Transport Committee on June 13th, 2024

[Monette Pasher]

It's obviously the role of carriers to service our country, but our airports represent communities. What we do to support air service development is work with carriers and provide incentives to try to attract more air service to communities. We work with provincial governments. Many of our airports are municipal airports, and we're working with municipal airports. We're working with the federal government. Part of our role as airports across this country is to represent our communities and to advocate and push and develop the air service that's required, working with all partners. It's something we're very passionate about.

Certainly with the pandemic and the postpandemic recovery, there's been a challenge in regional and rural connectivity. As a system, we're back to about 100% this year in terms of passenger traffic, but there have been a lot of shifts. We're seeing larger aircraft and less frequency, and our regional airports are suffering.

Some of our smaller airports are at 70%, some 50%, some 30%. We've seen some dramatic market shifts: Airports that used to have over 10 flights a day are down to two or three. This impacts communities. Frequency is certainly a concern in rural and remote areas, as well as the cost of flying. That's something that we hear, being community entities. We're very close to our communities and we hear about this often.

We're working with premiers and we're working closely with all areas of government to try to develop the air service that Canadians require.

[Annie Koutrakis, Liberal, Vimy, QC]

Do I understand correctly that your organization does take part in advocating to extend routes or add routes when they are cut?

[Monette Pasher]

The airports do, yes. Our airports certainly play that role in advocating for their communities, and I'm here representing our airports as the advocacy voice for all of our airports across the country.

[Annie Koutrakis, Liberal, Vimy, QC]

Are you aware of whether the airports are consulted when routes are being added or cut?

[Monette Pasher]

Yes, our airports work quite closely with carriers, and of course when a route is being cut, they are spoken to. I think those are commercial decisions that carriers need to make, because they're operating a business, but yes, they do consult with their partners and certainly advise them of the decision that's been made.

[Annie Koutrakis, Liberal, Vimy, QC]

Earlier, when we had the Transport Canada officials testifying in the first hour, Mr. Bijimine, I believe, was the one who said that they are looking to various jurisdictions around the world to see what they are doing to combat lack of competition and connectivity in rural and northern areas.

In the U.S., there's been a program in place since the late 1970s, when the airline industry was deregulated. Under the essential air service program and under the Department of Transportation, they currently subsidize air carriers to serve approximately 60 communities in Alaska and 115 communities in 48 states. In your opinion, should the Government of Canada subsidize air service to rural, remote and northern regions the same way this program does in the U.S.?

[Monette Pasher]

Thanks for the question.

Our colleagues in the U.S. say this program works well for communities. It's certainly something we've been asking for.

The essential air service program in the U.S. is funded at $368 million now. It has increased over three times since the eighties. It's a subsidy based on a revenue guarantee, the route and the aircraft type, and they RFP that.

I think that any way we can work with carriers and communities to support these regions that rely on essential service and have no other forms of service or have very little is very important to our network and the fabric of our communities across this country. I definitely think this is a program worth investigating further.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Koutrakis.

Thank you, Ms. Pasher.

Mr. Barsalou‑Duval, you now have the floor for five minutes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

Thank you to the witnesses for being with us today.

I'm very excited to speak with Mr. Lemieux. My fellow member Sébastien Lemire told me about something new in the world of regional air carriers, which work hard to serve people in regions.

Propair developed the co-chartering platform Edgard, which Mr. Lemieux talked about in his opening remarks. I want to follow up on that, because I think it's important for everyone to really understand what the platform does.

The platform makes it possible to share charter flights, which we are very used to taking. The system uses new technology to open up available seats on a charter flight to other people interested in taking the flight, while making it possible for companies to share the cost, and providing better connectivity and better regional service.

I think that's amazing. It's a revolutionary idea. However, you mentioned in your opening remarks, Mr. Lemieux, that only companies have access to the flights and that regulatory changes are needed to make them available to everyone.

What kinds of changes are we talking about?

[Justin Lemieux]

Thank you for your question.

The air passenger protection regulations wouldn't necessarily need to be changed, but exemptions would need to be added to the regulations.

The reason we work solely with companies and their employees is to ensure that charterers, the ones that charter the flights, retain the benefit of the charter flight. That's what I was getting at in my opening remarks.

To show what would have to happen in order to make the service available to the public, I'll give you a very simple scenario.

Let's say someone doesn't have a job because of poor health and has to travel outside the region where they live. Currently, the regulations prevent us from offering that person a seat on a co-chartered flight. However, if an exemption were added to section 4.1 of the air passenger protection regulations, that person could choose the type and conditions of carriage that suited them.

If you're interested, my entire team and I would be glad to provide you with an official document on the regulations that would need an exemption so that we could make our charter flights available to the public.

Currently, those are the regulations that apply when a seat not on a co-chartered business-to-business flight is sold to an individual.

A company that charters a private flight doesn't want to open itself up to penalties, if I can call them that. The company doesn't want to have to compensate passengers if it changes the flight itinerary in response to its own needs—the whole reason it chartered the flight.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

I see.

What you would need, then, is an exemption from the air passenger protection regulations for charter flights.

Do I have that right?

[Justin Lemieux]

That is right.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

We'll have to see what other groups think about that, but it's worth looking into, at the very least. What a fascinating idea.

You also said that the financial viability of launching a new air link service was problematic, that the company would be taking a risk. You mentioned that a subsidy program could be helpful to fill empty seats, at least for air link service start-ups. It would be similar to the regional air access program the Quebec government introduced during the pandemic. The federal government brought in a similar program during the pandemic, but it was only for places that are not connected by road.

If the government did introduce a program like that, should it be limited to places without road access, or should it be available to remote regions as well? I'm talking about regions that are far from major urban centres but that are connected by road.

[Justin Lemieux]

I think that even if remote regions can be accessed by road, they certainly need government support and subsidy programs like those.

I'm going to reuse the example I just gave.

In Rouyn‑Noranda, where I live and where our company is based, people have to drive six to eight hours to get to Montreal. Anyone who has to see a medical specialist usually has to go to a major urban centre.

With the current level of service available through a major carrier, someone has to leave at least three days early to get to their appointment. They have to leave in the middle of the day and stay overnight in a hotel. They can't do the return trip in one day.

If support programs were in place, companies based in regions would be able to provide those air link services.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

I don't have much time left, so I'll ask you just one last question. A short answer would be appreciated.

Do you think the user-pay model works for regions? Is that the way to go, or should we look for other ways to help regions?

[Justin Lemieux]

I think we need to look for other ways to help regions. We actually found a way to help them with our Edgard application.

If I can have a few more minutes, I can tell you about it.

[The Chair, Liberal, Peter Schiefke]

You can have 20 seconds, Mr. Lemieux.

[Justin Lemieux]

I'll do my best.

We brought together 25 companies in the region, and they invested in a fund to charter their own planes. They took matters into their own hands to get the service they needed. Monday to Friday, there's a return flight to a major centre in the Montreal area.

Yes, there are other options. The big companies need to be involved in those decisions. Even though the companies want to help their communities and open up those seats to people, they can't under the current regulations, unfortunately. All they can do is make them available to businesses and their employees.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Barsalou‑Duval.

Can you tell us more about that, Mr. Lemieux? How do the current regulations prevent them from doing that?

[Justin Lemieux]

I have to watch what I say.

Actually, it's still possible. The problem, however, is this: If the company chartering the flight sells seats to members of the public, it is on the hook for passenger compensation if the flight is cancelled. These big companies charter flights for their employees' travel needs. If there's an issue with the weather, which happens everywhere up north, the company may decide to cancel the flight, even if the organization paid for a service provided by the carrier.

Under the current regulations, if tickets for those seats had been sold to members of the public, the carrier and the company that chartered the flight would be required to compensate those passengers. They would also be required to book them on another flight.

[The Chair, Liberal, Peter Schiefke]

I see.

Thank you, Mr. Lemieux.

Finally for today, we have Mr. Bachrach.

The floor is yours. You have five minutes, sir.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thank you to both of our witnesses. I'm glad you had a chance to share your thoughts with the committee.

Mr. Lemieux, I understand your company is a charter service that provides medevac services, but I'm wondering if you can describe the situation when it comes to competition in your region. I know it's a rural region. It's probably similar to the one I represent.

Are the communities in your region served by multiple large airlines when it comes to scheduled service to larger hubs?

[Justin Lemieux]

No, not currently.

Other carriers serve the Rouyn‑Noranda region, like Air Creebec, in Val d'Or. When it comes to Rouyn‑Noranda, the city, in Abitibi‑Témiscamingue, only Air Canada offers a daily return flight, in the middle of the day. It's the only carrier. That was the carrier I was referring to earlier.

As I just said, thanks to the program we created with other organizations, a link between Rouyn‑Noranda and Montreal is now available, Monday to Friday, morning and evening.

Small carriers have tried in the past, including our company. Some carriers tried launching services in cities like ours, in regions, but 90% of the time, a major carrier I won't name opted to offer the service at a rock-bottom price until the competition disappeared. That's what happens in a lot of regions.

That's why I said in my opening remarks that it would be good to have a joint program with governments to offset the losses associated with launching a new service. When a new service is launched, take-up hinges on people's developing a new habit, so they need to see the quality of the service being made available.

If we just had a program that helped new services launch and offset their losses, it would help us show people who need those services that regional carriers can provide quality service.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you for that. It sounds like a situation very similar to what we experience in northwest B.C., and it is certainly consistent with what we've heard from other witnesses from rural areas: It's difficult to compete with large airlines that are able to use their size and their market dominance to force out smaller players.

Ms. Pasher, I was very interested to hear about the U.S. model. I believe it's called the essential air service program. It almost hearkens back to the time before deregulation, when smaller regional routes were licensed to specific carriers by the federal government, and there were conditions based on service to those communities.

Of course, there's a certain amount of subsidy in this case to allow those carriers to make a business case, but it also ensures that they're providing an adequate level of service for those communities.

I'm wondering if any party submitted the U.S. Department of Transportation as a potential witness to share more information about that program.

[The Chair, Liberal, Peter Schiefke]

The answer is no.