Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 5 - Evidence, November 2, 2010

OTTAWA, Tuesday, November 2, 2010

The Standing Committee on Transport and Communications met this day at 9:30 a.m. to study the emerging issues related to the Canadian airline industry.

Senator Dennis Dawson (Chair) in the chair.


The Chair: Honourable senators, I declare this meeting of the Senate Standing Committee on Transport and Communications open, and thank you for being here today. This morning, we are going to continue our study on emerging issues related to the Canadian airline industry, which was referred to us.


This morning we are pleased to welcome, from the Canadian Tourism Commission, Ms. Michele McKenzie, President and CEO, and Mr. Greg Klassen, Senior Vice-President, Marketing Strategy and Communications.

Michele McKenzie, President and CEO, Canadian Tourism Commission: Thank you for inviting the Canadian Tourism Commission to join you here today. I would like to offer senators a few quick points about the Canadian Tourism Commission, CTC, and then turn the microphone back to you for questions.

The CTC is Canada's national tourism marketing organization. We are headquartered in Vancouver, British Columbia and are active in marketing in 12 countries around the world. We are a Crown corporation operating within a highly competitive and commercial environment.

We are results driven: For every dollar invested in CTC core marketing campaigns in 2009, $101 was generated in tourism export revenues. That is new money brought into Canada's economy as a result of CTC marketing investments. That is a return on investment of 101 to 1.

Leading partnerships, we work with the whole tourism sector to strive to raise its competitiveness and showcase Canada as a destination where travellers can create extraordinary personal experiences unique in the world. That is Canadian's tourism brand.

CTC's leadership and partnership are very much sought after in international markets where the Canadian tourism brand leads and holds the greatest impact. Our vision is to inspire the world to explore Canada. CTC, our partners and industry watchers agree that the sustainability of Canada's tourism industry requires an increasing number of international travellers.

CTC's third-party-administered advertising tracking and conversion studies reveal that our measured campaigns in 2009 had the following attributable results: They generated an estimated $1.66 billion in tourism revenue for Canada's economy and contributed to the maintenance or creation of an estimated 15,284 jobs in the Canadian tourism industry.

Our objectives for 2011 to 2015 are to increase demand for Canada's visitor economy and to focus on markets where Canada's tourism brand leads and where we can yield the highest return on investment.

Since our 2007 launch of Canada's revitalized tourism brand "Canada. Keep Exploring," we have worked to build a bridge between the world's nature-based perceptions of Canada and the need to present more diverse and real Canadian travel experiences in a personal, emotional, relevant and interactive way. We want to prove to prospective travellers that experiences in Canada will enrich their lives.

Our success in branding Canada has been cited as one of the main reason that Canada has climbed FutureBrand's Country Brand Index, CBI, from twelfth place in 2006 to sixth place in 2007 and has held second place for the last two years.

The CTC achieved significant success during the first two phases of our 2010 Winter Games strategy. Phase 1 was Brand Building before the games, and Phase 2 was Media Relations and Web Content during the games. In many cases, our efforts far exceeded the initial targets set out in 2007 when we received incremental funds to leverage this opportunity.

We were now in the final phase, Harvesting the Afterglow, which means converting travel intentions into actual bookings, all in support of the ultimate goal of increasing tourism export revenue for Canada. As mentioned earlier, CTC's strategic focus is toward markets that generate the best return on investment, and those that are high-yield air travellers.

In 2006, Canada implemented the existing international air policy known as Blue Sky. The tone and spirit of the Blue Sky principles reflect a progressive and systematic approach to air bilateral negotiations.

While CTC cannot address issues that fall under the heading of government policy, we can certainly provide you with our insights about air travel and tourism opportunities for Canada.

I am very pleased that your committee is examining the issues that have an impact on travel to Canada. Emerging issues around the airline industry should be turned into opportunities for the benefit of the tourism sector.

We can do a great job selling Canada as a tourism destination and grabbing the attention of those high-yield air travellers. However, even if we were the most brilliant marketers in the world, if people cannot get here when they are inspired, we lose customers, and we lose against the competition. While progress is being made, there is considerable untapped opportunity. We certainly encourage new agreements with priority countries that have demonstrated potential for tourism.

Honourable senators, in the interest of your time and the important work of this committee, I would now be pleased to answer your questions.

Senator Merchant: Thank you for being here this morning.

In this morning's The Globe and Mail, there is a ranking of top tourist destinations. In 2000, we ranked ninth, and we ranked fifteenth in 2009. As you mentioned, in 2010 we had the Olympic Games, and we spent a lot of money promoting Canada.

According to the newspaper, Ms. McKenzie, you declined to comment on the statement of the National Travel and Tourism Coalition, NTTC, that issued this report last week criticizing Ottawa for heavily taxing the airport and airline sectors. Perhaps you would comment on it now.

Ms. McKenzie: I am quoted in that article speaking to the challenges that we face competing in an increasingly competitive marketplace. Canada is losing share. All established destinations in the world are losing market share as the pie is growing very quickly. Traditional destinations are losing to new and emerging destinations, so we have to compete fiercely to stay in the game.

NTTC is made up of organizations that are in the advocacy business. As a Crown corporation, we are not in that business. However, as the article mentions, increasing competition is the biggest strategic issue that we see in the international marketplace, and it is at all levels. We have a reasonable budget, but we are outspent by many of our competitors.

However, marketing expenditure is not the only competitive factor. Canada is a relatively expensive destination compared to destinations that we compete against. Therefore, we have to seek higher-yield travellers who can spend more money on a vacation.

That is our strategy, and we have had reasonable success in converting customers with it. However, that is a very small piece of the overall picture for Canada.

Senator Merchant: Are there any countries that subsidize flight costs to encourage people to come to their country? Once you get tourists in the country, they of course spend money. You said that it is very expensive to fly into Canada. Can you elaborate on that and tell me if there are any countries that subsidize flight costs?

Ms. McKenzie: I cannot speak specifically to countries that subsidize flight costs. The cost structures are very different in different countries. The Organisation for Economic Co-operation and Development, OECD, has released a tourism competitiveness report that says that overall Canada is quite competitive from a tourism point of view. We have a very high cost structure of airport fees and taxes, which increases the cost of air travel to Canada. Some countries have more ownership of national airlines, which was our model in the past. However, I cannot say whether there are countries that are directly subsidizing air travel.

Sometimes marketing organizations do that. They will subsidize charter flights, for instance, out of certain locations. The Canadian Tourism Commission does not subsidize any airlines coming into Canada. We work very closely with tour operators, some of which own their own airlines, but we are not in the subsidy business.

Senator Merchant: I believe that Toronto has among the highest landing costs in Canada. We will be making recommendations to the government. You are the government, though, are you not?

Ms. McKenzie: We are a Crown corporation.

Senator Merchant: Many people complain about the very high costs since the Government of Canada gave up control of airports to local airport authorities. What can the government do to bring sanity to these extra costs?

Ms. McKenzie: The cost of air travel to Canada should be looked at in the overall broad policy framework. There are many policy opportunities to improve Canada's tourism competitiveness. A number of those are identified in that white paper, so the airport fees and taxes have been identified as one of those areas.

I do not know to what extent the discussions between airports and the ownership or the management structure now within airports allow for an easy fix to that issue, but I do know it serves to contribute to the overall high cost of travel to Canada.

Senator Housakos: Would you be able to tell us what percentage of tourists come to Canada via air and via ground?

Ms. McKenzie: We have that information. We are talking about the U.S. market when talking about travellers coming by ground. About half of our international overnight travellers come from the U.S., and about 20 per cent come by air. Mr. Klassen can get the exact numbers for you. We are certainly happy to follow up on that.

Travellers from every other country come by air, with a few exceptions that come via some kind of a ship or cruise vessel. Our target markets in the U.S. are also air markets as well.

Senator Housakos: I assume it is safe to say that the U.S. market is our largest for potential tourists to Canada.

Ms. McKenzie: Yes, the U.S. is our largest market. However, in 2008, other international markets combined delivered more revenue to Canada than the U.S. market. That continued in 2009, and we expect that trend to continue. Proportionally, we expect that more international revenue will come from markets other than the U.S. market.

Senator Housakos: It is safe to say that you are tracking the second and third largest markets of countries in the world that send tourists here. I assume you are spending your time and energies marketing proportionately based on the history of who we are attracting.

Ms. McKenzie: Yes, we are doing that. Outside of the U.S., for instance, the next largest volume and revenue would come from the U.K., and then a number of countries deliver between 200,000 and 500,000 travellers a year. They are Australia; Japan; France; Germany; Mexico, up until the introduction of a visa; and South Korea.

However, we also have new and emerging markets where the numbers are lower but the growth rate is quite high. We have just started to invest in markets such as India and Brazil, and, of course, China, where we have just achieved approved destination status in the past year.

We are in those markets. Whenever we get into a new market, the most important factor that we end up dealing with there is air access because it is always a supply-and-demand equation. We need to build demand to attract more air capacity from those markets. However, we always run the risk of building demand when there is not enough capacity, and then not succeeding in closing those sales. That is a big part of our market development strategy as well, and as CTC, a big part of what we do is lead the overall marketing effort on behalf of Canada to open new markets that will be future markets for Canada.

Senator Housakos: In the hubs where we get our largest number of tourists, is the airline industry responsive to the needs in giving consistent service and competitive price? In your opinion, would you say that there is room to improve? Is there room for more competition? What can the government do, and what can this committee recommend to enhance competition in those areas? Furthermore, is there sufficient service in the emerging hubs where we are trying to develop more tourism? What else can we do to expand our service in those areas from an airline perspective?

Ms. McKenzie: I mentioned in my opening remarks that Canada's efforts around the Blue Sky Policy are important. From our point of view, doing more to liberalize the overall air-policy environment and having open-skies agreements with more countries, especially the countries where we are marketing and see great tourism potential, will have a huge impact. Comparatively speaking, we have far fewer open-skies agreements than the U.S., so I think that would be a policy priority.

With respect to the new markets we are entering, if I take India as an example, we do not have direct non-stop service to Canada from India. We have direct non-stop service from Brazil to Canada but only to the eastern part of Canada or to Toronto. We have great demand for our ski products in Canada in a market such as Brazil, but we do not have direct access from Brazil into Western Canada. We do not have enough direct access from a country such as Australia, where we have great potential.

Currently, we have good access out of China. Many airlines responded to that opportunity, and we have good access from that market. Sometimes we have good access from certain markets, but it is only seasonal, so we need more year-round access.

To answer your question, more access in an open-skies environment would be seen by us as a great help to Canada's overall tourism competitiveness.

Senator Housakos: Would you be able to tell the committee, from your point of view, whether there has been sufficient participation to promote tourism in Canada from the airline industry? What roles have the airport authorities played in that? What is the spirit of cooperation between CTC and some of the partners in the aviation industry, such as the airport authorities and various airline companies? Are certain airline companies more engaged with you than others?

Ms. McKenzie: Airlines are one of our best partners, but we do not restrict that to Canadian airlines. For instance, in China, we would work with other airlines. Out of a market such as Japan, we have traditionally worked with airlines such as Northwest Airlines that would hub into the U.S. A number of Japanese travellers coming to Canada have traditionally come through the U.S. because they have great access, and we want to use some of that access as well as direct access that we might be able to grow.

We work very closely with airlines, and we work with any airline that will help get passengers to Canada. Clearly, Air Canada is a very important partner working with CTC, and also WestJet. Other very important partners are airlines such as Air Transat that are in a conglomerate that also owns tour operators in Europe, for instance.

Yes, they are big partners. Have they done enough? I would always want more in terms of partnerships, but they are great partners — Canadian-based airlines and also airlines all over the world.


The Chair: Before I give the floor to Senator Boisvenu, I have a supplementary question to Senator Housakos's question. Perhaps Mr. Klassen could give us the numbers later. In percentage terms, how many Canadian companies are there that carry passengers for tourism, as opposed to American companies? In other words, do you have the absolute numbers for land transportation versus air transportation, and the proportion of Canadian companies and foreign companies?


Greg Klassen, Senior Vice-President, Marketing Strategy and Communications, Canadian Tourism Commission: One question was about the number for American tourists. About 25 per cent of all visitors from the U.S. stay one or more nights, who are the ones we tend to count, and they come by plane. Seventy-five per cent of visitors from the U.S. tend to drive into Canada. The numbers for the rest of the world would be roughly 95 per cent. There may be some visitors who make their way into Canada over land crossings, but they would likely have flown into markets such as the United States in advance.

Our industry is highly reliant on air access, unlike a market such as Europe, where there may be a lot of land access, for instance, flying into London or Paris and then using land access throughout the rest of Europe.

The Chair: Would you know the percentage of people who fly via Canadian airlines versus foreign-owned airlines?

Mr. Klassen: I do not have that number. We would have to do research on that. If I were to guess, I would suggest about 75 per cent would come in through a Canadian airline.

Ms. McKenzie: That is not information that is produced by Statistics Canada, which is where we get the numbers that Mr. Klassen is quoting. That is information we would have to get from the airlines directly. You have to determine the origin of the passenger because if a seat is full, you cannot tell whether it is a Canadian travelling outbound or an international traveller returning. We could certainly try to obtain that information.

The Chair: Whatever you can provide for us will be appreciated. How many of these visitors are people who fly into Plattsburgh, Burlington, Buffalo or Seattle and then take a bus, charter bus or car into Canada? Do you have access to that type of information? Is that information available to us?

Ms. McKenzie: We do have access to that information. We know how many seats are available coming in from a market such as Australia. We would know how many passengers would be origin Australia on those flights. Then we know, through Statistics Canada, how many Australians came to Canada. For instance, in that case, there is a gap of about 15,000 people a year; we would then assume those people came to Canada by flying into the U.S. and then driving across the border. We do have some good details on that.

The Chair: Whatever you can provide for us would be appreciated.

Ms. McKenzie: We also have an increasing number of Canadians travelling across the border and flying to international destinations or flying within the U.S., from U.S. airports.


Senator Boisvenu: Good morning, Ms. McKenzie. I have a few questions about your presentation, and then a question concerning tourism development. I was pleasantly surprised to see that return on investment is 1 per cent. If I understand correctly, for each dollar invested, $100 is reinvested in the industry, is that right?


Ms. McKenzie: Yes.


Senator Boisvenu: We know the provinces invest a lot in tourism, as do some regions of Canada, according to type of activity. What synergy is there between your organization and the provinces, to make sure that you are focusing on the same targets rather than scattering your efforts? Since government money is scarce, investments have to be properly targeted. What synergy do you have, for example, with tourism associations in Quebec?


Ms. McKenzie: I mentioned, in my presentation, that we work with partners. That is a broad statement. Those partners would include the Province of Quebec, which has a tourism marketing investment, as well as the City of Montreal, through Tourism Montreal and Tourisme Québec, those types of destination marketing organizations. We also work with the private sector across the country, of which there would be some significant examples in Quebec as well.

The way we work with them is different depending upon the market. However, when we are in the international marketplace — and I mean outside of Canada and the U.S. — it is really Canada that we are selling. The other partners are working with us to sell under the Canada brand. For instance, when we are in a newer market such as China, they are not really aware of the parts of Canada. They will know certain iconic attractions in Canada, and they will maybe know some cities, but they are not familiar with the names of provinces. It is not as relevant to go into that market and market on a provincial basis. We market fully under the Canada umbrella, and the partners invest with us to do that. It is a cost- sharing model under the Canada brand.

The U.S. market is different. Our partners market under their own brands in the U.S. Montreal would be there under its own brand, as would the Province of Quebec. The Province of Ontario is invested directly, as well as British Columbia, for instance. We do not market there under the Canada brand in the same manner because the provinces invest directly to try to build their independent brands.

When I say that we are investing where the Canada brand is most relevant, it is in those other markets where the Canada brand has to lead to attract those customers.


Senator Boisvenu: So then how do you manage to calculate return on investment for money spent by the Government of Quebec or the City of Montreal, or Toronto, in relation to the dollar you are spending? How do you manage to distinguish your impact from the return on investments by the provinces?


Ms. McKenzie: If we are working with Quebec in a market such as China, we are invested in the same campaigns; we are not doing different campaigns. These are campaigns that our partners are invested in as well. We can tell the return on investment because we are working closely together on the same campaign.

There may be issues in a market such as the U.S., where you might see an investment by Quebec and an investment by Montreal, and it might be difficult to determine the impact of each of those investments. However, again, they tend to work closely together. When I release return-on-investment numbers, it is about the CTC investment, plus our partners working together.


Senator Boisvenu: The events of September 2001, particularly in North America, for tourism, resulted in post- traumatic shock that I think is still present today. The first impact was fear of travelling by air, and the second was the enormous cost increase, in terms of security.

I have just bought a ticket to Costa Rica. The price is $800 plus taxes and security fees, so it costs $1,300. Nearly 30 per cent of the cost is taxes and security. Since September 11, 2001, how has the tourism system recovered from that shock? What is your strategy for dealing with these two phenomena, fear of travelling by air — it's difficult to get to Canada without taking a plane — and the enormous cost of taxes and services, which deter a lot of people from travelling by air or going short distances?


Ms. McKenzie: I will ask Mr. Klassen to speak to this as well because we have been working together at CTC. I have been there for seven years, but Mr. Klassen worked specifically through 9/11 at CTC. We learned much from that. We thought we were going through a situation and that we just needed to get through it and things would get back to normal. We learned that things never went back to normal and that our industry continues to change. We have had to become quite nimble as marketers in terms of responding to that.

Some interesting opportunities were created by 9/11. Our traffic from the U.S. actually increased in 2002 quite dramatically because Americans were not as comfortable taking airline flights, so they were taking more car trips. We were the only international destination that they could easily drive to from many parts of the U.S. We had that one blip in our numbers. As travellers became more comfortable again with air travel, we ended up having to compete for those travellers, just as we always have.

The other big factor since 9/11 was the introduction of the Western Hemisphere Travel Initiative. This initiative ultimately caused the U.S. to require everyone entering to have a passport, including returning Americans. Our challenge was that Americans had never needed a passport to come to Canada, and Americans did not hold passports in great numbers at the time, although that has since changed.

However, the psychological impact of that has served to make many people in our target markets in the U.S. decide to not bother with international travel. They have many destinations to travel to within the U.S. They have never travelled outside their country at the same rate as Canadians. We have always been great international travellers, so we have had that issue as well.

All of that caused us to start to look further afield for our customers, further afield in the U.S., so we have gone into air markets in the U.S. However, importantly, we started to develop other international markets where we could grow when we knew there were some factors at play in the U.S. that we could not compete against with tourism marketing. I will ask Mr. Klassen to elaborate.

Mr. Klassen: Additionally, 9/11 caused some short-term challenges, as did H1N1, SARS and so on. The world's travelling population is very nervous around those kinds of shocks that happen but remarkably resilient after that. Travellers take time to get used to that new normal, and air travel and travel in general from around the world is one of the fastest-growing industries. It is remarkable how resilient they end up becoming. It becomes a new kind of normal for them, and they build some of those ideas into their travel plans and patterns. Our opportunity is to follow the bouncing ball to try to compel and inspire these people to choose Canada when they are ready to travel again. That is where our focus has been in the previous years.

Senator Zimmer: That is one thing about 9/11 and the reaction, the drop and recouping that business. However, more specifically, as with the scare in B.C. the other day, is there an automatic drop as a direct result of a scare anywhere in the world that continues today, excluding 9/11?

Ms. McKenzie: I will say no. As Mr. Klassen said, with the travel or international travel that we have seen — and this is one of the changes I am talking about, that there has been no normal to go back to — travellers now seem to understand that there are new risks in travel and are prepared to accept that, but different markets respond differently.

For instance, we find that the Asian markets are much more sensitive to pandemic matters. After H1N1, and in fact after SARS, we saw that our Asian travel was most impacted. It was not as much of an issue for our European or U.S. markets. It depends upon the sensitivity of a particular market and the nature of the scare.

We found that travellers generally are pretty resilient. Canadians have somehow accommodated all of these different risks into how they weigh their travel options. Canadians are still travelling in great numbers to international destinations, and so are travellers coming to Canada.

Senator Zimmer: You are also saying that different cultures and countries react differently to different scares.

Ms. McKenzie: Yes.

Senator Johnson: Welcome. I am interested in the marketing. You make a statement in the book Inspiring the world to explore Canada:

According to independent research, many international citizens are aware of Canada as a tourism destination, but far fewer are aware of its individual provinces, territories or attractions.

. . . less than 1 per cent were aware of destinations by province.

Is that changing the way you are marketing? In coming to Canada, obviously they will go somewhere, but do they not know where to go? What do these statistics mean?

Ms. McKenzie: This is talking about unaided destination awareness, so we are in a country asking people what they know about travel destinations in the world, and on an unaided basis, close to 19 per cent of people are listing Canada as a destination; about 1 per cent are listing parts of Canada when asked that same question.

When they are prompted to say what they know about Canada, a higher percentage of people will be able to speak about parts of Canada but very few understand our specific geography. If they know anything, they know about Canada, and they have an image of Canada.

Senator Johnson: What is that image, do you know?

Ms. McKenzie: It is a very positive image. It is an image that is predominantly nature-based, and they think of Canada as a place that they might like to live, to which they might like to immigrate. They think it is a safe country, and they think of us as natural, as a big, expansive natural country.

However, they cannot easily translate that positive image of the country into a reason to travel here. That is exactly where we have focused for our marketing, to be much more deliberate about giving them ideas of experiences that you can have in Canada. We are not trying to give them a geography lesson. We are not giving them a map of Canada and asking where they would like to go because they typically do not know that. They typically have an idea of an experience in their mind, and so we want to ensure they know they can have those experiences in Canada.

Senator Johnson: Do the airlines work with you in this respect? Are you happy with the way they work with you? They see the Canadian North, the Royal Canadian Mounted Police, the RCMP in their red uniforms. There is more than that and a more cutting-edge Canada out there now, correct?

Ms. McKenzie: Yes, and you saw much of it through the Olympic Games coverage. For instance, we worked with every province and territory in Canada with Mr. Klassen's group and went out and shot great high-definition footage across the country. The program was invested in by CTC but also by every single province and territory. All of that content was then available for the world's broadcasters, and they used it. For instance, when Tom Brokaw was doing his piece on Canada for NBC, all the shorts in that piece came from our database.

Senator Johnson: I watched the Olympic Games from the United States, and the coverage was fantastic on the NBC.

Ms. McKenzie: We worked closely with NBC. We had the weird opportunity in that the economy started to decline in the U.S. in 2008. The world's broadcasters, including NBC, no longer had the budgets to come to Canada to pre- shoot their own material, so they relied on our database more than we could ever have dreamed. That database had great images, of course, of British Columbia, but it had images of the entire country. Therefore, we saw Mary Carillo, from NBC, doing a great piece on Manitoba.

Senator Johnson: They did better work than many of our networks, actually.

Ms. McKenzie: They did a great piece on Newfoundland. We marketed by giving them content they needed to use and helped them present the Canada we wanted to show, and that was very much based on the types of experiences you can have in Canada.

Senator Johnson: I am concerned as well about the passport issue and the enhanced driver's licences, the increased security at the border with the United States. Obviously it has affected our tourism from there. Do you have any idea to what extent at this point? This happened last June of course, but it is significant because of the usually friendly border crossing that has gone on for so long.

Ms. McKenzie: I am from Nova Scotia and have been marketing tourism for a long time; the U.S. has always been an important market. For us it is all across the country.

Senator Johnson: Will you be tracking that? It affects car travel just as much as planes in this respect, but do you track airlines coming from the United States?

Ms. McKenzie: We do track it. Overall volume numbers mask some very important trends coming out of the U.S. market. Figures for volume from the U.S. include same-day travel, that is, people coming for a few hours during the day and then returning. Since the early 2000s, that market is down more than 50 per cent. Same-day travel has seen a sharp decline, and we do not expect that that travel will come back in great numbers. That has impacted certain parts of the country that benefited from same-day travel, most predominantly the Golden Horseshoe area of Ontario.

Tourists are considered people who come for at least one night. The decline in overnight travel out of the U.S. has not been as great, and we have been most successful in retaining air travelers from the U.S.

Senator Johnson: You have kept the air aspect.

Ms. McKenzie: Yes. We can break down all the numbers.

Overall, our U.S. market is down about 20 per cent from its peak. However, as I said, it has a few different components, including 20 per cent for overnight travel.

Senator Johnson: What are your goals and focus with CTC and airlines in the future? What will you do to rev up the tourism industry in our country?

Ms. McKenzie: We have the great advantage in that the world knows so much more about us since Olympic Games coverage than ever before. Our awareness levels are higher than they have ever been. We are working hard to convert that interest into the travel. We want people to not only know more about Canada but also to come to Canada. We are working on that in direct partnership with tour operators and airlines in our focus countries.

Mr. Klassen can give examples of what our campaigns will look like. We call them conversion campaigns. We are trying to convert interest into sales.

Senator Johnson: Do you think open-skies agreements would be good?

Ms. McKenzie: Absolutely.

Senator Johnson: There are currently 26 agreements, either open skies or more limited.

Ms. McKenzie: Increased liberalization in air is very important. In fact, there is no greater strategic issue for us as marketers than having great air access into Canada.


Senator Boisvenu: You talked about short or same-day trips, which in fact account for a very large volume for border towns, like those in the Eastern Townships, where I come from. There is undoubtedly the factor that you will never control, parity between the Canadian dollar and the American dollar.

Our currency has been fluctuating since the last decade; would this be one of the main factors in the decline in short trips?


Ms. McKenzie: The exchange rate has been a very big factor for border traffic from the U.S. It is less a factor further south in the U.S. In fact, in markets such as California they are not really aware that our currency is different. You are right that exchange rates are highly sensitive and do impact interest in travelling to Canada.

Canadians are very much aware of currency, so it impacts our travel into the U.S. as well, and sometimes the exchange rate is good for keeping Canadians at home. We are highly aware of and sensitive to exchange rates, but not everyone in the U.S. is.

Senator MacDonald: You mentioned the launch of "Canada. Keep Exploring" in 2007 that talks about the nature- based perception of Canada, which includes mountains, moose, et cetera.

You mentioned the need to present a more diverse and real Canadian travel experience. What measures did we take to change people's perception of Canada?

Ms. McKenzie: That has been the entire effort around Canada's refreshed tourism brand. We are not trying to change people's idea of what Canada is because the perception is very positive. We are trying to build on it so that we have more dimension.

To use an example of another country to which many people can relate, about 10 years ago the only things that Canadians knew about New Zealand were sheep, Kiwi and green, not much that actually related to a travel experience. In the last 10 years, New Zealand has done a great job in tourism marketing. That marketing has given us a much better idea of the types of travel experiences one would have in New Zealand. We have moved beyond thinking of New Zealand as a nice place to thinking of it as a nice place that we would like to visit.

That is what we are trying to do. We want travellers around the world to move from thinking that Canada is a nice place to thinking that Canada is a nice place that they want to visit.

Senator MacDonald: What have we specifically done?

Ms. McKenzie: We have introduced Canadian experiences into our marketing. The coverage during the Olympic Games did not use only pure beauty shots, big aerials that did not show any people. Actually, some of those marketing pictures are scary for some people because they thought there was no civilization here.

We used some of that but primarily focused on experience. There are images in this brochure that illustrate what I mean by that. The geography of Canada is still in the images, but it is in the background, and the experiences of Canada come to the forefront, and that is working. When we do awareness research now, we find that the world is gaining a much better understanding of Canada as a travel experience, not only as a big, beautiful green country.

Senator MacDonald: You mentioned that in the FutureBrand index we moved from twelfth to sixth to second place, where we have remained for the last two years. That is how they measure it, but how do we measure it? What quantitative measures do we have?

Mr. Klassen: We do a measurement in every one of our markets. Ms. McKenzie referenced conversion studies, and we do them in every market to measure the effectiveness of our campaigns.

We also implement comprehensive measures in terms of brand awareness and resonance of brand. We check whether people can cite back the essence of the brand that we want them to get, and we measure that over time.

We look at about three to four years of metrics that will move the mark. Changing perceptions is a long-term idea, except when you have the Olympic Games, at which time you can accelerate it. We are currently measuring the impact that the Olympic Games may have had in accelerating the awareness resonance of our brand and, most importantly, the desire and interest to come to Canada as a vacation destination.

Senator MacDonald: I have been in the tourism business for years on the East Coast, so I am quite familiar with the inconsistencies in the industry.

I assume that the percentage of travellers who fly directly to Canada's West Coast from Asia would be substantially greater than those who fly into Halifax from Europe. Canada's East Coast is still very dependent upon the American market. The experience there is what has been said here.

Ever since 2001, it is difficult to build that American market back, and I suspect it may be different on the East Coast than on the West Coast. I want you to reflect on that. Is there something we could do on the East Coast that we are not doing because it has been a struggle?

Ms. McKenzie: It has been a struggle.

Senator MacDonald: We cannot replace the traveller in the same way.

Ms. McKenzie: If you think about the typical traveller who might want to come to Atlantic Canada out of Europe, chances are that traveller will have to fly over Toronto. If you are coming out of Europe and flying over Toronto, you are adding about three or four hours to the travel time. That means if you are in a given city in Europe, you have travel time that will compete with destinations such as South Africa; yet Atlantic Canada is quite close to Europe, as the crow flies.

That is directly an air-related issue. Atlantic Canada has some direct access to a market such as Europe, but primarily that access is over Toronto or another hub, even a hub in the U.S.

We have seen examples where we have had some other air access over the years. Icelandair was a good example, coming into Halifax. When we first started to work with Icelandair, people thought we were crazy because they thought we were after Icelanders.

We said that there are only 300,000 Icelanders. At the time, they had a lot of money, and they liked shopping in Halifax. However, we were looking for an easy way to get European travellers into Atlantic Canada. For that period of time, that worked well; but the overall policy environment was not friendly to that undertaking, and it was very hard for Icelandair to get daily service.

I am not trying to bring that up because that is old news; but it was a great example of what can happen when you have better air access into part of the country.

Senator MacDonald: We need more direct flights; it is as simple as that.

Ms. McKenzie: The U.S. market is still an important market for Atlantic Canada. However, increasingly, other markets will open up for Atlantic Canada, and it will happen based on easy air access.

Senator MacDonald: Maybe I should not ask your group this, but on the East Coast, half of our tourism is domestic. Does your group have any involvement in domestic tourism, cross-country tourism?

Ms. McKenzie: Domestic tourism is 80 per cent of Canada's tourism business. It is an important business for Canada's tourism industry. We were invested over the last two years with stimulus investments through a campaign called Locals Know. It was a heavy media campaign, helping to instil in Canadians the idea that Canada has some very exotic destinations that can compete with the idea of an international vacation. We have been invested in the domestic market, as well.

We also realize that the domestic market has done well for Canada over the last number of years. In fact, 10 years ago, the domestic market was only 66 per cent of our business, two thirds of our business. Now it is a full 80 per cent, four fifths of our business.

That is both a good thing and a bad thing. It is good that the domestic business has been strong, but it shows the challenge we have. To bring new dollars into our economy, they have to come from international markets.

We believe that the domestic market is well served with many Canadian marketers. There are great campaigns in the domestic market by destinations such as Newfoundland, Alberta, B.C. and many cities. We have new hotel levies in place across the country, building new marketing funds at the city level; Ottawa would be an example of that. Millions of dollars are now available for tourism marketing, and much of that is being invested in the domestic market.

The domestic market is doing quite well, and that is why our strategy is to take our money into the international markets, where we are fighting a fierce competitive battle. Therefore, we are not planning to invest in the domestic market moving forward.

Senator MacDonald: The longer the Canadian dollar stays strong, the more pressure there will be on keeping the domestic market.

Ms. McKenzie: I think you are right. We have had a strange phenomenon in Canada over the last few years, one we have not seen prior to this. As the Canadian dollar gets stronger, it drives our travel deficit. That is the difference between what Canadians spend outside the country versus what international travellers spend here.

In the last few years, we have seen both the travel deficit and domestic travel increase. Those two things do not usually go together. We do not think that is sustainable in the long run. We think Canadians will continue to travel internationally, maybe at the expense of those domestic trips.

Senator Johnson: I wanted to tell Ms. McKenzie and Mr. Klassen that Icelandair has renegotiated. They will still be flying into Halifax six months of the year, three to four days a week, bringing tourists from Europe and the United States into the Maritimes.

Senator Martin: I see that you are based in Vancouver. I am a resident of Vancouver, so it is nice to see you in Ottawa.

First, I can see how for Canada's airline industry, what you do internationally would directly benefit the industry. I am curious about the specifics of how you would partner with the airline industry, such as Air Canada, for instance. I am thinking of the catchy HSBC Group advertisements we see at the airports. In what way would you partner with the different airlines?

Mr. Klassen: Our investment with the airlines comes in multiple ways. It is not always as evident and overt as it might seem. Many the airlines support tour operators who will sell 100 seats on a flight, for instance, and bring them to Canada en masse. The airline itself would play a big role in negotiating the sale of those seats to that tour operator, who would guarantee them a certain number of seats in a given period of time.

We develop shows and put events together, where we have our airline and tour operator partners together, and they do those kinds of negotiations. Some of that investment is not evident.

In many instances, there is a type of traveller called a fully independent traveller, FIT. Those travellers tend to make their own reservations and do not travel with large groups. That is where the airlines play a bigger role in marketing and working directly with us. We will have campaigns, brochures and catalogues, and we will go to shows where the airline will work directly with us in our advertising.

Airlines tend to have much of their investment in marketing in international markets in more of a hidden way. They are not overt in terms of selling themselves. They rely, to a great extent, on our job of selling Canada and them being the natural choice of carrier to come into Canada. That tends to be where they focus their efforts, but they are always with us and always there.

Ms. McKenzie: Another example of how we work with airlines is they that give us great deals on seats to bring in travel writers and meeting planners to do site visitations in Canada. We did many of those during the Olympic Games, where we brought in meeting planners to see how if we could put on an event that big, we could certainly put on their events.

We did a partnership last year, by way of example, with United Airlines in the U.S. It was a two-for-one deal, coming out of Chicago into a number of cities across Canada. Our part of that partnership was to collect the cities that would be featured. We collected their investment and our CTC investment and built a strong campaign in Chicago. United Airlines invested in that as well as the airline partner, and it was successful. I think we sold out all the capacity that they put on the promotion within a week of the promotion going live. Sometimes it is very retail-oriented, and other times it is very much behind the scenes. The airline is the partner working to provide the tour operator with the capacity they need to get our customers here.

Senator Martin: There must be many examples similar to the one that you gave us this morning. Is there anywhere that we can look at the innovative work that you have done?

Ms. McKenzie: We do not have it structured in that manner, but we could pull together information for you on how we are working with airlines. We are not just working with Canadian-based airlines. We are working with airlines all around the world. We are working with anyone who can help us get our customers here.

Senator Martin: As you are working with airlines from around the world, you would also be able to speak about some of the innovative practices and ideas that other airlines are using to improve their sales, attract tourists and increase the volume of flyers, et cetera.

Ms. McKenzie: Someone asked earlier what the role of airport authorities is in helping to market Canada. That is an emerging question. Some airport authorities are very involved with us; some are not that involved at all. For instance, the airport in Vancouver is very active marketing with us. They attend most of our shows. In the past, Calgary has been very active. It depends upon the particular business plan of a particular airport and whether or not they see tourism marketing as part of their future success. We have been working with Calgary on new flights out of Japan. They have been doing very well with those flights. When that first came on board, we thought it might cannibalize business into Vancouver, but it has not. It has been totally incremental business. We have been happy with the work that airports also bring to the table.

Senator Martin: Obviously, you anticipate new markets. However, do you expect great growth in 2011-12? Are you working on new markets? This is also married to some of the Blue Sky agreements and other kinds of initiatives that would complement what you are doing.

Ms. McKenzie: We are putting a lot of focus on our opportunities in China with ads, so our marketing investment in China into 2011 is much greater than it has been in the past. We are working with a finite budget, so we do not see expanding the number of markets that we are focused on in 2011 or even beyond. We have lots of untapped potential in the markets that we are already invested in, and that will be our focus.

Senator Martin: I have one quick question about the booklet that you have given us. Where are these found? Do these go abroad as well?

Ms. McKenzie: No. This is a corporate brochure that is intended for audiences such as you to say who CTC is and what we do. We use it as a communication piece when our executives are on the road speaking on our behalf.

Senator Martin: When I looked through this brochure at the images that you selected for the provinces, I did not see many images associated with our cities. For example, with British Columbia, I recognize the art gallery, but others may not. I am curious about the fact that there is not as much diversity reflected in these images. If this were going abroad, it would be an interesting perception of Canada if people who did not live in the cities could see Canada through this brochure. I was looking at this as a snapshot of Canada because you talked about the Canada brand. That is, if people other than those around this table were looking at it, what image they would draw of Canada from looking at these pictures? That is just a personal note.

Ms. McKenzie: That is good feedback. However, this is not a marketing tool. It is not the type of piece that we would have in the market place. I encourage you to look at our website to see what types of images are there in the marketplace.

Senator Martin: In Vancouver 2010, everything you did was magnificent.

I am sure there was greater tourism in Vancouver in the summer of 2010. I saw a lot of activity, but I imagine it was the direct result of what happened with the 2010 Olympic Games.

Ms. McKenzie: Mr. Klassen has information on our conversion studies. We saw much more success in our campaigns in 2010 out of our core markets such as Australia and Germany. We have results from those markets now. We can provide that to you.

We do have good imagery of our cities. In fact, it is an ongoing discussion with the cities as to how to best portray the urban experience in Canada. We have images such as the one on the front cover, which are urban. If you go into a market such as China, where there are 100 cities with more than 1 million people and many cities with more than 5 million people, the idea of travelling because of our cities is not that appealing. They like the idea that we have cities. It indicates that we will have many of the amenities that cities bring. For many of our markets, part of why they come to Canada is to experience the combination of a city on the edge of nature and to have both of those experiences together.

Senator Zimmer: Senator Martin raises an interesting question. A huge amount of Canada's population lives in the bottom half of our country in each province, but we have tremendous tourist sites and experiences in the North; that is, a lower population but tremendous opportunities up there. Do you have a proportion of your budget that you apply to the North versus the South? There always seems to be a concentration at the southern part, but there are tremendous experiences in the North.

Ms. McKenzie: We do not have a proportion of our budget per se dedicated to the North, nor do we have that for any types of experiences in Canada. However, the North has been a strategic priority in our corporate plan for the last three years. We are working closely with our partners in the North.

You are right. We see great demand in the world for the types of experiences that we have in the North. One of our biggest challenges has been access, getting people there, and ensuring that we have enough market-ready products for people when they come. We see the potential as huge.

Senator Zimmer: Of course infrastructure is an issue too, because it lacks that.

Senator Mercer: It is hard for us to remember sometimes that we are doing a study on emerging issues related to the Canadian airline industry because it is not often that we have you before us, especially those of us who come from tourism locations. I am from Nova Scotia, Canada's ocean playground, so we are interested in tourism. I want to ask at least one question that is non-airline related, but I will try to stick to the airlines.

Our American friends, who are our biggest tourism customers as well as our biggest customers for everything else that we sell and make, have a continuing problem of not understanding 9/11, about where the terrorists came from, how they entered the United States, et cetera. We have even seen it with the most recent incarnation of the United States Secretary of Homeland Security making reference to the porous northern border. I am not suggesting that all these problems will be solved by a good advertising campaign, but I would hope that in our advertising, or even subliminally on our website, we would draw reference to Canada's response on the day of 9/11. That is, what we did and where we were. We were the only ones there doing this, obviously because of our proximity.

However, the fact that hundreds and hundreds of airlines landed in places such as Gander, Halifax, St. John's, Moncton, Vancouver, Victoria, et cetera, do we make reference to that at any point as we are marketing ourselves to the Americans?

Ms. McKenzie: We tell that story, and I would have to check to see whether it is on the website. I know it is a part of how we present ourselves in the U.S.

The most effective way to tell that story is when Americans tell it to themselves. NBC did a piece, which they actually aired again during the Olympic Games, focusing on Newfoundland. That has much more impact than anything we can bring into the marketplace.

It is telling that story through their eyes, and they respond best to that.

Senator Mercer: Thank you.

My non-airline question is related to your offices. Your offices were moved from Ottawa to Vancouver a number of years ago. I have several questions related to that. Do you think it has worked? There was always a debate that, while I am very much in favour of decentralization of federal government agencies, moving from one big city to another big city was not what the rest of us thought should happen when decentralizing. Moving from Ottawa to Charlottetown or Ottawa to Shawinigan or Ottawa to Miramachi was our idea of decentralization.

Has it worked? Also, what is the level of bilingualism among the staff in your office in Vancouver?

Ms. McKenzie: I have been with CTC since we were based here in Ottawa and made the move to Vancouver. I will say that it was quite tumultuous for the organization. We lost about 80 per cent of our staff when that happened, so we had to rebuild. We have done that, and we did it, I think, quite successfully.

Yes, it has worked, we are up and running. In fact, we have had great marketing success from our base in Vancouver. I think we would have had that success from other places as well, but certainly it has worked in that regard.

I cannot speak to the policy decision around decentralization. I can tell you that we operate under the same rules and commitments in Vancouver as we operated under in the National Capital Region with respect to official languages. We have had a fantastic record with official languages the last two years in a row. We have been rated "excellent." In fact, we were the top federal agency that was reviewed last year in terms of our official languages record. I think we have stepped up to the plate.

About 50 per cent or 60 per cent of our positions in Vancouver are bilingual positions. Sometimes we struggle to find people in Vancouver who meet the official languages standard. We have probably had more people move to Vancouver for positions than we expected when we first went there, but that is part of the requirement of the job, and that is what we have done.

Senator Mercer: Thank you. You say that about 80 per cent of our existing staff lost their jobs. A former assistant of mine was one of those staff members who stayed here in Ottawa rather than going to Vancouver.

Consistency in the level of service at airports is a concern that we have talked about, the level of service from one airport to another. Another question raised the different levels of interaction of airport authorities with CTC.

How do you handle that? You are working well with the Vancouver Airport Authority, the Calgary Airport Authority and others. There are others, unnamed, that you have obviously not been working well with, perhaps due to their lack of initiative. Are there initiatives you take to reach out to those airport authorities to try to engage them in making sure that the level of service is as even across the country as possible?

Ms. McKenzie: Some of airports are very actively involved in tourism marketing, and that changes. It depends sometimes on the particular management at the airport.

For instance, Toronto Pearson International Airport was not actively engaged with tourism a few years ago, and now they are very active. They sit on the board of Tourism Toronto. They are very active. It depends upon their business plans.

We do meet with all the airports together, as the Canadian Airports Council, CAC. That is where we would have different discussions; not so much about the level of service but about how we are marketing Canada. We are very interested in what airlines they are pitching to service their airports and in what countries and how we can work with them in a collaborative way so that those efforts are synergistic.

The other issue that we have taken up with airports — and it is not really the airport, per se, but more Canada Border Services Agency, CSBA, and Citizenship and Immigration Canada, CIC — is around the welcome that our international visitors get when they arrive in Canada. What is the first impression that they receive? We have had, in fact, a partnership with CBSA through the Olympic Games to dress up the arrivals halls, to make them look less like a hospital and more like a welcome hall. We have had good success with that.

In fact, anyone whose has landed internationally here in Ottawa will see some of the imagery that was changed as part of our Olympic Games initiative, working with CBSA. Those arrival halls have been improved all across the country in that regard.

Senator Mercer: Senator MacDonald raised the issue of Atlantic Canada, and I will continue in that vein. Sometimes when marketing our tourist product, there is also the opportunity to sell other things. For example, when you are selling beautiful Nova Scotia to the world, there are obviously many things you could talk about, including the Cabot Trail, the Bay of Fundy, the wonderful coastline, as well as the historic city of Halifax. There is also the Port of Halifax, which is an economic driving force in the city and in the region.

Is there an opportunity, and do you take the opportunity, to blend tourism with industrial development as well?

Ms. McKenzie: We do that on a selective basis. We have had some very good success stories. For instance, we have been working closely through the Olympic Games with Agriculture Canada. We are in the marketplace doing joint promotions with Canadian food products and Canadian tourism. It links very closely to one of our key stories about Canada as a destination, and that is the wonderful cuisine we have and great Canadian food experiences.

On those select bases, we are very aggressive. We do not go out with a general Canada investment and trade-style message writ large, but we do work on very selective joint initiatives, and they work well.

We also is work in market very closely with Foreign Affairs and International Trade Canada, DFAIT. For instance, we are working very closely with the high commissions, embassies and consulates, and we do many combined things. That works quite well also. However, when marketing Canada as a tourism destination, we are not infusing our images with industrial-development-style images, yet we actually, on the active promotion side, do quite a lot of work.

Senator Mercer: You brought up CBSA, which I was not going to ask a question about, but you have brought it up. We have had some bad publicity at the Halifax Stanfield International Airport with respect to the treatment of arriving passengers by CBSA agents. It makes us shudder to learn that bad service is being given to tourists, in particular.

Do you receive such complaints? If so, what do you do with them? Do you call the relevant agency to relay the complaint and ensure that it is aware of the complaints about the service?

Ms. McKenzie: We have worked very closely with CBSA over the last couple of years on topics of this nature. I know that they are of great concern to them as well. We have worked with them on a tourism training program called SuperHost, which they have been agreeable to building into their training programs of new officers.

We have had some good success working with them. There are still stories about where it has not been as successful. We talk about those to see what we can do together.

When we do international research, we do not hear those stories repeated back. Canada's image is friendly. These stories concern to us because they do not represent the image that people have of Canada. In the research and the markets, our image is still that of a very friendly country.

We saw something great during the Olympic Games. Broadcasters from around the world who carried the story of the Olympic Games were blown away by the friendliness of our people. They all talked about it, and not just on NBC where we saw the coverage but in all of the countries. The friendliness of our people became a big part of Olympic Games coverage. It is our image abroad, and it serves us quite well.

Senator Housakos: I have a supplementary question to that of Senator Mercer about your interaction with airport authorities and how some of those relationships are very good and others seem to be not as good. Why would there not be uniformity across the board? I would presume that promoting tourism would have a direct impact in favour of each airport authority's bottom line.

I have observed that boards of airport authorities are pretty much well represented in terms of municipal interests. Boroughs, the federal government and certain boards of trade have representation.

Do you think it would be a good idea for people such as yourself to be represented on that board of airport authorities to strengthen and maybe rectify some of the lack of uniformity in promoting Canada and all the various airport authorities in the tourism industry?

Ms. McKenzie: I do not think the management structure for airports in Canada lends itself to a uniform approach because they all have different management. Our focus is to try to meet with all of those management regimes to talk about what we do and how we think we can best work with them.

We are meeting with the Canadian Airports Council as a group to have that discussion. We then meet individually with airport authorities to have that discussion. It ends up becoming individual management decisions made at individual airports.

Do I think that the end-user groups could be better represented on some of these authorities? Absolutely, they could. In the overall air policy environment, customers and communities have been underrepresented. It would be helpful to have more communities and end users represented in many areas.


Senator Boisvenu: Is there a deficit or a surplus in Canada's balance of trade for tourism?


Ms. McKenzie: We are running a trade deficit in tourism of about $12 billion. It has grown dramatically over the last 10 years.


Senator Boisvenu: One of the constraints in Canada is winter. We also have an aging population. There are millions of Quebeckers and Canadians who for a long time have fled from winter to the southern United States, Central America and South America. The fact that we have these migrating retirees, who leave Canada for four or five or six months, what proportion is that of Canada's trade deficit? Is my question clear?


Ms. McKenzie: Yes, it is clear. I do not know the specific part of the deficit that is due to snowbirds or people who on a seasonal basis routinely leave Canada. However, throughout my career, we have always had a trade deficit in tourism. At times, it has been quite low, in the range of $1.5 billion to $2 billion. I have never seen it this high and sustained this high. In the last 10 years, there have not been that many more new snowbirds come on board, so there are many other factors at play.

As new air access has opened up new international destinations, Canadians have enjoyed travelling to those destinations. We are travelling outbound in record numbers, which I think is the driver of the travel deficit. I do not think it is the result of a growing number of snowbirds.


Senator Boisvenu: In the 1980s, there was a Quebec minister, Marcel Léger, who had a somewhat far-fetched dream, that Canada or Quebec would create an eleventh in the southern islands. So Canadians, instead of going to Florida, would go and visit that island, and that would generate investments in our own country.

At the moment I am thinking of Haiti, which is having major infrastructure and recovery problems. Mr. Chair, I am going to give my imagination free rein here. For example, if Canada collaborated with Haiti, we could have a massive tourism infrastructure development plan on that island. There could be an international agreement with Haiti so that more Canadians would visit Haiti rather than Central America or another global destination. Canadian money would stay in a corner of the world that would in a way be Canada, at least in the context of an economic agreement that provided a return on the money spent. Do you think this might be an avenue to explore so that our trade deficit, which is undoubtedly attributable in large part to our migrating retirees, might be reduced?


Ms. McKenzie: I have not thought about that, but I suspect it could be part of that type of scheme. Our winters are more attractive to more international travellers than we appreciate. We have great opportunities to attract travel to Canada year round. We do not focus a great deal on the fact that some Canadians choose to leave Canada during the winter. Instead, we focus on trying to bring the idea of great Canadian winter experiences to an increasing number of markets. For example, we just started to invest in Brazil. For markets such as that, the idea of coming to a winter destination is very exotic. Canada has some wonderful products, and that has been more our focus.

Senator Boisvenu: As you get older, winter gets worse.

Senator Merchant: You have told us about all the good work that you are doing to promote Canada, but we are still lagging behind in getting those tourist dollars. I would imagine that price must have something to do with it. When people look at a country to visit, they have a certain amount of money that they set aside for their vacations.

Can you tell us if perhaps we are pricing ourselves too high as a destination? Countries such as Mexico, Austria, Ukraine, Russia and Hong Kong are ahead of us, where we used to be ahead of them. What part of the cheapest tourist ticket actually goes to the airline portion, and what part goes to the extra fees that we have in Canada?

I am wondering what we can do to attract more tourists. We cannot maybe do anything about the airline costs because they have fixed costs. We have some way of setting their parameters, but we are not doing anything about the airports. I am returning to my question that I asked originally: What can we do to control some of the extra costs that we add on to the tickets so that we are competitive?

Ms. McKenzie: The tourism industry is advocating strongly, to the extent that government holds the levers that drive some of those costs, to try to address those to help us be more cost-competitive.

You noted where Canada sits internationally in terms of our rank. Other countries on that list are also relatively expensive to travel to. The U.K. would be an example of that, and they have some good success attracting people. Going to Paris is a relatively expensive trip also.

We know that there are travellers out there that will spend that money. When we are doing our marketing, we are trying to target the people who have more money; we are calling them high-yield travellers. We are not talking about a luxury traveller, but people who have more money to spend because we are not a discount destination and never will be. To the extent that we can work to drive some of the costs out of our overall structure, that would be very helpful in improving Canada's competitiveness.

Senator Merchant: You do not know the proportion for a ticket.

Ms. McKenzie: I have heard my airline partners quote anywhere from 30 per cent to 50 per cent, sometimes more than half the price of the ticket. I do not have that information specifically; I am quoting anecdotally what I have heard. That would be an important question if you are calling airlines to the committee.

Senator Merchant: That portion of the ticket goes to whom? You said that between 30 per cent and 50 per cent of the ticket.

Ms. McKenzie: That portion would be add-ons: fees and taxes, et cetera.

The Chair: Before closing, I would like to remind members that there is no meeting tomorrow night. Next week is a break week and the following week, on Tuesday morning, we will have the Canadian Transportation Agency. On Wednesday night, we will have the Canadian Airports Council.


Next week, we will be hearing from the Quebec Air Transport Association.

The steering committee will meet to set the agenda for meetings between now and Christmas. I would remind you that that we will very probably not be meeting on Wednesday, December 8, and Wednesday, December 15, 2010.


Ms. McKenzie and Mr. Klassen, thank you on behalf of the members for your very interesting presentation. You were very forthright in your answers.

(The committee adjourned.)