. Fitchett: I am afraid I cannot comment on the ATSC. That is set by the Government of Canada, and CATSA has no involvement. I can speak to CATSA’s costs. So CATSA is funded by parliamentary appropriations. Behind the scenes, of course, it is very clear in the budget that the ATSC is used to fund that appropriation to CATSA. CATSA’s costs are certainly not going up by 30%.
Senator Quinn: What are they going up by?
Ms. Fitchett: Last year, the supplemental funding we asked for was $330 million. For next year, it’s $468 million.
Senator Quinn: At the end of the day, again, there will be a higher cost for air travel in Canada.
Ms. Fitchett: That is correct.
Senator Quinn: From Mr. Oommen I would like a clarification. You talked about the interswitching question that allows one to go up to 160 kilometres at a reduced cost — or you mentioned something about the cost. Is that a reduced cost than that which would have been charged by the Canadian National Railway or Canadian Pacific Railway?
Tom Oommen, Director General, Analysis and Outreach Branch, Canadian Transportation Agency: Thank you for that question. The way that interswitching works currently, with no changes, is that the agency establishes the interswitching rate every year. The agency establishes a number, a cost, to transfer. That would continue if it was —
Senator Quinn: Is that set at market rate or below market rate?
Mr. Oommen: It’s a cost-based rate. The agency determines the railway costs, and based on the railway costs, it sets the interswitching rates.
Senator Quinn: Do the railways agree with your estimation of their costs?
Mr. Oommen: We consult the railway on our process and the methodology. We do not consult them on the rates.
Senator Quinn: I have two other points on interswitching. One, why limit it to the Prairies? You’re worried about having shippers have greater access to other railways. There could be U.S. railways included. I’m from Atlantic Canada. We had a debate on Bill C-49, I think it was, allowing access to railways on other lines. It was permitted in some parts of Canada, but not down east. Why is this limited to the Prairies?
Mr. Oommen: The bill was introduced into Parliament by the government. I can speculate that the model I mentioned from 2014 to 2017 was being repeated in this 18-month pilot. That was a Western-based measure.
Senator Quinn: Last question. Why are we doing this again? Didn’t we do a pilot project on interswitching a few years ago? It was done away with, and now we’re doing it again. What is the rationale for doing it again?
Mr. Oommen: In the National Supply Chain Task Force report that was issued to the minister, shippers asked for a number of measures to alleviate their concerns, and one of them was extended interswitching.
Senator Quinn: Thank you.
[Translation]
The Chair: My question will be very brief because I have a long list of senators who want to ask questions. However, I would like to ask one question.
I was travelling at the beginning of April, on a parliamentary trip with my colleague Senator Cormier and some MPs. I went from Montreal to Paris and Paris to Montreal. It was incredible: All notifications I received from Air Canada by text and by email were in English only. I tried to find a way to get the information in French, but it was impossible. One of my colleagues, a member of Parliament who only speaks French, had the same problem.
I know you’re going to say that you aren’t the Commissioner of Official Languages. However, I’d imagine that you are able to act on this. I can’t believe the Commissioner of Official Languages doesn’t have the power to compel the airline to do something. I’d like to hear your perspective, because I found that unacceptable in 2023.
Ms. Pégeot: I’m sorry, but you have your answer, which is that unfortunately, or fortunately, we aren’t responsible for official languages. As you said, that’s regulated by the Commissioner of Official Languages, Mr. Chair.
The Chair: I’m going to have to call the Official Languages Commissioner to appear.
Ms. Pégeot: I’m very sorry.
The Chair: Thank you.
[English]
Senator Manning: Thank you to our witnesses. I just wondered, when you talk about exceptional circumstances, it seems to me in some ways, as a traveller, that there are a lot of exceptional circumstances that are not falling under the guise of being compensated. How would what we’re doing here today with this piece of legislation correct some of the problems that people have when airlines don’t take responsibility for some things that are happening?
I travel back and forth to Newfoundland and Labrador. Exceptional circumstances may be being able to see through the fog at 500 feet. But we’ve had flights cancelled for a lot less than that. How do we address the exceptional circumstances so that people feel confident in the process and the system?
Ms. Pégeot: Thank you. So the current system is based on three categories of events. The first one deals with categories that are outside the control of airlines, like meteorological issues. The second one is within the control of airlines, so it’s basically their fault, if you like. Then, the third category is within the control of airlines but required for safety. This third category gives a lot of grey zones, I would say, and that’s what the bill that is before the Parliament attempts to resolve. It’s to bring more clarity. The way I like to put it is trying to bring the grey zone closer to black and white.
Currently, the burden of proof is on the shoulders of the consumers. The bill before you would put the burden of proof on the industry to explain why they would not have to compensate because of exceptional circumstances. For example, exceptional circumstances would include some meteorological conditions, some medical emergency — we can think of COVID; it could include a closure of an airport. Essentially, events that are really outside the control of the airlines that they could not have predicted where basically they have to change operations to comply with that.
Senator Manning: Thank you. One thing I would believe would be in the control of the airlines when they’re flying planes is that they would have a pilot.
Ms. Pégeot: I’m sorry?
Senator Manning: One thing I would think would be in the control of the airlines is that when they are flying planes, they would have a pilot.
Ms. Pégeot: Yes, I’m sorry. Yes, a pilot.
Senator Manning: I’ve sat in an airport for three hours waiting for a pilot while the airplane is at the gate. Then, when the pilot arrived — this was in Halifax not long ago — they informed us that the time was up for the staff, so they had to replace the staff, and we had to wait for another hour and a half for the staff.
When you have no pilot, then someone should have known that if the pilot was going to be here in two hours, then the staff would have to be replaced, and we would have to wait another two hours for the staff to be replaced. Those are the things that really aggravate people. Will this piece of legislation help alleviate that for the passengers?
Ms. Pégeot: It should, yes. I should point out that we already have decisions of the agency that have ruled on what we call “crew shortage.” There were lots of issues like that. Essentially, what the agency has already ruled is that unless the company can really prove that this is something extraordinary that they could not have prevented, they have to compensate. For example, if it’s a lack of planning or if it’s because they offered flights and they did not have enough pilots to go around, then it becomes under their control and they have to compensate. That would certainly be part of the bill.
Senator Manning: Thank you.
I have a question for Ms. Fitchett. Does your organization have an issue with recruitment and retention?
Ms. Fitchett: I assume your question is not related to the CATSA staff but the screening officers across the airports, so I’ll let Mr. Parry answer.
Neil Parry, Senior Vice-President, Operations, Canadian Air Transport Security Authority: I’m happy to take that. Thank you for your question. In April and May of 2022, we certainly struggled, like our aviation partners, in attracting, recruiting and retaining adequate capacity to service the sudden and abrupt surge in traffic that occurred last year. I don’t think we were alone in that. Both in the industry and globally it seemed to be a phenomenon. By the end of June, we were fully staffed. Since June 2022, we have maintained and exceeded our staffing capacity against our required head counts. We have also continued to deliver and maintain the wait time service-level standards that the government provided for us. Attrition is certainly a bit higher. It has started to come down over the last couple of months, which is quite positive heading into this summer.
We’ve exceeded our staffing targets for this summer’s operations. We did have a challenge. Our contractors had a challenge, but it was relatively short-lived. Since April 1 of last year to March 31, our fiscal year, 97.8% of all passengers at the 17 largest airports, which accounts for almost 95% of the traffic, waited less than 30 minutes to be screened. It’s not an average; it’s a hard number.
We definitely struggled in April and May when the surge happened. Globally the industry suffered and struggled, but we recovered quite quickly. A lot of that is due to the hard work our contractors did to attract people, ramp up and train. And we’ve been going full bore for 12 months now on training and recruitment.
[Translation]
Senator Miville-Dechêne: I have a question for Ms. Pégeot.
Of course, I completely agree with the idea of tightening up the criteria to compensate consumers who have suffered greatly. However, could such a regulation have unintended consequences on the frequency of flights across Canada? We all know that when private companies face rising costs, they generally try to pass the cost on to consumers. However, these consumers are travellers, and reducing the number of flights would be another way to go, especially since they say the labour shortage is no longer an issue. They can reduce their number of flights, particularly to destinations that aren’t as profitable; I’m thinking of the remote destinations in this great country. It could happen. Don’t you have any control over service reductions?
Ms. Pégeot: No, we have no control over that.
In my opening remarks, I mentioned the national transportation policy, which is essentially intended to have us contribute to making the transportation system fair, efficient and accessible. When we develop regulations, we certainly try to strike a balance where the passenger is protected; we need a balance between market forces. It’s definitely part of our analysis framework.
It’s extremely difficult for us to predict how regulations will help change the airlines’ behaviour. Unfortunately, we have no control over that. We can’t guarantee it. That’s why we strive for regulations that protect, at the lowest possible cost, because protecting consumers also involves giving them a selection of flights at a reasonable price.
Senator Miville-Dechêne: I understand, however, that our new regulations are a little tougher than those in the United States, and even tougher than Europe’s. When you say that you try to compare yourselves to other countries to ensure that we don’t face a devastating impact on our regime, it seems to me that, on the contrary, knowing how competition works — sometimes isn’t it better to leave well enough alone? Will having more stringent regulations than our neighbours have a negative impact on service here, on the number of flights, the frequency of flights?
Ms. Pégeot: If we compare ourselves to the United States, the U.S. regime does far less to protect passengers than Canada’s; there’s no doubt about it. The U.S. President just announced that he wants to better protect U.S. passengers. It remains to be seen what type of protection will be provided. We’re certainly watching very closely.
The final regime will depend on the regulations that the CTA will have to develop to determine the exceptional circumstances we talked about earlier, among other things. We will look at what Europe is doing. Its regime has its flaws. We just got back from Europe, where we met with French colleagues who are responsible for the European regime, so we can’t say that it’s passenger paradise there either.
Basically, that’s one system we will observe to draw inspiration for our proposed regulations, always with the utmost respect for Parliament, and based on the legislation that’s passed. Of course, our regulatory process includes opportunities for consultation with businesses and consumers. I’d say it will be an opportunity to get a better sense of the impact regulations like these might have.
Senator Miville-Dechêne: Thank you, Ms. Pégeot.
[English]
Senator Harder: Both of your agencies are takers of policy, not makers of policy. As such, I would like to ask the CTA if you were consulted at all by the government in the development of the policies that we’re discussing.
Second, given that your data is viewed credibly by the public, consumers and others involved in the industry, how are you enhancing your reporting of both the interswitching change, the pilot project, and the passenger rights issues that we like to see data on beyond simply the annual report? Are you enhancing your capacity to measure progress but also more transparently report to the public?
Ms. Pégeot: Thank you, senator. Yes, we were consulted. First of all, in the annual report, every year we must provide advice on how we should change the legislation. A lot of what you have in front of you actually came out of our various annual reports.
When I appeared before the Transport Committee of the House of Commons, I was asked the question about the legislation. At that point I said that more clarity would certainly help. Of course, then we were also consulted on the legislation, and we provided our advice.
Over the last two years, we have invested a lot in our reporting systems. We have much better data on consumer complaints, when they were received, et cetera. We have started to be more transparent. For example, we now put the number of complaints we receive per airline on our website. It is information for consumers as data becomes more available. There is a section of the bill in front of you that would enable Transport Canada to ask for better data and that is certainly what we hope for. We are, for example, working with the National Research Council to use artificial intelligence to deal with complaints. As we improve our systems, we will be able to have better data. We do intend to publish data on complaints, as I mentioned to your colleague before.
Senator Cardozo: Can you wind the discussion back a little bit and explain once again your responsibilities, how they differ and how they relate to Transport Canada? What are their responsibilities and what are yours?
Mr. Parry: Thank you for your question. The responsibilities differ in this way. Transport Canada is the policy lead for government for aviation security-related policy. They’re also our regulator. We as a Crown corporation are responsible as the operator. That said, we collaborate very closely with Transport Canada. They consult us on their regulatory process, on the requirements. They also consult us on certain policy decisions that they’re making; we feed into that. Where it goes from there, I would defer to Transport Canada for comment. It’s regulator/operator that is the really key distinction between us and Transport.
Ms. Pégeot: Ours is different. We’re an independent agency. We have two roles. We are a tribunal where we resolve dispute, and we have the power of a superior court in that context. We’re really totally independent on that side. We’re still independent as a regulator, but, of course, we develop regulations based on the legislation passed by Parliament.
When it comes time to develop a regulation, we would do this in consultation with the Minister of Transport. Our regulations have to follow the same process as any other piece of regulation that would be approved by the Treasury Board, for example.
Senator Cardozo: Do you make your own regulations or does the minister make those?
Ms. Pégeot: We do make our regulations but in consultation with the minister. Again, they still have to be approved by the government.
Senator Cardozo: My second question is a general one. When you’re making your decisions about policy and how to weigh things, do you weigh passengers’ rights against business viability? Sometimes there’s a sense that we can’t go further because business is going to be upset about it. The specific case I have in mind is certainly the interswitching issue. Will the railway companies withdraw their services or reduce their services, for example, if they find this too costly? In general, with passengers’ rights, are you dealing with weighing the business case?
Ms. Pégeot: When we do any regulation, the regulator has to look at what problems we’re trying to resolve and what kinds of behaviours we’re trying to change. What this bill is doing is asking the agency to develop regulations that would actually enhance consumer protection.
Of course, in the context of the economic regulations — just as your colleague Senator Miville-Dechêne said — we want to be careful that the market remains efficient and balanced. That’s part of the national transportation agency. That being said, we certainly are in front of increasing consumer protection, and it will be important to ensure that this comes out at the end of the process.
Senator Cardozo: On the matter of the interswitching, is there a concern that the railways would reduce their services if they don’t like what they’ve got to do now?
Mr. Oommen: I would repeat something I said earlier. Whatever legislation is passed by Parliament, we would, of course, implement.
Senator Cardozo: That sounds like maybe —
Ms. Pégeot: Maybe could I complement that. We don’t necessarily know. What interswitching allows is more choices for the shippers to have access to more options to ship their product. Whether they would reduce their services is hard to say at this point. But for now, this is a pilot; it’s for 18 months. We will be able to see and assess the impact this will have, and we will see what happens after the pilot.
Senator Dasko: Thank you to the witnesses for being here. First of all, I assume that there is a backlog of complaints sitting on your desk somewhere. I am wondering how many you have. I’ve certainly heard about this in the past. How are they going to be dealt with under the new regime? Do they go from this over to this category or do you have to settle them through the previous process?
Ms. Pégeot: Thank you. Yes, unfortunately we have quite a large backlog. We have 46,000 complaints in our backlog.
Senator Dasko: There are 46,000 on your desk right now?
Ms. Pégeot: Yes, 46,000.
Senator Dasko: Right.
Ms. Pégeot: Just last year we received 40,000 complaints. To give you a point of comparison, five years ago we had 5,000 complaints, and not long before that we had 1,000 complaints a year. This is why part of what is in the budget implementation bill is a change for our business model. Now we would have a much more simplified model where decisions could be made by designated complaints officers.
When the agency was created, it was really to deal with some rail disputes. You had two sophisticated commercial parties and quite complex cases with big economic impact. The agency was not set up to deal with a high volume of relatively low complexity cases.
What is before Parliament now would change how we do our business. It would certainly help to address the backlog and would enable us to be more equipped or better tooled to deal with high-level, high-volume, low-complexity complaints.
Senator Dasko: This backlog of all these complainants would go to square one in your new process? Is that what would happen?
Ms. Pégeot: The new process would apply, indeed, to the backlog, but what we would ensure is that it is not back to square one. They are there, their complaint is there, and we would help them to resubmit what they need to resubmit. We are trying to do this as much as possible through electronic means and to have minimum interactions from them.
I should point out, though, that the new legislation, with respect to air passenger protection that we’re talking about, which is different from our business model, would not apply to the backlog. If we change the air passenger protection regime, it would apply only to the complaints we receive once that new regime is in place.
Senator Dasko: Okay, thank you.
This question came up earlier and I want to pursue it because there wasn’t time. When it comes to the compensation that passengers can claim, can they claim extended expenses like loss of income, those kinds of expenses? Or is it just the price of your ticket or the price of a hotel? How extensive is it? Do you regulate on those items? Is that part of what you have to develop in terms of regulations, the actual items that passengers can claim?
Ms. Pégeot: No, we don’t regulate, and there is no compensation offered if people lose income because, for example, they missed a business or a work opportunity because a flight is late.
What the current regime — and with some modification potentially the new regime — would do is compensate passengers for the disruptions of their flights. They’re entitled to some form of compensation depending on how late the flight is, and also, in some cases, they are entitled to some what we call “standards of treatment” or assistance in terms of food and hotels, and in some instances, means of communication if they have to reach people.
Senator Dasko: And also a ticket if they’ve lost the ticket price?
Ms. Pégeot: Again, in some cases, yes, they could be entitled to a refund.
Senator Dasko: Tell me about the length of delay. When does that kick in? What is the delay beyond which people are entitled to be compensated?
Ms. Pégeot: When it’s a delay of three to six hours for large carriers, passengers are entitled to $400. I’ll just stick to large carriers. The amount is smaller for small carriers. For six to nine hours, it is $700, and more than nine hours, it’s $1,000.
Senator Dasko: And this is in your regulations?
Ms. Pégeot: It is in the regulations.
Senator Dasko: You expect this will continue?
Ms. Pégeot: We have to redo the regulations based on the legislation, but I think it’s fair to say that will be the starting base for sure, yes.
Senator Dasko: Thank you.
[Translation]
The Chair: Thank you very much to our witnesses for being here today.
[English]
Honourable senators, we are now going to continue our examination of Bill C-18 — no, Bill C-47. Bill C-18 is so much in the minds of the clerk and the chair that we can’t get it out of our system. We know how urgent it is to get it out in time.
For our second panel, we are pleased to welcome, by video conference, Gábor Lukács, President, Air Passenger Rights; Jeff Morrison, President and Chief Executive Officer, National Airlines Council of Canada; and Duncan Dee, former Air Canada Chief Operating Officer. Each of you will have five minutes for opening statements, and then we will turn to question and answer. We will start with Air Passenger Rights. Mr. Lukács, you have the floor.
Gábor Lukács, President, Air Passenger Rights: Mr. Chair, honourable senators, Air Passenger Rights is Canada’s independent, non-profit organization of volunteers devoted to empowering travellers. We have a track record of successfully predicting shortcomings and loopholes in legislation relating to air passenger rights.
Five years ago, we testified before the House of Commons and the Senate’s respective committees and cautioned that the Transportation Modernization Act was inadequate. In 2019, we published a 52-page report with predictions about how airlines would likely exploit the Air Passenger Protection Regulations’ shortcomings and loopholes.
In December 2022, we cautioned that Canada’s air passenger protection regime was broken, and we proposed specific legislative amendments as a solution. Mere days later, during the holiday season, Canadians witnessed a second meltdown of air travel that year, compounded by airlines’ flagrant disregard of passengers’ rights under the Air Passenger Protection Regulations, or APPR.
Our predictions are based on the experience of passengers whom we help daily in their struggle to enforce their rights and have been validated by the four years that have passed since the regulations came into force.
Today, even the government acknowledges that our air passenger protection regime needs to be substantially strengthened. Unfortunately, the legislative amendments put forward in Bill C-47 have the opposite effect.
First, the government proposes to create a secretive, Star Chamber-like process for adjudicating consumer disputes between passengers and airlines, with no appeal. Adjudication will be conducted on the basis of confidential information instead of evidence and with the exclusion of the public and the media.
Bill C-47 therefore violates Canadians’ freedom of expression and the open court principle guaranteed by section 2(b) of the Charter, as well as the right to a fair hearing in accordance with the principles of fundamental justice protected by section 2(e) of the Canadian Bill of Rights.
Second, proposed section 85.12 is effectively a Henry VIII clause that allows the Canadian Transportation Agency to change the law while bypassing the system of checks and balances set out in the Statutory Instruments Act.
The agency will be able to make and modify guidelines affecting passengers’ rights overnight, without examination by the Clerk of the Privy Council and the Deputy Minister of Justice, without publication in the Canada Gazette and without scrutiny by Parliament’s committees.
Third, Bill C-47 perpetuates existing loopholes and will create a new one. In spite of the government promise to the contrary, the bill retains the “required for safety reasons” excuse for airlines to avoid paying passengers compensation. This made‑in‑Canada loophole has unnecessarily and disproportionately complicated adjudication of disputes between passengers and airlines. Since evidence about the reasons for a flight disruption is in the airlines’ exclusive control, passengers are at a great disadvantage in enforcing their rights to compensation.
Bill C-47, however, shifts the burden of proof to the airlines in such disputes only if the passenger gives up their right to a fair and open hearing before an impartial judge and instead agrees to submit to the Star Chamber-like process. Bill C-47 also creates a new loophole. Clauses 467 to 470 would allow airlines that sign a so-called compliance agreement to avoid paying penalties for violating passengers’ rights.
To summarize, many of the government’s proposed amendments to the Canada Transportation Act miss the mark, do the opposite of their stated purpose and will weaken not only air passenger protection but also fundamental rights in Canada. Please be a sober second thought, and do not let this happen. Please amend Division 23. A suitable model for amending Division 23 would be Bill C-327, a private member’s bill to harmonize Canada’s air passenger protection regime with the European Union’s gold standard. Bill C-327 has been endorsed by Canada’s leading consumer protection organizations. It is what Canadians need. Thank you.
The Chair: Thank you very much. I turn the floor over to the National Airlines Council of Canada.
Jeff Morrison, President and Chief Executive Officer, National Airlines Council of Canada: Thank you, and good morning.
[Translation]
Thank you for the invitation to appear before you.
[English]
As some of you know, the National Airlines Council of Canada is the national association representing Canada’s largest passenger airlines. Unfortunately, I am not able to join you today in person as I am currently in Edmonton, but just yesterday I was in Detroit at a meeting with Minister Alghabra, Secretary Buttigieg from the U.S. and U.K. Transport Secretary Mark Harper discussing sustainable aviation fuel, which is a discussion I would be thrilled to discuss with this committee at another time. But in the short time I have, let me make a few key remarks about the APPR provisions contained in Bill C-47 that you are considering.
As I said publicly many times, nothing in these APPR amendments will improve or strengthen air travel in Canada, which is the most important priority for passengers, which many of you talked about with the previous panel. The changes don’t improve airport infrastructure; they don’t hold other air travel entities to any sort of accountability standard; and they don’t lower the cost of air travel. In fact, Bill C-47 will increase cost of travel. They don’t lead to better regional connectivity. In short, at a time when demand for travel is very strong, as I saw in the airports over the past two days, the government’s focus should be on strengthening air travel, not penalizing it.
Given the APPR legislation that is before you, let me recommend two amendments. First, if the legislation passes, as was discussed, there will be a regulatory process that will define the exemptions that airlines can claim from paying compensation. It is imperative that through this regulatory process, adherence to safety be the primary consideration. As you know, safety is and must remain the top priority for airlines, which includes many factors, many of which are prescribed via regulation; for example, weather factors, unforeseen mechanical issues or defects, labour disputes with essential service providers, bird strikes, security risks and so forth. The idea that airlines should somehow be penalized for doing the right thing and, in many cases, the legal thing by protecting the safety of passengers, flies in the face of a balanced, fair and equitable approach, which was the original intent of the APPR.
We will soon share with this committee a list of safety-related exemptions that are being proposed in Europe that are aimed at clarifying the exceptional circumstances exemption that exists in the European regulations, also known as EU 261. We want to be sure the APPRs are guided by a clear yet broad and accurate understanding of what constitutes safety. We don’t want an EU 261 situation where there have been over 50 — and I think it is now closer to 60 — court rulings that have had to establish those parameters.
In order to capture the importance of safety and guide the subsequent regulatory process, NACC is recommending adding the following clause in the preamble:
Regulations must always prioritize safety of our transportation system and do not jeopardize it by assigning financial consequences to carriers for safety-related decisions in a mode of transportation.
The second recommendation is that the legislation includes a clause stating that airlines would be required to provide refunds in the event of Government of Canada-issued travel advisory. Carriers increasingly organize their various fares into distinct products to differentiate themselves and their offerings and provide passengers with more flexibility and transparency when they purchase. This is also known as branded fares. In fact, at the hotel that I am currently at, I paid via a branded fare. With the requirement to provide full refunds in the event of a government‑issued travel advisory, which, of course, is entirely outside the control of airlines, the legislation is putting into question this entire flexible pricing scheme. As a result, NACC is recommending that this reference to government-issued travel advisories be eliminated or, at a minimum, that the clause be amended to only apply to government-issued travel advisories issued after a ticket is purchased so that the system of branded fares is not compromised.
To reiterate my original point, nothing in this legislation will improve the overall air travel system. As we learned last summer, when any entity in the air travel system does not perform adequately, travel is disrupted, but of course, under the APPR, it is only airlines that are held to any form of account. That’s why last week NACC issued a report containing recommendations to operationalize a system of what we call “shared accountability,” whereby all entities in the air travel ecosystem would be held to account through the use of service standards, a public reporting system, a communications protocol and a means for airlines to recoup financial penalties if other entities cause disruptions. This system of shared accountability is not meant to be a finger-pointing exercise, but rather, it recognizes the basic reality that all the entities in the system must work effectively together and that improvements for passengers are not possible without shared accountability among all the entities. We will, of course, make sure that all members of this committee receive a copy of that report.
Again, thank you for this opportunity, and I look forward to the conversation.
The Chair: Thank you.
Duncan Dee, Former Air Canada Chief Operating Officer, as an individual: Thank you for this opportunity to share my views with the committee. First, I would like to emphasize that I am speaking in a personal capacity and not on behalf of any airline.
Given the horrendous experiences of Canadian air travellers over the past 18 months, particularly during the travel peak, it is no surprise that the Minister of Transport introduced so-called improvements to Canada’s air passenger protection regime. While the changes will certainly streamline the complaints process and allow travellers to more easily file complaints and potentially receive refunds and compensation from airlines, they do nothing to actually fix the underlying issues that caused the complaints in the first place.
It should be no surprise to senators that air travel in Canada in the past 18 months has been nothing short of a major challenge. The numbers bear it out. Canada’s airports have consistently underperformed compared to their U.S. comparable peers, and sometimes by a significant margin. The publicly available monthly on-time performance data from the Official Airline Guide show that Toronto Pearson, Montréal-Trudeau and Vancouver International consistently underperform compared to comparable U.S. airports like Seattle, Detroit, Chicago O’Hare and others. Somewhere around 1.5 to 2 flights out of every 10 at comparable U.S. airports are delayed. Closer to 3.5 to 4 flights out of every 10 are delayed at Canada’s three largest airports.
While the minister and Transport Canada try to redefine the meaning of delay to flights in Canada operating within an hour of their scheduled departure, the global standard defines a delay as a flight being delayed by more than 15 minutes beyond its scheduled departure time. At that point, connections of both travellers and bags become a problem, resulting in a long list of potential disruptions to an individual’s travel plans.
The question, therefore, is what is causing Canada’s air transportation system to perform so poorly? While the committee is not looking directly into those factors today, it would be important to understand that the causes are not always within an airline’s control. As Canadians saw last summer, the greatest contributing factors to disruptions were, in fact, related to poor planning and outdated procedures by several federal government agencies. The long lines at airport security managed by the Canadian Air Transport Security Authority and at customs and immigration managed by the Canada Border Services Agency resulted in massive disruptions to airlines’ schedules. The staffing issues faced by NAV CANADA were another important factor, which persists today. Yet the changes introduced by the minister do not in any way address those issues or hold those entities accountable. There are no enforceable service standards, and travellers and airlines simply have no recourse whenever these entities cause delays, which can at times mean that airline operations are upended for days on end.
Canada’s airlines have consistently ranked among the best in the world for safety and service. The numbers also bear that out, but clearly, the air system’s performance since the beginning of 2022 has fallen far short of that. While Canadian travellers can expect to travel relatively disruption-free during the shoulder seasons when fewer people are travelling and the pressures on the system are at a minimum, the same can no longer be said for the peaks, and that is where these rules simply fail to address the systemic issues that have caused these disruptions in the first place.
I would urge senators to look at ways to ensure that those underlying systemic issues are addressed and, in particular, in the context of the legislation before you, to ensure that all players, all entities, not just airlines, can be held accountable for their roles in ensuring smooth travel experiences for Canadians.
With those remarks, I would be pleased to answer any of your questions. Thank you.
The Chair: Thank you for that. I will launch off the Q&A part of our program here. My question is specific to Mr. Morrison.
I understand the importance of making sure that responsibility is spread around in terms of the fiasco of what has been our airline industry over the last few months, particularly since COVID. But at the end of the day, the buck stops, in my opinion, with the airline companies. And the buck stops there because that’s where most of the revenue goes. That’s the driver when it comes to the airline industry. Everything else is peripheral. Security is peripheral. Airport authorities are peripheral. The governments are even peripheral.
The governments, also, for decades now, have gone out of their way to protect and promote our airline industry, in large part driven by the demands and wishes of the airlines. Again, politicians in this country have accommodated. We don’t have Open Skies in this country. We don’t have massive competition because we’ve been convinced for decades that having more targeted airlines in this country and one or two or three national airline carriers would allow us to be more competitive.
The truth of the matter is this. I’ve been in business for 20 years. There was a philosophy in business once upon a time that the customer comes first. And I can tell you, from my experience — and many of my colleagues can share it around the table — because I’ve flown a little bit, that the customer comes last now. Shareholders come first. Executives of airline corporations come first. Unions and employees come second or third, but the customer is always dead last.
I won’t get into the nitty-gritty experiences I’ve had with companies like WestJet and Air Canada just over the past three months because it would be petty, but I can tell you there’s a reason why there are tens of thousands of complaints with the Canadian Transportation Agency.
My question is the following. Will the airlines step up and correct the problem, or do we have to take drastic steps as legislators to start protecting customers?
Mr. Morrison: Thank you for the question. First, we have all acknowledged that 2022 was a difficult year for a number of very unique circumstances. We saw a 300% increase in demand for travel in a period of a few months. We had a very unique weather system on the busiest travel time of the year. It was continental in scope over several days. I was impacted by that myself.
I would say, first, we cannot suggest that somehow those unique experiences from 2022 are the new norm of travel. We have seen from the start of 2023 that things are getting better. We’re seeing that in various metrics. Are they perfect? No. But are they better than 2022? I would argue, yes.
With respect to your comment about competitiveness, we fully agree. We in fact believe, and we’ve had discussions with the minister about how we make the system more competitive so it can benefit passengers, so we can look at how to improve the overall air travel system from a passenger perspective and do so in a cost-competitive way. There are a number of ways in which we can do that and which I would be happy to chat about more.
Mr. Chair, at the end of the day, you said that it’s really about the passengers and they need to come first. I would fundamentally agree with that. It’s why we have suggested that the APPR provisions that you’ve talked about are not going to fix the overall air travel system. The best passenger protection regime is one in which disruptions are minimized in the first place. We know from polling, especially in Europe, that’s what passengers care about the most. That’s why we’ve been really trying to focus in on how to improve the overall air travel system, because that’s where passengers matter. But airlines cannot do it alone. I know you said the buck stops with the airlines, but in reality, it is an ecosystem. If we don’t look at it from a systems perspective, frankly, airlines could do everything 100% correctly, yet we could still face disruptions if we don’t apply an overall ecosystem approach.
The Chair: That’s the same song we heard from Air Canada when they were here a few months ago, that we had some terrible weather periods in December of 2022, and that the bad weather in Canada explains the atrocious service we have been getting. It’s not getting any better in 2023. The problems I had as a customer were in March and April of 2023.
And you try and get in touch with any one of our Canadian airlines. Some are better; some are a little bit worse than others. You try to get in touch with them in order to deal with customer service issues. It’s like having a root canal without the anaesthetic.
At the end of the day, with all due respect, it’s nice to continue to blame it on the weather and the ecosystem and everybody else involved in the industry, but, quite frankly, I don’t think Canadians will tolerate that much longer. My time is up, so I will pass it on to Senator Wallin and then Senator Simons, who I am sure will be nicer than the chair.
Senator Simons: Or not.
Senator Wallin: Yes, or not. Thank you all. I want to come to the question of productivity in Canada. We are studying that in other committees. I sit on these airplanes day after day after day, with 200 or 300 working people aboard these planes who are missing entire days of work. At the end of the workday in Saskatchewan, if you need to fly to Toronto to connect or to go back home, you will arrive in Toronto — if you’re lucky, if the plane is on time, which actually never happens — at 1:45 in the morning. That means you will lose part of your next working day.
We’ve gone on about this here, about missing connections and missing meetings and the whole 15-minute delay. All the airlines do is just delay their flights 15 minutes at a time. It starts at 10:00, and at 10:15, they delay it to 10:30. We’ve all sat in airports and watched this.
I am going to Mr. Dee on this question because you’ve worked inside the country’s biggest airline. What could fix this issue? Because it is not just inconvenience for passengers. It’s about the productivity that goes on in this country, which is already a problem and a concern economically.
Is competition the answer? Is there any way to allow that to happen, or do we have a process in place that will prohibit that from actually happening?
Mr. Dee: Thank you, senator, for that question. Like you, I live outside the major centres of this country. I’m in New Brunswick, so I’m very familiar with what you’re talking about in terms of that last flight out of Saskatoon or Moncton, and then you don’t get into Toronto until past midnight, and you are stuck because you can’t connect anywhere else.
What is the industry facing? If we look at the situation in Canada, particularly in the last year, we have just so consistently done worse than comparable peers. If you compare Toronto to Detroit, which is not that far away, or compare Vancouver to Seattle, or compare Montreal to Boston, the number of delays is significantly higher on the Canadian side of the border as opposed to the U.S. side. What you are experiencing in Saskatchewan is completely understandable, given the fact that the number of flights that operate into Saskatchewan touch on those major hubs.
What is happening in Canada that makes Canada so much worse? That’s a legitimate question, one for senators and parliamentarians to answer.
I can look at the causes of that. For example, the U.S. recently passed a bipartisan infrastructure bill which dedicated US$50 billion for airport improvements. At the same time, the Government of Canada is withdrawing half a billion dollars every single year from Canadian airports, funds that should be going into things like improving taxiways and runways and improving de-icing. In Canada, we used to be leaders in de-icing, and now places like Vancouver and having a difficult time. They had to shut down the airport completely because of two inches of snow.
What is taking place in Canada is not sustainable from the traveller’s perspective because all of these delays compound, even if we just have weather issues on one day. I know the chair talks about the weather not being the excuse. Unfortunately, in Canada, even if we have a weather event that hits one of the main hubs for one day, the impact could last for several days beyond just that one day. The reason for that is the recovery time it is taking in Canada is significantly longer now than it used to be. A lot of that is because we have not invested in what it takes to ensure that the system is resilient enough to deal with these types of issues, and this will only get worse if we listen to what the scientists are saying in terms of climate change. Thank you.
Senator Wallin: Thank you. I will forfeit my time so we can have more questions.
Senator Simons: Mr. Morrison, I envy you being in Edmonton today where the weather is glorious. It is not so glorious here.
You have the worst-possible audience. Many of us fly twice a week, every week, three or four weeks out of the month. When you tell us things are getting better, they’re not. We have the evidence of our own eyes and lived experiences. The problem isn’t because of lineups at immigration. If I’m flying from Edmonton to Ottawa, that is not the problem.
I want to turn to Mr. Lukács. I had high hopes for this new system, which promised a more streamlined way to get to resolutions so that we don’t have 46,000 people waiting for adjudication. You seem very convinced. You basically compared it to secret trials. This isn’t quite like a court procedure. This is a corporate mediation from a federally regulated industry.
Why do you think that having this mediation, which the government tells us will make things go faster, is so problematic? Won’t it make things faster?
Mr. Lukács: Thank you for the question.
There are two concerns here. First, it is not a mediation. The end result is actually a legally binding order, which is enforceable like any court order. As long as it’s a mediation, it is not binding, of course, parties are at liberty to have as much secrecy as they want.
Once we are issuing a final legal determination of rights, that is settled law, that that process and the evidence used for it have to be public. That’s one of the core values of democracy, whether you go to a tenant-and-landlord dispute or an immigration — other than refugee — dispute. If there are no compelling reasons for protecting victims or protecting the innocent through confidentiality, openness is the norm.
I don’t have much faith in the Canadian Transportation Agency to begin with, given their quite troublesome role during the COVID-19 pandemic. The Canadian Transportation Agency posted misinformation on its website, misled passengers to believe that they had to accept vouchers when actually they were entitled to real refunds in the original form of payment.
I don’t believe that more secrecy is going to improve anything. There is an old saying that sunlight is the best disinfectant.
Senator Simons: There are things that do seem to be improvements. For example, there will be compensation for delayed luggage. There will be some effort to say that people are entitled to food and water, which would seem the bare minimum.
Clearly, the current system is broken when we have 46,000 people waiting. Administrative tribunals can be extremely time‑consuming. If you were going to have designed this system, what do you think is the best way to get efficient mediation of disputes that doesn’t involve a quasi-judicial procedure which can take years?
Mr. Lukács: First of all, baggage issues have already been on the law books for decades. The Montreal Convention is part of the federal Carriage by Air Act, and it requires airlines to compensation passengers for delayed, lost or damaged baggage, at least for international travel.
For the past more than a decade, the Canadian Transportation Agency established case law dealing with baggage delay and damage liability, which has also been forcing airlines to do that.
So, this bill corrects some drafting issues in Bill C-49, which, by the way, we flagged back in 2017. The government didn’t listen then and is not listening now.
You asked me what the solution would be here. The solution would be creating crystal clear rules. The reason we see far fewer issues with baggage than we see with flight delays and cancellations in terms of claims that passengers make is because baggage rules are far clearer.
The issues that we see with compensation for flight delay, cancellation and denied boarding in Canada are largely due to the fact that Canada did not follow the European Union’s gold standard.
Now, there is actually a bill before the House of Commons, Bill C-327, which would bring Canada in line with the European Union’s gold standard. It would also incorporate some of the existing case law from the European Union about defining what extraordinary circumstances are, and that is the solution.
Once airlines face significant financial consequence for breaking the law, and the law is clear and every player knows what their obligations are, it becomes a very simple system.
If you want to make it even more efficient, you could have mandatory solicitor and client costs against airlines that resist meritorious claims. There could be treble damages. There are a number of tools to incentivize airlines to be reasonable, but it has to start with clear and simple rules. What you have before you is not accomplishing that.
You have heard that there is now initiative to essentially move the “required for safety reasons” loophole from the primary legislation into the regulations. It will be taking the same airplane, painting it a different colour and calling it a new regime.
Senator Simons: Thank you.
Senator Cardozo: I have a general question which I would like you all to comment on.
When it comes to passengers’ rights, do you and the government have to weigh, on the one hand, the rights of the passenger and, on the other hand, the viability of the businesses, which are the airlines? I’d like all of you to comment on that.
Mr. Dee, you mentioned that we have not invested in what it takes to be resilient enough. I would like to ask you for some specifics on what we could do to be resilient enough.
Mr. Lukács, you talked about “crystal clear rules.” Could give us a few more examples of those?
First, any general comments? I’ll start with Mr. Morrison.
Mr. Morrison: Sure. You asked whether APPR needs to weigh the viability of the airlines and the answer is absolutely, 100%.
At the end of the day, we’ve already talked a lot about competitiveness of airlines. If there are to be additional financial burdens on airlines for a number of causes — by the way, this is all on top of a number of additional financial burdens we’ve faced over the past months, such as an increased NAV CANADA fee of 30%. You just heard about the security fee, a 30% increase there. Airport improvement fees have all been increased.
At the end of the day, if you are continuing to assign additional cost after cost after cost, that does have an impact on connectivity, competitiveness and the cost of travel. It absolutely has a correlation.
Senator Cardozo: Mr. Dee, please go ahead.
Mr. Dee: Thank you, senator. In terms of examples of resilience, I’ll point simply to de-icing as one and the availability of de-icing equipment during a storm. We saw in Vancouver that they were unable to keep up with the de-icing demands because of about two inches of snow in December. The entire airport had to shut down for the entire morning. That should not be happening. It wasn’t happening in Seattle, which was experiencing the same weather event, but it’s happening in Canada.
We’d like to point to the European Union as the gold standard. Sure, they’re the gold standard. They also have much greater supports for the infrastructure that it takes to run an effective, efficient air transportation system. Canada’s user-pay model does not allow for that.
If you take a look, as Mr. Morrison cited, the airport improvement fees are now up to $45 per enplaning traveller in some airports in this country. In the U.S. it’s capped at less than $3 per traveller.
Senator, your original question was whether or not these rules should take into account the viability of the industry they regulate, but they should also take into account the viability of what travellers are able to pay.
Canadians pay some of the highest taxes and fees on the planet. We are in a situation where we’re constantly seeking more and more out of the pockets of travellers in the form of higher air transport security charges and NAV CANADA and airport improvement fees.
One final thing, particularly on the issue of remote communities. Canada is one of the few countries on the planet with remote airports that still have gravel runways. If you want to talk about resiliency and the ability to serve smaller communities in this country, the number of aircraft models that are still available to service gravel runways is diminishing. We just saw, for example, Canadian North retire —
Senator Cardozo: Do you mind if I stop there and ask Mr. Lukács for a quick comment because my time is running out?
Mr. Dee: Sorry, senator.
Senator Cardozo: Thank you very much.
Mr. Lukács: The purpose of good regulation is behaviour modification. In the case of airlines, this means that instead of investing money into paying out compensations, they would invest money into more backup crews and aircraft, as is done in the European Union.
Airlines like to complain about the ecosystems, but they do have the ability to sue their suppliers and third parties. This is commercial litigation.
In terms of crystal clear rules, just look at the European Union’s criteria for compensation. It can be decided in the vast majority of the cases within minutes whether a passenger is or isn’t owed compensation. You look at when the flight was supposed to arrive and when it actually arrived; you look at public information, whether there was any truly extraordinary circumstance like a volcanic eruption, a major snowstorm, terrorism, God forbid, and that’s it. You don’t need a massive amount of evidence. It can be a strict almost court-like process because the exceptions are so few and far between that it doesn’t take a massive amount of time to determine whether the passenger is or isn’t entitled to compensation.
The Chair: Thank you very much.
[Translation]
Senator Miville-Dechêne: Mr. Morrison, can you hear the interpretation?
Mr. Morrison: Yes, I can, thank you.
Senator Miville-Dechêne: I’m a bit stunned by your arguments essentially founded on you having no real responsibility in this whole regime, and that the responsibility lies with others, for the most part. I must tell you, personally, that always bothers me: It’s them, not us.
You actually have several responsibilities in this. I even feel that your speech was a little threatening. If this law, if the regulations come into force, what you’re saying is, not only will consumers be paying more, but they will have fewer flights, since you will no longer be able to fund those flights. Did I get the gist of your speech?
Mr. Morrison: Thank you for the question.
[English]
With all due respect, I would say, no, that is not the intent of what we’ve suggested. First of all, with respect to responsibility, to be absolutely clear, airlines take their responsibility under passenger protection rights as well as other responsibilities, such as safety, incredibly seriously.
If there is a flight delayed or disrupted, the first step in this process, which was not discussed in the previous panel, is that, of course, a passenger files a claim directly to the airline. The airline has 30 days in which to respond, and the vast majority of claims get settled in a very informal process.
[Translation]
Senator Miville-Dechêne: Why are there 46,000 unanswered complaints? What you’re saying makes no sense.
[English]
Mr. Morrison: No, the vast majority of claims do get settled directly between airlines and passengers, again, in the 30-day window. What we’ve seen, again, because of some unique circumstances in 2022 with the summer delays as well as the holiday period, there has been a significant number of complaints to the CTA.
I would suggest that in regard to those differences of interpretation by the passenger who chooses to go to the CTA and the airline, there has been a lack of clarity regarding the exceptional circumstances and those exemptions Ms. Pégeot referred to in the first panel. That is why we need a clear regulatory process to define what those exemptions are. That’s what we’re suggesting to this committee, that safety be first and foremost under that. With respect to —
[Translation]
Senator Miville-Dechêne: As a show of good faith, can you promise here and now that if the legislation passes and the regulations are implemented, that will not result in higher airfares, which are already quite costly, or service reductions when it comes to the frequency of flights?
[English]
Mr. Morrison: No, I cannot make that promise. First of all, with respect to the security charge, which is part of Bill C-47, that is a charge that gets passed directly to the consumer, to the passenger. That is set forth in the legislation.
With respect to other costs that this bill may have, including, by the way, something we have not talked about, which is the potential levy that airlines would pay if a passenger chooses to go to the CTA, which is something beyond the airline’s control — Again, when you keep adding these various costs, at some point, something has to give.
Now, can I say that these costs will be passed on? No. Can I say that they will not be passed on? No. Airlines will have to make that choice independently. What I can say is if you keep consistently adding costs onto any business, regardless whether it’s transportation or anything else, at some point it will have an impact.
My final point, just last week we had our American counterparts —
[Translation]
Senator Miville-Dechêne: Don’t you make a profit, Mr. Morrison? Are the airlines not turning a profit right now?
[English]
Mr. Morrison: Of course, it’s important to recall that we’ve had three years of a pandemic where airlines went significantly into debt.
I will, as a last point, on the point of competitiveness, say that our American counterparts were in Ottawa last week, and they pointed out to various officials that because the cost of flying to Canada is so much higher than the United States, there has been a 30% reduction by American air carriers flying into secondary hubs in Canada, meaning places like Regina and Saskatoon, as we were talking about. They’re losing access to an American travel system because of the lack of competitiveness in Canada. That is the type of thing, again, where we want to address this. We want to have a more competitive, robust system. Airlines cannot do it alone. I know people don’t like to hear that, but it is part of a system.
The Chair: Thank you, Mr. Morrison.
Senator Manning: Thank you to our witnesses.
I listened to all of your opening remarks, and each of you are here to discuss Bill C-47. I stand to be corrected, but I think each of you stated that this bill is going to do absolutely nothing to improve the airline traffic in the country. That really concerned me because the purpose, supposedly, of Bill C-47 is to do the exact opposite of what you’re telling us.
If each of you could take a moment to tell us one thing that we need to do with this bill to improve airline traffic in this country, what would it be?
Mr. Lukács: I’m happy to go first, senator. You probably have our brief as well. We put forward recommendations under items 5, 6, and 7 of closing existing loopholes. That would be essentially implementing provisions from Bill C-327, a private member’s bill by Mr. Bachrach, that would harmonize Canada’s passenger protection regime with the European Union system. That system has proven to work and has been tested for close to two decades. It has kept airlines profitable, even low-cost carriers in Europe.
Senator Manning: Mr. Morrison?
Mr. Morrison: I provided a recommendation with respect to ensuring that the regulatory development of process is guided by the necessity to maintain safety. That is absolutely critical for airlines.
I would also add the concept of shared accountability, which I referred to earlier in my remarks and about which we released a report last week. We assumed that would not likely be included in this piece of legislation. However, based on comments from the minister and from Transport Canada, we understand that there is a likelihood or a possibility that future legislation may be introduced possibly as early as this fall that would include elements of that shared accountability system. It would include things like data sharing and a communications protocol so that airlines are better informed when there are delays or disruptions amongst all the other entities.
With all due respect to Senator Simons, who claimed that customs are never really the cause, I saw that in person with my own two eyes yesterday at Pearson going through the CBSA hall. There was one member of staff dealing with a flood of people, and one gentleman said he would not make his flight due to that delay at customs. We do need to improve the overall system with that shared accountability process. It’s not finger pointing, but a way to improve air travel for all passengers.
Senator Manning: Mr. Dee?
Mr. Dee: Thank you, Senator Manning. One idea I would have if we’re confined to this legislation really is to echo what Mr. Morrison just said, which is the need for shared accountability.
Just one small example, picking up on a point that Senator Wallin made earlier about the inconsistencies with airport security screening, that’s one area where both travellers and crew members are, in fact, delayed. What we saw last year was crew members who were so delayed that flights were being held, waiting for crew members to get properly screened.
To the extent that the various players in the sector can be held accountable through proper data, proper service-level standards, then that’s something that will help improve the experience of travellers, reduce delays and reduce cancellations, particularly during the peak periods. The issue of shared accountability should not be something that the government should resist, because in many cases they too recognize that — just like when they added more staff when it was clear that they didn’t have enough staff at both customs and at security — it’s something that’s sorely needed.
Senator Manning: Mr. Morrison, when a flight is delayed or cancelled and I find myself at the service counter to talk to the people who are there, they are inundated with hundreds of people in a lineup, and my heart goes out to them for what they have to do at that desk. It seems to be a really slow process when there is a problem and the lineup is 200 or 300 people and some have a flight to catch in an hour and a half and there are connections. Is there any effort being put in to improve that process? For us, we go up to the Super Elite counter, or whatever the case may be, but for many others in that lineup, that is not an option.
The Chair: Time is up. Thank you for the question.
Mr. Morrison: I will come back.
Senator Dasko: My first question is to Mr. Dee. You have talked about the fact that travel is the issue, and you have talked about system factors, factors that are outside of the purview of the airlines themselves: security lineups, system issues, de-icing and so on. Just to play devil’s advocate for a moment, granted that these things certainly may be issues, but that being said, don’t you feel that what the bill has with respect to changing the passenger interaction process and the claims process and the complaint process — don’t you feel that even though we can’t deal with all the issues in this legislation, if we can deal with some of the issues, is this not an improvement? Is this not going to help our system? Shouldn’t we embrace this and say, “Okay, we’re going to do this,” understanding there are other issues that we must deal with? And perhaps those will be dealt with in time. I would like to put the question to you that way.
Mr. Dee: Yes, senator. Absolutely. The current system for processing passenger complaints, particularly at the CTA, is bureaucratic and cumbersome, and why do we have 46,000 complaints in the backlog that will take over a year to process? Clearly, there is a process and procedure issue that needs to be addressed. Does this bill help do that? Sure, it certainly does.
In terms of holding airlines accountable, absolutely there are certain cases which required clarification, especially in areas of the responsibility of the airline, that this bill certainly helps.
Overall, the system is in such a state right now — and I point to the Canada-U.S. comparisons simply because they are the easiest ones to make. It’s hard to dispute that Vancouver and Seattle, for example, shouldn’t be compared to each other, or Toronto and Detroit shouldn’t be compared to each other, because they’re just so close. And why is it that when they’re facing the exact same challenges, the exact same weather patterns, it takes Toronto or Vancouver or Montreal that much longer than their comparable U.S. airports?
Yes, airlines can be held accountable, they can be singled out for requirements for compensation, which is absolutely fair, because the contract of carriage is between you as a traveller and the airline, but surely there has to be a way to also hold all of the other players accountable. That’s all I would like to emphasize.
You are absolutely right, senator. Is the bill an improvement over some aspects of what we previously had? Yes.
Senator Dasko: Thank you.
My second question is to Mr. Lukács. The minister has claimed that under the new regime that he has here that we will be better off than Europe after the changes are implemented, and that we will be better off than the U.S. but also better off than Europe. You’ve said to us that, in fact, we’re still going to be worse off than Europe, and you have urged that we embrace a private member’s bill that is supposed to help with that.
Help me understand this. How can you be saying one thing about comparison to Europe and the minister is saying exactly the opposite? Could you clarify that from your point of view?
Mr. Lukács: Thank you, senator, for the question. Unfortunately, we have heard from this government before, back in 2017, 2018 and 2019, that we have the best possible passenger protection regime, and here we are with 46,000 complaints before the agency.
Part of the problem is that the minister has many responsibilities and his expertise is not narrowly in air passenger rights. He does other things. When the minister was actually announcing those measures, he didn’t even seem to be aware of when they would come into play. He was having difficulty, actually, answering basic questions about it. It appears either the minister is misinformed about what is actually in the bill or he is being given wrong advice.
The Chair: Thank you very much. The time has run out.
Senator Quinn: I’ll be fast so that Senator Harder has a bit of time.
A clarification for Mr. Morrison. You’ve mentioned that the vast majority of complaints are dealt with directly by the airlines and the passenger. We’ve heard that there are 46,000 or 47,000 complaints before the CTA. Your answer would suggest that there must be hundreds of thousands of complaints. Would I be accurate in that, if the vast majority are solved without going to CTA?
Mr. Morrison: Thank you for the question. Again, because of the circumstances of 2022, with significant disruptions over the summer, significant disruptions in the holiday period — again, two unique circumstances — there were a significant number of claims to airlines. I don’t have that number. Of course, when a passenger chooses to go to the CTA, that is their choice to do that. There was misinterpretation between passengers and airlines in terms of what is compensable, which is why we presume that there are —
Senator Quinn: You can stop there because I have a second question. To me, it’s a performance indicator. There are lots of complaints out there, I guess, is what I was hearing.
I have a question on information sharing, data sharing. We’ve heard about it in other sectors, whether marine, trucking, you name it, blockchain, et cetera. Where would you have concerns with data sharing? What type of data would you not want to share?
Mr. Morrison: For airlines, anything that is of a confidential nature with respect to passengers would, of course, be of concern. But on the broader question of data sharing, we absolutely support that. It was part of the budget announcement. As I say, we expect there will be legislation forthcoming at some point —
Senator Quinn: Thanks. That’s great.
Senator Harder: Thanks very much, Senator Quinn.
My question is for Mr. Dee. Almost 30 years ago, the Government of Canada of the day, and subsequent governments, have embraced what they called user-pay in this sector in particular. This reflected ownership of airports, and it reflected, post 9/11, the distribution of responsibilities for passengers’ safety. In a sense, we’ve reached, I would posit, the limits of that policy framework.
The kind of upgrades and redistribution of responsibilities to deal with infrastructure that has not been maintained clearly means that the solution lies in readjusting what the consumer ought to pay and what the general taxpayer ought to pay.
Am I saying it too bluntly? In your view, is it not time that there is a broader study of the policy framework in this sector so that we can rebalance the appropriate allocation of public funds to the consumer and to the broader public?
Mr. Dee: Thank you for your question, Senator Harder. The short answer is absolutely. I was part of the last study that was chaired by the Honourable David Emerson, which did a review of the Canada Transportation Act, which is conducted every 10 years. We’re about a year away from having to do that, so hopefully the government will proceed with that. More important, however, is that whoever the minister is when that report is concluded actually implements many of the recommendations. Unfortunately, many of the recommendations we made under the Emerson study were not proceeded with.
Specifically on user-pay, Canada is the only major economy on the planet that has a policy of 100% user-pay. You see that on your airline ticket. When you take a look at the Airport Improvement Fees in Canada, they are upwards of $40 to $45 per traveller now; whereas, in the U.S., it is capped at below $3 per traveller.
When you take a look at the elasticity and the ability of travellers to pay for the entire air transportation system, I think we’ve reached a saturation point. When you’re talking about a 30% increase in the air traveller security charge with no commensurate improvement in the experience — Senator Wallin talked about her personal experience earlier — I think that’s something that Canadians should be asking themselves about.
In terms of the user-pay model itself, I think the time has come for us as a country to review it in the context of air transportation not being just an issue for the airlines and air travellers, but as an economic issue with broad implications for the economy as a whole.
The Chair: On behalf of this committee, I would like to thank all of our panellists for shedding a lot of light on all these issues. I can assure you, listening very carefully to your testimony and answers today, that the minister will have a lot to answer for tomorrow. He will be before this committee.
(The committee continued in camera.)