Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 7 - Evidence, March 14, 2012


OTTAWA, Wednesday, March 14, 2012

The Standing Senate Committee on Transport and Communications met this day at 6:47 p.m. to continue its study of emergent issues related to the Canadian airline industry.

Senator Dennis Dawson (Chair) in the chair.

[Translation]

The Chair: Welcome to this meeting of the Standing Senate Committee on Transport and Communications.

[English]

This evening we are continuing our study on the Canadian airline industry.

[Translation]

We have the pleasure of having Steve Desroches, Deputy Mayor of the City of Ottawa.

[English]

We also have Mr. Scott Clements, President and Chief Executive Officer of the Fort McMurray Airport Authority. Accompanying Mr. Desroches is Mr. Chris Cope, from the City of Ottawa's economic development branch.

Gentlemen, thank you for taking the time to speak to us. Mr. Clements, I understand you will begin. The floor is yours.

Scott Clements, President and Chief Executive Officer, Fort McMurray Airport Authority: Honourable senators, I would like to say first that this is the first time I have had this honour and pleasure and it may be the last, so I am going to enjoy it.

I have 10 minutes of text which you have already received, and if you do not mind, I will read most of that rather than try to wing it, and we will get through that and then have time for questions.

I would first like to thank you for conducting this very timely and important study of our industry and, second, for the opportunity to address you personally. I have been in the aviation business and airport industry for over 52 years. That sounds silly when I say it because I do not feel that old, but I guess I am. Obviously, I have seen a lot and learned a lot over those years.

While my remarks today will be from my current perspective as the president and CEO of Canada's fastest growing and currently the nation's fifteenth busiest airport in Fort McMurray, you will see from my background that I have the experience that would permit questions on the broader state of the air transportation business in Canada.

I understand that several of my colleagues have testified already, mostly from the top eight airport authorities that represent the hubs in Canada's network of airports. Since I was the President of Edmonton Regional Airports Authority for 10 years, there is much that had been said by them that I know, understand and agree with in terms of their praise for the national airports system — as it has evolved over the last 20 years — and their suggestions for improvements to lead to better competitiveness for airports and carriers.

That ground has been covered well and I will not wander into that territory. Rather, my remarks will talk generically about the vital regional networks that serve Canadians by feeding the hubs and the issues that many regional airports face in terms of support and competitiveness.

Fort McMurray is a great example and there are many broader conclusions that may be drawn from looking at our region of Wood Buffalo. I will make comments related to four categories: governance and the airports system, the funding of regional and smaller airports, international access, and the critical importance and unique nature of the air traffic in the Alberta oil sands region.

First I will talk about governance and the airports system. You are very aware from witnesses that have already appeared of the 26 so-called national airports that make up our National Airports System, or NAS. However, you may not know it is really not a national airports system, per se, but rather a land management tool for the government. In the early 1990s these 26 airports were identified as part of this system based on assumptions and projections of the day and were all leased to airport authorities, over time, under lease conditions that have become well known to you.

The rest of the federal airports in Canada, Fort McMurray included, were transferred to municipalities or qualified airport management entities that have had a mixed bag of governance overseeing the businesses of their regional airports. They were classified as part of a new regional or local system of airports; a sort of second tier.

Fort McMurray is a particularly interesting example. Upon transfer from the federal government to the Regional Municipality of Wood Buffalo in 1999, there was a relatively new federally built terminal in place, designed to accommodate a quarter of a million people. At the time of transfer there was 102,000; a comfortable situation for the airport when it was transferred. Obviously, it would not have met any standard to become a national airport. Since that time, there has been an absolutely dramatic increase investment in the oil sands, and together with that a growth in the last eight years that is the highest percentage growth in North America. We have gone from that 102,000 to 775,000 people at the end of last month going through that little terminal designed for a quarter of a million. If you have been through it recently, you know that something needs to be done.

As this growth occurred it became apparent that the municipal model of governance was not working well to handle the growth pressures. It was decided in 2009 to convert using the Alberta Regional Airport Authorities Act to the airport authority model that was worked so well across Canada. I believe we will hear from my colleague just how well it has worked in Ottawa.

The experience of the past two years has proven that this decision to create an autonomous administration was wise and facilitated the critical decisions required to undertake a new major project which will open in April of 2014: an international terminal five times the size of the current one.

With growth like that experienced at Fort McMurray, and with similar rapid growth at airports like Toronto City Centre and Abbotsford, it begs the question of whether there needs to be a redefinition of the parameters for determining what airports should constitute Canada's National Airport System. It seems timely to redefine the National Airport System so that it is more than just simply a way of managing federal land. I have raised this point with senior executives in the transportation department and they have acknowledged the situation. I just met with one today.

In summarizing the point on governance, I put to you that there should be an easy way to allow airports managed with a municipal governance model to convert to the airport authority model, with immediate clarity on equivalent and fair treatment in relation to the other NAS airports. This includes treatment in regard to federal taxation and access to other critical services.

I also suggest that it would be timely to restate the parameters of the National Airport System to allow for the inclusion of airports on the basis of traffic volumes and service offerings. In the case of Fort McMurray, we should be seen as having the status, trappings and obligations of the fifteenth busiest airport in the country.

My second issue relates to funding of regional and smaller airports. I accept that the airport authority model has, in normal circumstances and with the right things in place on transfer, all the tools it needs to do what it needs to do. However, in reality these conditions vary dramatically from one airport to another as has been explained to you by previous witnesses. You are also aware that several exceptions have been made to the original concept of financial autonomy to accommodate growth in economic development situations in some communities by the granting of federal dollars for specific projects. For example, there has been material federal help for Quebec City, Halifax, Whitehorse and Prince George that I know of. This form of help should be put in an expanded formal program with a long-term planning horizon and eligibility criteria that would allow more of us to benefit from it.

The help for special projects has been an addition to the Airports Capital Assistance Program, or ACAP, that you know about, and this has funded 678 projects at 171 airports for a total of $556 million over its 17 years of existence. While this is very helpful, the $38 million dollar per year ceiling and low threshold for airport eligibility leaves many airports without funding for critical projects. With the significant rent payments coming into the national treasury from the larger airports, I believe it would be in the public interest to materially increase ACAP funding so that the overall air transportation system would benefit from resource inputs from the industry.

Our airport at Fort McMurray needs financial support to build the air terminal and related facilities required by its traffic levels and requests have been put to all three levels of government. With the incredible growth at our airport, the amount of money to complete the full project is beyond the means of the airport authority. This has been acknowledged by the regional municipality with a public grant of just under 10 per cent of the $258 million total cost for the project.

We are engaged with both the provincial government and the federal government for similar support in making the Fort McMurray airport strategically what it needs to be, in order to support the critical growth of the wealth generating activities and business in the oil sands region.

I have left a copy of the formal request that I have made to the federal and provincial government so that your staff can review it later.

My third issue, honourable senators, is related to our quest to become an international airport at Fort McMurray. With over 770,000 passengers per year, an estimated immediate international passenger market of 50,000, a very strong demand for international cargo to serve the huge industry processes in the oil sands and a household income twice that of Calgary, it is amazing that Fort McMurray — Canada's fifteenth busiest airport — is only one of two airports in the top 32 without customs of any kind. We have been in the process with the Canadian Border Security Agency for the last 18 months to get this changed, and there is some hope that this will happen soon. I confirmed that with a meeting at the director general level in CBSA.

The point I would make is that the process for an airport like ours is cumbersome and counterproductive to business case analysis. With the knowledge that CBSA is a fairly new construct and still evolving, I would suggest that there be another fundamental review the policies related to the deployment of CBSA resources to make them more responsive to a demonstrated requirement, and to create a better alignment with changing air service traffic. This should include an examination of the process for new entrants, like Fort McMurray.

My last point is an interesting and informative one that has caused some concern. That is the unique nature of the air traffic situation as it has developed in the region in the last 10 years or so.

In addition to the Fort McMurray airport, there are 17 other airports in the region, several more in the municipality and several more in the region.

Obviously, air transportation is extremely important to the critical businesses at Fort McMurray. Of these airports, most are privately held and operated by oil companies. Four of these are very busy with flying workers in and out from all over Canada on a regular basis directly into work camps north of the city. We estimate that annually there are as many passengers going and coming from the camp airstrips as passengers using the main airport at Fort McMurray, in other words, a total of 1.5 million to 1.6 million per year.

My point in raising this issue is that the whole system of airports has evolved in an ad hoc manner. The private airports are not certified. They are in uncontrolled airspace using procedural control in an area that has a heavy mix of instrument traffic and visual traffic, mainly helicopters.

I am happy to say that there is an agreement by all the users, owners and regulators of the air transportation infrastructure in the region to conduct a study of the situation with a view to identifying options to improve the safety and effectiveness of the system in the region.

The Government of Alberta-led study is currently under way. Both NAVCANADA and Transport Canada have agreed to be observers in the study.

In conclusion, we should indeed have a true national airport system properly defined, one which would include a regional tier network whose importance to the overall system would be recognized in policies that promote the economic benefits that come from a robust and vibrant feeder network for our principal hubs in Canada.

The Chair: Thank you very much, Mr. Clements.

We will have Mr. Desroches make his presentation and after that we will have a period of questions.

Steve Desroches, Deputy Mayor, City of Ottawa: Thank you very much. It is a pleasure for me to be here on behalf of the City of Ottawa. .

I will be keeping my remarks to the importance of the Ottawa airport to the local economy and with the work we have been doing at the city to ensure that it is a key part of our city's success.

I do not have a background in aviation. I am a passenger and can comment from that perspective, but I will be talking about the work we have been doing at the city to ensure that our airport is a success.

[Translation]

It is a great pleasure for me to be speaking to you this evening to express the point of view of the City of Ottawa on the very important economic relationship that exists between the city and Ottawa's MacDonald-Cartier International Airport.

[English]

As we all know, Ottawa enjoys a unique place among Canadian cities as the nation's capital. We are exceedingly proud of that position. We are also very proud of our city's rich history, the vitality brought by the presence of government and our beautiful natural scenic setting.

We are fortunate to be blessed with many cultural entertainment and tourist attractions, four post-secondary institutions and the incredible dedication, drive and inventiveness of our business, entrepreneur and high-tech sectors.

Our population is diverse and growing, and we are consistently rated amongst the best places to live, work, visit, study and play.

We have recently renewed and reinvigorated our long-term economic and development strategy.

Of particular note is the recent launch of an arm's length economic development agency known as Invest Ottawa to put us on a more solid footing to compete nationally and globally for investment and tourism.

[Translation]

In the context of its investment in economic development, the city has committed to making the best use of Ottawa's strengths as a competitive world hub and promoting Ottawa as a great place to live, work, visit, study and play.

[English]

Against that background, with our renewed focus on the importance of economic development in Ottawa, I would like to emphasize the vital economic importance of the Ottawa International Airport to the City of Ottawa. The airport is usually the first and last place a traveller sees when visiting the city. More often than not, it is the place where the first impression is made.

Ottawa's ability to compete on the world stage and attract and retain business, investment opportunities, major events, conferences and tourists requires that this airport be impressive, modern, functional and convenient.

As the Ottawa International Airport Authority recently celebrated its fifteenth anniversary, it was honoured with a series of prestigious awards by the Airports Council International. Earlier this month, the council named Ottawa International Airport the number one airport of all sizes in North America, and the number two airport in the world serving between 2 million and 5 million passengers annually. Both are significant recognitions.

In recent years, the Ottawa International Airport Authority had added new routes, increased passenger volumes and cargo handling facilities and undergone major facility upgrades, all the while maintaining itself as a secure, efficient, and cost-effective organization that receives no subsidies from government.

[Translation]

However, for Ottawa, the airport is much more than an attractive access point for people and goods; it is a major public asset, a large employer and a land developer, in addition to being a powerful stimulus for and an essential driver of local economic growth.

[English]

The airport is responsive to the community, invests private money in infrastructure that serves and supports the community and is an integral component of our economic development.

The airport authority has a strong governance structure and has developed and continues to cultivate positive relationships with the organizations that appoint or nominate to its board, including the City of Ottawa.

I would like to share a few facts to underline the integral importance of the Ottawa airport to the city of Ottawa.

In 2011, the airport authority injected $1.1 billion into the local economy. When indirect and induced impacts are included, the total economic impact of the airport exceeded $2.2 billion. Ottawa airport activities generate approximately one quarter of a billion dollars in taxes for all three levels of government.

The airport employs approximately 5,000 people directly and another 5,400 are indirectly employed as a result of its operations. The 5,000 people directly employed earn approximately $271 million dollars in labour income.

Based on traffic forecast and estimates of growth in employment over the next five years by organizations at the airport, there will be between 6,300 and 6,600 direct FTEs of employment at the airport, generating between $1.4 billion and $1.7 billion in economic output by 2017. By 2030, it is estimated there will be between 8,400 and 8,800 direct FTEs generating between $1.9 billion and $2.2 billion in direct output.

Between 2006 and 2010, passenger traffic at the airport grew by 17.5 per cent, or an average annual rate of 4.1 per cent. This is double the average growth among the eight largest airports in Canada. In 2011, passenger traffic grew by a further 3.4 per cent.

It is estimated that 45 per cent of the passengers are business travellers. Aircraft traffic at the airport grew by 18.4 per cent between 2006 and 2010, for an average annual rate of 4.3 per cent.

As a land developer, the airport has begun to develop its surrounding employment lands. Recent examples include hotels, restaurants, a retail complex, and a new CE centre, a world-class convention and trade show space on Uplands Drive that, since its opening, has attracted many high profile events.

The City of Ottawa invested $8.5 million in this $39 million public-private partnership with the Ottawa International Airport Authority and the Shenkman Corporation. It has created the largest purpose-built events space in eastern Ontario, has created 600 direct and indirect jobs, and it is expected to inject $30 million annually into the local economy.

In 2011, the airport served 4.6 million passengers and supported 91,000 commercial aircraft movements, confirming the strength of the local market and the airport's continuing status as an attractive option for carriers and passengers.

There are approximately 150 organizations operating at the airport, including the airport authority, commercial operators, both aviation and non-aviation, and government agencies.

[Translation]

All of these achievements and recognitions are remarkable and significant for the airport's administration. They are also very important for the City of Ottawa and its residents. That is why we want Ottawa's airport to continue to grow and prosper.

[English]

In addition to facilitating access for the tourism industry, our local economy depends on the airport to conduct business and sustain and grow targeted sectors such as clean tech, photonics and life sciences.

These are all reasons why the City of Ottawa and the Ottawa Macdonald-Cartier International Airport have recently collaborated on developing a shared vision that recognizes the critical role of our world class award-winning airport as a catalyst for economic growth and includes a commitment for us to go forward together as partners. This shared vision will go before council in two weeks and was recently approved by a committee of council. It is intended to guide how the city and the airport can work together to stimulate economic growth and optimize contributions to employment and economy.

Some of the objectives of this vision include stimulating and targeting economic growth, international business and foreign investment in key industries and commerce; attracting major events and conventions; strategically developing employment lands with a focus on attracting small, medium and large multinational companies; proactively identifying route expansion opportunities and targeted geographic regions; and augmenting Ottawa's exports.

The city and a viable, profitable and competitive airport must work together through a collaborative partnership to enhance economic development. If this collaboration does not happen, we face a series of possible risks: The loss of domestic and international travel connections and the ability to stimulate tourism; a weakened ability to compete for global services and new routes; increased competition from neighbouring airports; a restricted ability to stimulate economic growth and develop employment opportunities; increased vulnerability to an economic downturn; and the inability to become a globally competitive city.

[Translation]

Honorable senators, the City of Ottawa is highly interested in supporting an industry and a safe Canadian air transportation system that are healthy and competitive, as well as the free and efficient flow of people and goods through its airport.

[English]

At this point, on behalf of Mayor Jim Watson and the people of the city of Ottawa, I would like to thank Mr. Paul Benoit, President and CEO of the Ottawa International Airport. He announced today that after 16 years at the helm, he will be retiring in February.

As the mayor noted today, he has been a tremendous catalyst for change at the Ottawa airport, and under his leadership the airport has become the best in North America and a global leader that drives economic and tourism growth in the nation's capital. We are grateful to Paul for the vision, leadership and energy he has brought to the Ottawa International Airport.

I thank you for the opportunity to speak to you this evening.

The Chair: Thank you. As the audience can see and hear, the scope of our study is well represented in front of us today when we have different issues and problems between these two airports. That makes our job that much more of a challenge.

[Translation]

Senator Boisvenu: Mr. Desroches, please congratulate the people of Ottawa's airport. I think they won a prize last year for being the number one airport?

Mr. Desroches: That is correct.

Senator Boisvenu: Bravo. I will speak to Mr. Clements first. Can you hear the interpreter?

Mr. Clements: Yes.

Senator Boisvenu: I think you have quite a problem.

[English]

Mr. Clements: I am out of retirement for the third time, now.

[Translation]

Senator Boisvenu: How much will have to be invested to expand Fort McMurray's airport?

[English]

Mr. Clements: I did not hear the translation but I think you asked how much the project would be. The project is $258 million total. We as an airport authority have borrowed $198 million. We cannot borrow another dollar. We are leveraged to the maximum and that is why we are coming to the municipality, and to the provincial and federal government. Our appeal to the federal government is to extend our runway; the runway is too short. However, we could not afford to do that given all the other requirements.

The municipality has participated already with $25 million. That will help with civil works. We had the build it on the other side of the runway. We could not expand in place. No one imagined we would ever have this kind of traffic.

[Translation]

Senator Boisvenu: I suppose it is a region that will continue to grow. Will you have to do more work in five or ten years? How long will the expansion meet your needs?

[English]

Mr. Clements: This kind of decision happens about every 25 years. You need to have after 50-year vision when building this kind of facility.

Therefore, when my board sat down to look at the financial challenge of doing what they needed to do, they wanted to be assured, through a third-party analysis, of the kind of growth projected. Four separate studies were done, and they assumed a medium line that was conservative. The more likely outcome in the oil sands is that it will be aggressive. The indication price of oil and the investments that have been announced in the last couple of years will take us from 1.6 million barrels a day coming out of the oil sands to 2.5 million barrels a day, guaranteed. Air traffic exists in direct correlation to the investment in the oil sands.

We are pretty safe in making the projection of 2.5 per cent growth over 20 years.

[Translation]

Senator Boisvenu: Does your airport qualify for federal government assistance?

[English]

Mr. Clements: We do not qualify for the Airports Capital Assistance Program, ACAP, because the threshold is too low.

The big airports are fine on their own. I ran one for 10 years and we did not ask for any money.

Senator Boisvenu: You are in the middle.

Mr. Clements: The smaller ones are also fine. We are caught in the middle, along with another dozen airports. I asked for a redefinition of the ACAP so this kind of critical infrastructure could be funded.

Senator Eaton: When you are talking about 17 airports around you, most of them owned by the oil companies, could they not be coerced or gently persuaded that it is in their interest to have a large, well-turned-out international airport facility and to give you some money and consolidate everything into one big international airport?

Mr. Clements: Two of my board members are oil sands executives and one of them built one of those airports. It is a togetherness thing, I am happy to say. The communication and cooperation is evident to me. They agreed to help fund this study to identify the things we need to do going forward to make the whole system of airports more efficient, more effective and safer.

Senator Eaton: I am sure our present Prime Minister wants Northern Gateway to happen, and if Keystone happens, you will be very busy.

I would have thought it is in their interest to help finance a big international airport.

Mr. Clements: Their primary interest is in their own companies. They built those airports because they did not have the infrastructure to get their workers into the work area in an efficient way.

They are huge companies with lots of money. Building an airport is not cheap but they built a number of them.

[Translation]

Senator Boisvenu: Mr. Clements, your airport is not considered an international airport, but rather a regional airport. Are your fees higher than those of an international airport? Will expanding lead you to review your users' fees?

[English]

Mr. Clements: Unfortunately, our user fees are high; given the amount of traffic and the amount of money we have had to borrow, we lead the nation at $30 of the AIF — each passenger leaving has to pay $30. We did not want to go there but we had to and we had to also raise the airline rates and parking charges. It is the nature of the business model. If we can get some help, we will be able to lower those rates and charges, which will make us more competitive.

The international airport issue is not one of costs so much as providing a service to 50,000 people who live in Fort McMurray who think that they deserve to fly directly into the United States or Mexico, just like they do in so many other parts of Canada.

[Translation]

Senator Verner: Mr. Clements, you say that the user fees are much higher because you are a regional airport. Do you think that is one of the reasons why private companies working in Fort McMurray have their own airports?

[English]

Mr. Clements: No, that is not the reason at all. It is purely a question of time is money, and the transportation infrastructure to get into these difficult areas makes it very advantageous fly in.

[Translation]

Senator Verner: I have to say I am aware of the issue because my son works in Alberta and he travels to Fort McMurray every week.

Senator Boisvenu: I have a question for Mr. Desroches. You seem to know Ottawa's airport well. I would like to know what type of relationships there are between the City of Ottawa and the administrators of Ottawa's airport. Are they business relations?

Mr. Desroches: Currently, two representatives of the City of Ottawa are members of the board of directors. We just approved an agreement to work jointly with the airport. As you know, the success of the airport will depend on its collaboration with the City of Ottawa on emergency services, public transit and planning services, among others. That is why we have a partnership agreement with the airport. Many services provided by the City of Ottawa are very important for the airport.

[English]

Senator Greene: This question is for Mr. Clements. You appear to want to join the National Airports System, but a number of witnesses have given us testimony about their complaints about how the system operates, particularly in the area of rents.

Could you outline the benefits for you of being part of that system and talk about those rents?

Mr. Clements: I will avoid the question of rent because it has been well covered. I lobbied very hard to reduce the amount of rent when I was in Edmonton and we were successful.

We will leave it there. I think the federal government is taking too much money out of the system.

Senator Greene: We would like to hear about that.

Mr. Clements: I will go there, but I will answer the other part of your question first. The reason we would like to be part of a redefined National Airports System is because the country should have one and it should be clear what qualifications you need to become part of a recognized National Airports System.

Airport number 15 in a critical economic area like Fort McMurray obviously will make whatever the parameters are, but the way it is designed, we cannot get in. It is a land management system. In looking again at something called a National Airports System, let us redefine the qualifications, assign the airports to it and then define the obligations and benefits of the National Airports System.

One of the big benefits is clarity on taxation.

There is a special act called the Airport Transfer (Miscellaneous Matters) Act, which covers a number of things, such as the Official Languages Act, acknowledging that there is a rent situation as well, but it says, for CRA, all of your airport revenues are tax exempt.

We are not in that club, so we are going to be in front of CRA without that benefit and hopefully convince them that we are not-for-profit, which we are, and therefore exempt under the separate act of the Income Tax Act. It would be better and much clearer to treat airport number 15 in Canada the same as airport number 26.

Senator Greene: Could you explain in point form why your current situation puts you at a disadvantage?

Mr. Clements: We transferred from a municipal model, a municipally owned airport, to kind of a federal model, an airport authority model, and that model has worked so well.

We heard from one airport, Ottawa, how they have done, but I can assure you, since I ran the Edmonton airport for 10 years, that it is just as good there. It is just as good in Calgary, Vancouver and Montreal. Everywhere where the airport authority model has been exercised, the economic benefit and benefits to the customers and the users have been tremendous. We are the envy of the world in terms of the airport authority model.

The benefit of going to that model is that it is run like a business. You know the model. The board is independent and totally accountable for all their decisions and that works much better than a government system.

Senator Greene: Part of that model is high rents, which get transferred to consumers.

Mr. Clements: In 1999, when the airport had only 102,000 people and was kind of out of sight, and so many other airports like it, the land was transferred for a dollar to the municipal government. For 10 years, I had to run it as a municipal entity. They transferred the land to us for one dollar, so rent is a moot question because we own the land.

Senator Greene: I understand. You want to become part of the National Airports System but maintain your position with rents as a dollar.

Mr. Clements: We do not want the redefined National Airports System to be a land management system. Keep that separate.

Senator Greene: I understand where you are coming from.

Senator Eaton: I was in Fort McMurray in the early 1970s and it was a lot of ATCO trailers.

Mr. Clements: There have been big changes.

Senator Eaton: I would have thought that given the importance of Fort McMurray and the airport to Canada, and especially to the province of Alberta, that the province would have given you any money you need to keep on building your infrastructure. For instance, are you linked by rail or bus lines out of Fort McMurray?

Mr. Clements: The province is involved in this project.

Senator Eaton: What is the percentage that they are involved?

Mr. Clements: What I am asking the province to do, since we have built the project inside the fence, we have $25 million of help from the municipality, we want the province to pay for the off-site levies that will come to us because they had to build a sewer line to the airport, a new water line; they have to change the roadway structure. Normally, as a developer, we would be assessed our share of those levies. We are asking them in this particular case, as it would make economic sense since we are going to have a hard time raising the money.

Senator Eaton: I do not think you are being greedy enough.

Mr. Clements: Thank you. I think they agree with you. It is not easy to get public money in support of a project like this.

Senator Eaton: I could not agree with you more. Here, in the centre of Canada, we hear nothing but, and I firmly believe in the importance of Alberta to the economic future of this country. I have trouble thinking that Premier Redford or whoever will win your next election will not see Fort McMurray as something important.

Mr. Clements: I have spoken with the premier personally and many of the ministers. They absolutely agree with you. There is a 40-year framework of development of infrastructure called the Comprehensive Regional Infrastructure Sustainability Plan — CRISP — that is approved by cabinet in Alberta. It has no money attached to it yet, but they have formed a transportation coordination committee with the two key deputy ministers, infrastructure and transportation. I sit on it representing air transportation. The chief administration officer of the municipality sits on it. We have in one meeting identified the spending and priorities for the first five years. Those will be taken to the Treasury Board once the election is done.

They are serious. In addition to that, since 2005, $2.5 billion has gone into the Fort McMurray region from both the federal government and the provincial government over and above what the municipality could do on its own — new sewage, water, bridges, roads, schools, fire halls, prisons, everything. They just forgot about the airport.

Senator Eaton: When you talk about a regional tiered network, should it have something specific? One of the things we have been thinking about on this committee is that the National Airports System encompasses everything from Toronto International to the airport I land in to go fishing in Labrador, which has the same security regulations.

Perhaps the larger airports should be one system and the smaller airports with fewer passengers a different system.

Mr. Clements: In a redefined system, that is exactly what you would come up with. It is a tier 1, with the parameters to join that, and a tier 2 and maybe a tier 3 as well. As I say, it is a misnomer to call those 26 airports a National Airports System when it is just a land management tool.

Senator Eaton: If you have any thoughts, would you submit them to our committee as to what you would see in tier 1, 2 and 3? I do not want to give you extra work, but as you already think about transportation and obviously understand airports thoroughly, it would help in our deliberations if you could recommend something.

Mr. Clements: Transport Canada has already defined tier 1 and tier 2, and it is unrelated to the National Airports System. Then there is tier "other." Actually, Fort McMurray has not graduated from tier "other" to tier 2 yet. We have grown so fast that we have lagged in terms of that analysis.

Senator Eaton: Let us hope you get that.

Senator Merchant: Thank you for your presentations. My questions will also be directed to Mr. Clements.

I was in and out of Fort McMurray 25 years ago, so I am sure things have changed since then. I am sure it is not the same airport I knew back then. That was in the mid-1980s.

We have heard from a lot of airports, and they all have similar complaints. You said half of the people going in and out are flown around by the big oil companies. By my arithmetic, you would get about 2,000 people coming through every day because you said you have 750,000 people in total 365 days a year.

You have seven different airlines, I believe, coming into your airport. Are these airlines competing against one another or are they flying from different parts of the country?

Mr. Clements: With the deregulation of airlines, they all compete, absolutely, both in charters and scheduled service. They will fly into the airports up North and they will fly into our airport. WestJet is involved; Air Canada is involved. There are many charters, such as Canadian North, which has a major part of its business in doing this. That is good for them. They are doing good business up there.

Senator Merchant: Are the fares competitive? We have heard about a lack of competition.

Mr. Clements: The fares at Fort McMurray suffer from a competitiveness issue. Without WestJet having a regional service, they have one size aircraft, so they can only serve us when it makes sense to them. Air Canada, of course, with the broad spectrum of aircraft they have, is able to have the majority of the market. On shift change days and weekends, the fares skyrocket. They do not have the capacity.

As we grow bigger, there will be more competition and the fares should start to lower, particularly with the announcement that WestJet will be getting into the regional service business. That will benefit our community, just as it will benefit many communities our size in Canada.

Senator Merchant: You also spoke about surcharges. When you fly the smaller airlines like Transwest Air, flying from Regina, let us say, to Saskatoon — I am from Regina — you bypass all security lineups. It is very attractive to fly small airlines.

Mr. Clements: Indeed, that is true. The oil companies have their own security, and they like it, obviously. However, I think Transport Canada is looking at that. I know they are, especially when they are in larger airplanes.

Senator Merchant: Of the 2,000 passengers that come through your airport, they are not the workers that go to the —

Mr. Clements: Some are.

Senator Merchant: Some are?

Mr. Clements: Yes.

Senator Merchant: Where would they come from as opposed to those who come through with special arrangements?

Mr. Clements: I am told Suncor is the fourth largest airline in Canada. They are in the aviation business in a major way and have reorganized to recognize that. They have 45,000 passengers per year coming to our terminal, and they are mainly from Calgary and Edmonton, but mainly Calgary. Syncrude has two flights a day back and forth to Calgary and Edmonton, and they have had that for 30 years. They also fly up to Mildred Lake.

There is a significant amount of traffic identified on charters. In addition to that, I do not know the actual percentage of scheduled traffic that would be workers, but I have flown the routes many times, and these people look like workers to me; they are very identifiable.

Senator Mercer: Mr. Clements, Senator Greene, Senator MacDonald, Senator Doyle and I know your airport very well; it is the second largest airport in Nova Scotia and Newfoundland and Labrador and a number of our friends and neighbours and constituents work there.

I find it interesting that we have 17 other airports in the area and they seem to have unregulated, uncontrolled airspace, using procedural control in an area this heavy. Those are your words. It seems to me Senator Eaton has a point; you have to get a bigger solution in here to fix this problem. It seems that one of the easier fixes would be to impose some regulation on the air traffic in the community.

Would it make more sense to have these other airlines landing at Fort McMurray and then either via chopper or some other means ferry the people out to the various sites from Fort McMurray? If we imposed that on them, it would drive more traffic into your airport. It would also drive more interest in your infrastructure into the minds of the companies that are affected.

Mr. Clements: The oil companies would object, obviously, very strongly to that. That kind of regulation is a slippery slope.

Rather than go that route, we should identify the ways we can actually see the aircraft and make the control of the aircraft safer. In the outcome of this study that is ongoing, which is led by the Government of Alberta, we will identify parameters under which new airports will or will not be built.

In addition to that, this crisp Comprehensive Regional Infrastructure Sustainability Plan, once funded, will drive ground transport right by the airport up into the work area, and once that happens, it will make the economics of flying in and flying out a lot less attractive. That will take some years, but the wheels are in motion.

Senator Mercer: Mr. Desroches, my colleagues would be disappointed if I did not ask questions of someone representing the City of Ottawa airport. I wish Mr. Benoit well in his next endeavours. I for one will miss our exchanges of emails, sometimes very late at night.

I did a little project before I came here tonight. I did a Google Maps search of five different locations in Ottawa: Ottawa City Hall; the former Nortel site, which will now be National Defence headquarters out in the Moodie Drive area; Parliament Hill, which is an important one for us; the Orléans shopping centre, which is another location; and then Scotiabank Place. I searched the transport from there to the Ottawa airport just to see what Google did for me. Google did exactly what I thought it would do. It drove all the traffic on to Bronson and the Airport Parkway. The one from Orléans was a slightly different route from the others. Cities like Vancouver and Winnipeg have a problem with their airports because to get from the airport downtown — Vancouver is a good example because it is one of the largest airports and busiest airports — you have you to drive through residential streets. In Winnipeg, you have to drive through residential and industrial streets to get to downtown.

The difference is that all of those are four-lane streets. All of these roads Google sent me on — if I were to take their route, which I do — would force me into a two-lane problem at Hunt Club. The City of Ottawa, in its wisdom, is building a pedestrian overpass over the highway. I have lived in and around this city since about 1995. I do not remember seeing more than three dozen pedestrians on that road. I would have thought that the City of Ottawa would have done something a little more imaginative, like twinning the rest of the road to the airport, since you allowed the construction of the CE Centre. It is that building that we all see when we get to the airport, off to the right. It is a major centre for business shows and some entertainment things. It has not happened to me yet; however, I am waiting for the day when I am on the way to the airport, and the traffic is tied up because of people getting in and out of there, meaning that I cannot get there. What are the plans of the City of Ottawa to rectify this problem, and what are the long-term plans with respect to moving traffic from the airport not just Parliament Hill but also to other parts of the National Capital Region?

Mr. Desroches: Thank you for the question. It is something that I am concerned about as well, as my constituency is in the south of Ottawa.

I do not disagree with you that the Airport Parkway needs to be upgraded to accommodate not only the airport but also the tremendous residential growth that we are seeing in south Ottawa. I am a strong advocate for upgrades to that road as well as to the entire road network in the south end so that it can carry some of the residential traffic and not have it further add to the congestion reaching the airport. We also, of course, have to invest in transit. This is a council that has been making transit investments. As you know, we are poised to build a significant LRT project through the downtown core, from Tunney's Pasture to Blair. We looking at an option of extending the O-Train from the South Keys area, where it goes now, to Leitrim and into the residential areas in the south, with the goal of not necessarily serving the airport but of taking some of that residential congestion and trying to direct transportation needs to public transit.

I agree with you; that is a project that we need to consider when we move into updating our transportation master plan, which we will do starting in 2013. I know many councillors will be making a case that we need to make upgrades to the Airport Parkway. The pedestrian bridge that you have seen under construction is really aimed at connecting a community that does not have access to our rapid transit system at South Keys and Greenboro, the Hunt Club and Brookfield area. You can imagine the large number of people who live in that community and really have limited access to the southwest transitway.

The pedestrian bridge is consistent with our goal of trying to create a transit-friendly city to take some of the pressure off of our road network. It is a piece of the puzzle, but it is certainly time that the parkway be upgraded and widened so that it can accommodate both the airport and the residential traffic that we are seeing in the south of Ottawa.

Senator Mercer: In my question, I may have emphasized leaving Ottawa. In my previous lives, I have spent a lot of time coming to Ottawa. One of the conveniences that I always enjoyed in business was to be able to fly into Ottawa early in the morning, get downtown, do my business, and then, if I chose, go home to wherever I was living at the time. That cannot happen any more in Ottawa because of the traffic coming into the city. I do not take an early flight from Halifax anymore because I know that I cannot guarantee that I will make my early morning meeting. I have to come in the night before if I have an early morning meeting. I wanted to make sure you understood that I was not just talking about finding a quick way to get out of the city. I would like to find a quick way to get into the city so that I can conduct my business. My wife was in the high-tech business in this city for 12 years, and it was always an issue for them to get people from the airport in and out of town.

Now that Mr. Benoit is leaving, I assume there will be a search. Is there a timeline? I understand it is early days.

Mr. Desroches: Unfortunately, I do not know what the timeline would be for that. It was an announcement made today, which I think caught some of us by surprise. We are grateful for his work. As you know, the airport is an independent authority, and I expect that they will find a replacement that will ensure that the airport continues to succeed.

Senator MacDonald: My questions are for City Hall. It is great to have City Hall at the table. I had two questions. I really only have one now because Senator Mercer spoke to something I always noticed in regard to the access to the city. This is the national capital of the country. It is a beautiful airport. We fly a lot; we fly all over the world. We have been in a lot of airports. Most Canadian major airports are beautiful, but this airport should have beautiful and efficient approaches to it. It does not. Getting from the airport is part of transportation, too. I want to emphasize what Senator Mercer raised.

As for the second question I have, the more you travel and experience different things, the more you reflect on your own service. I want to speak about taxi service to the airport. I am not denigrating people who work hard for a living. They put a lot of time in; I know that. It is not a great job; it is a difficult job. However, you can flip a coin sometimes as to whether that car is going to rattle all the way in or be filthy. Not all are, but many are. I cannot get over how many airports I have been to around the world where, no matter who is being picked up by a taxi, it is a Volvo or a Mercedes or a BMW, and you can eat off the floors. People come to Ottawa, and they do not have that service. I mean, I assume that most of that, in terms of the taxi service and the licensing, is controlled by City Hall. What plans does City Hall have to get a higher quality taxi service at the airport?

Mr. Desroches: Thank you for your questions. To answer your first question, I agree with you completely that we need to ensure that we have good, reliable, and timely access to the airport, so I will certainly be one — and there will be other councillors — who will be advocating for improvements to the Airport Parkway and to the other road network in south Ottawa so that we can accommodate the residential growth that we are seeing. Obviously, transit has to be part of that equation, and we are looking at options there.

With respect to the taxi industry, it is regulated by the City of Ottawa. We have made some progress over the years. I moved here in 1988, and both the airport and the taxi industry were not what we see today. We rely, as I said in my remarks, on tourism, and, obviously, the experience that someone has with a taxi — the impression that is formed — is one that reflects on the city and on the nation's capital.

I will take your feedback, senator so that when we are looking at the standards and reviewing our bylaws around that we are considering the impression that it has on the tourism industry and on the business community.

Senator MacDonald: It is the national capital. We are an advanced country. We should have the option of the best of service at the airport.

Mr. Desroches: I agree with you. We have made some progress to require a modern and safe fleet as well as courteous drivers. Again, I certainly would counsel you and any resident of the City of Ottawa, if they are unhappy with the service they receive, to report it to the City; and we will make sure that there is an investigation. This is why we are working so closely with the airport. This is why we have set up this framework with the airport — an agreement on cooperation and collaboration. They are independent but there are so many services that we regulate or provide that we need to make sure the airport has a voice and that we are responding to their needs. Certainly, that is one of them — the taxi industry and how it serves the airport.

Senator Eaton: This is a commentary. I would disagree strongly with my two colleagues. I think we are so lucky. I can get into a taxi at quarter to four and get to the airport at 5 or 10 minutes past four. I think we are so lucky. In the major capitals of world, such as London and Paris, it takes an hour or more to get to the airport. In Montreal it takes 40 minutes and in Toronto it takes half an hour at rush hour, if I am lucky. Ottawa is wonderful for airport access. I am sorry; I disagree because my experience is very different from those two.

The Chair: The chair does not often participate in the question period. but I would have to disagree with Senator Eaton and agree with my two colleagues. It is not the time it takes — sometimes it does take 15 minutes. However, when you plan for 15 minutes and it takes 45 minutes, you might miss your flight. If I were to poll the committee, you would probably be in a minority, but I would not want to do that at this time.

I have a supplementary on taxis, which have improved. The committee visited the airport, as you know, a few months ago. There were remarks made about the taxi accommodations when you come out of the airport. There is traffic and a bundle of people, and there is no discipline to get them cabs. There are two cabs and they leave, and you have to wait to get the other cabs. There has been improvement, but we were told there would be some structural changes made to the front of the airport so that you could have basically two lineups and increase the flow. Have there been any negotiations with the city on that?

Mr. Desroches: In terms of the layout and the organization of the airport, that would be a decision of the Ottawa International Airport. I am certainly prepared to take back to them that there continues to be concerns about that. The city's role would be in terms of the regulation of the industry and the provisions of licence. The organization of the airport in terms of how they pick up or drop off passengers would fall under their purview; and I am happy to take those comments back.

Senator Unger: Mr. Clements, my comments are for you. You were in charge of building the Edmonton International Airport. As an Edmontonian, I feel it was somewhat at the expense of Edmonton's historical municipal airport. Are you making any attempt to utilize the Edmonton airport, at least temporarily, until your funding issues are resolved?

Mr. Clements: You know how sticky that question is for me.

Senator Unger: It is sticky for me.

Mr. Clements: In my 10 years of working for the board of Edmonton airports and the appointers of the board, I followed the direction that ensued from a referendum that you will remember in 1995, when 77 per cent of Edmontonians voted to consolidate all commercial traffic at the international airport, and run the downtown airport as best we could. For the ten years I was there, I did exactly that.

Now that I have left, am I free to express an opinion? Absolutely, but it has not changed. It was the right decision by Edmontonians, and ultimately Albertans, to convert that property to a dream, which City Council is now doing, and to take away what was harming Edmonton traffic for a long time — splitting traffic in a small city, compared to Chicago or New York that need two airports. Splitting traffic is anathema to economic development. It is a density business. If you can put all your traffic in one place, you will have much better air service. You can you see that that has indeed happened in Edmonton.

I was responsible for building a new terminal that would handle under 6 million passengers, but we got to 6 million 10 years earlier than we had planned; and it has expanded dramatically again. I do not think any of that would have happened without that critical vote in 1995. Are we using it in the interim? I flew into there a couple of times from Fort McMurray, and I loved the convenience. Who would not? That was not the issue. I guess it was the issue for people flying into Edmonton. Edmontonians own the airport. They voted clearly to do what they have done to it, and I agree with them.

Senator Unger: Actually, there were two referendums. Some argue that a referendum was held until there were two answers; however, that is another issue.

You say that that Fort McMurray is the fifteenth busiest airport. Where does Edmonton rank?

Mr. Clements: Edmonton is fifth, after Toronto, Vancouver, Montreal, Calgary.

Senator Unger: Of the 17 airports in the municipality and region, are you including Edmonton?

Mr. Clements: No. That is just in the municipality and, by the region, just outside the municipality — in other words, where the oil companies are working.

[Translation]

Senator Boisvenu: I flew to Toronto recently and I was surprised to see few security agents, as opposed to the situation in Montreal's airport. If there are many, they are very discreet.

Do you have a lot of vehicle and baggage theft, which was the case in Montreal in the 1990s or 2000s? Do you have the same problem in Ottawa?

Mr. Desroches: Not to my knowledge. It is not a problem I have heard of. It has not happened to me or my neighbours. As you know, the security service is provided by the Ottawa Police. They have a contract with the airport for these services.

Senator Boisvenu: Inside as well?

Mr. Desroches: Yes, inside. I have been a councillor since 2006 and I have never heard of problems with airport security.

Senator Verner: I would like to put another question to Mr. Clements. I imagine that one of your wildest dreams would be to have a luxury taxi problem at Fort McMurray's airport. I imagine that would be a nice problem you would like to manage one day.

We know that many workers go through Fort McMurray's airport to head to construction sites. These workers bring with them equipment that is, obviously, highly specialized, and so forth. Does ensuring that everything travels safely and that everything is handled with care generate additional costs for Fort McMurray's airport?

[English]

Mr. Clements: Yes. CATSA screens you when you go on board. It is not surprising the kinds of things that they find on the workers trying to fly out of Fort McMurray. We do not have to buy any tools or wrenches — it is just amazing what they will try to bring on the aircraft. They arrive sometimes four hours ahead after being dumped off by a bus. They have all their kit with them, but they forget to put the bad stuff in the other bag.

I do not think it is any extra cost to us, but I would comment on taxis. At its first meeting, my board decided what they want it to be. They said, "We want you to be the best regional airport in Canada." I said, "Gulp; we are a long ways from that."

That is their vision and I tested them on it to ensure that they understood what they told me to do. Taxi service is not in that category. I know the Ottawa situation and the situation in Fort McMurray. Happily, we are working closely with a chief administrative officer and council on changing the bylaw so that it is enforceable and a high standard. Airports have major contracts with taxis, and the leaders downtown all want the same thing — a higher standard of taxi cabs.

The Chair: Thank you Mr. Clements and Mr. Desroches, and pass along our best to Mr. Benoit. We have changed our terms of reference because we will be tabling the report a little later than planned. We will probably add taxi service to airlines and airports in our terms of reference because it is a topic that has come up before.

Our next meeting will be Tuesday, March 27. On behalf of the Canadian Airports Council, we will hear from Marilynne Day-Linton, Chair of Greater Toronto Airports Authority.

[Translation]

We will hear from Réal Raymond, Chair of the Board of Aéroport de Montréal.

[English]

We will also hear from Mary Jordan, Chair of Vancouver Airport Authority. Thank you very much. See you next week.

(The committee adjourned.)