[Recorded by Electronic Apparatus]

Tuesday, April 16, 1996

.0937

[English]

The Chairman: Welcome.

I should make a couple of opening comments. I note the department has not given up death by briefing. There was a concern about the timing with which these arrived. I've spoken to people in the department. We would like to ensure that two weeks before we start hearings we have these in members' hands.

Mr. Mulder, are you going to begin or is Mr. Gauvin?

Mr. Nick Mulder (Deputy Minister of Transport): Thank you. Mr. Chairman and members, we are definitely pleased to be here because we think this is a very important piece of legislation.

Before I go on, Mr. Chairman, I do want to apologize for the fact that the documentation arrived late. I know that you and some of the members expressed concern about that. The attempt was made to give you so much material that it took too long to put together. As you can probably tell from the book, the clause-by-clause analysis is a relatively small part of it. A lot of other stuff is background data and information that will be useful later on. You do have our apologies, but the fact is that in order to be comprehensive we were too slow in responding to it. If we can help rectify that over the next few days by elaborating on some of the information, or whatever, we stand ready to do so.

With your concurrence, I thought I would just make a few brief opening comments and then turn it over to Paul Gauvin, who will take you through the highlights of the legislation. We hope that will be done in about 15 minutes or so between the two of us. I know that previously you expressed concern about the amount of time, so we hope we'll have more time available for questions and answers.

.0940

The people here with me are

[Translation]

Daniel Paris, our human resources specialist and Paul Gauvin, our Assistant Deputy Minister.

[English]

I should say ``senior'' assistant deputy minister. He's been doing a number of tasks, particularly in the capacity of chief negotiator. He did all the day-to-day slugging and negotiating with NAV CANADA and all the other players to get it done. To his right is Gord Wilson, who is our specialist in developing all the legislation. He knows every word in every clause. At least he says he does. He should be able to answer any of the technical questions.

I'd like to highlight just four main points. One is that this is an essential part of the government's drive to change the role of the department in transportation, to get out of operations and to focus on policy and safety and security. The decision that we should not be involved in day-to-day operations to a very large extent for airports, ports, air navigation systems and other functions was made by cabinet about two years ago. This is by far the biggest element and it's the biggest commercialization initiative that we have undertaken in the Government of Canada. Through that we had to set a number of precedents, which we think are sound ones, but we'll leave it to the committee to see whether we have everything right.

Second, we think this benefits a number of players. It certainly benefits the air transportation industry. They'll have more capacity to respond to changes as required and they'll be faster in adapting because they won't have to live with as many complicated rules. We think it will benefit the travellers because we'll continue to have a safe system and over time a more up-to-date and more responsive one as well, without adding additional costs.

The employees stand to gain from this, because not only do they have job security for the short term, they also work in a new environment that will allow them to play a more effective role. We also think the taxpayers benefit, because one of the successes of this deal is that we generated $1.5 billion for the Minister of Finance. But that isn't why we did it, Mr. Chairman. We did not start off in order to look for money for the Minister of Finance. We started off for the first three reasons: to make a more responsive, more effective, more user-friendly system and therefore benefit the transportation system at large.

Finally, we are protecting the public at large in four areas through this deal while we have gone out of our way to give NAV CANADA the scope to get on with the job and to minimize the number of restrictions.

We've protected certain safeguards in legislation. The first is safety. We, not NAV CANADA, will very much be in charge of safety. We will have the safety regulations and make sure that they meet safety requirements. We've also protected the public at large in a number of cases where some people think that NAV CANADA should perhaps not have ultimate authority. For example, that relates to the north, to humanitarian and emergency flights, to issues such as unjustified user charges and so on.

As Mr. Gauvin and Mr. Wilson will indicate, we've made sure that while NAV CANADA should have scope to get on with it, in certain cases the public at large should be protected from any potential abuse of monopoly power. Those issues are all built into the legislation.

I'll now turn it over to my colleague in the department, a fellow New Brunswicker from Moncton, Paul Gauvin.

The Chairman: I should also say one thing regarding the discussion about the time limit. We'll give you a little flexibility because it's the first time. You have an hour and a half for the whole session.

Mr. Mulder: I realize that, but we thought we'd minimize the presentation and allow more exploration of the ideas and the issues through the questions and answers.

Mr. Paul Gauvin (Senior Assistant Deputy Minister and Chief Negotiator, ANS Commercialization, Department of Transport): Mr. Chairman, the clerk is distributing a very small deck, which is a very summarized version of what I was going to say this morning. As Mr. Mulder suggested, we have a lot of material and should you have any questions or comments in the future we have still more we could provide to you. I would like to just go over some of the highlights in terms of what this deal is.

We're talking about the commercialization of the civil air navigation system. It includes responsibility for the management of all Canadian air space and international air space over the north Atlantic delegated by the International Civil Aviation Organization, or ICAO. There are 6.8 million aircraft movements involved. That's a 1994 figure. The organizations involve 6,400 employees, including seven area control centres, 44 towers, 86 flight service stations, and a whole network of electronic navigation aids.

.0945

In terms of events, I won't go through all the dates, but we started this task in February 1994, when it was announced in the federal budget that there was the intention to review the potential to commercialize the air navigation system. Then the next big event was a year later in February 1995, when it was agreed that we would, after doing some consultation and discussion with a number of groups, follow through and attempt to commercialize the air navigation system. It was also decided at that time that it would be through a non-profit, non-share-capital corporation.

The next key date was December 8, 1995. We signed an agreement in principle at that time with Transport, NAV CANADA, in terms of agreeing to what the price would be, which is $1.5 billion net.

The next key date was on April 1, 1996, when we signed the agreement to transfer, which is basically all the documentation supporting this deal.

April 16, 1996, was obviously a very key date. It was the first meeting with the standing committee.

The functions to be commercialized include: all air traffic services; technical services, which is the maintenance and the engineering supporting this activity; all systems requirements, including the planning and the procedures; and aeronautical information, including our training institute at Cornwall, the Transport Canada Training Institute.

It also includes a proportion of support services, because in the past, air navigation was part of Transport, as were a number of other activities, including the coast guard and airports. As a result of that, support activities were centralized. So what we had to do was take a proportion of finance and administration and personnel to make this entity whole.

The rationale for commercialization is a key element of the government's streamlining and resource reduction, which is a major part of overall government strategy. But that wasn't the real reason. The real reason was driven by the needs of the users. They were looking for more a efficient, responsive and affordable service.

We think that outside the government environment, they can adapt more quickly to areas of technology and operational requirements. While the operation of the system will be outside government, government will continue to focus on standards and safety.

As I mentioned, it's a not-for-profit entity. There have been extensive consultations with the industry, unions, users and other stakeholders. We did that mainly in 1994. We looked at a number of models. Then we eventually got down to three: a crown corporation; a mixed enterprise, which will include private and public; and then a not-for-profit corporation, which is what we chose as a model in the end.

The not-for-profit corporation is called NAV CANADA. It was incorporated in May 1995. It will be financially self-sufficient. It's expected to operated certainly as a cost-recoverable public utility to commercial business, with profits reinvested to fund capital, new technology and R and D, and to reduce debt or reduce user fees.

NAV CANADA has articles of incorporation and by-laws, which were approved by the Minister of Transport. The changes to key articles and by-laws required the Minister of Transport's consent. This includes areas in governance, accountability and the structure of the board of directors. It requires mandatory consultation and transparency of information on changes in user charges, facilities and levels of service.

.0950

The nature of the NAV CANADA organization is that it's not for profit, as I mentioned. It doesn't have any share capital whatsoever. It represents a wide range on the board, which offers safeguards against abuse of the monopoly power, we believe.

The board of directors of NAV CANADA has fifteen members: five are appointed by the users, two by the unions, three by the government, there are four independents, and there's a chief executive officer.

The user-appointed directors come by the largest national association of air carriers, which is currently the Air Transport Association of Canada, ATAC, and the largest association of business aircraft operators, the Canadian Business Aircraft Association, or CBAA.

National associations have members from all parts of the country. ATAC's membership is drawn from carriers of all sizes across the country. The by-laws of NAV CANADA require consultation with bona fide regional air carrier associations in the appointment of the four air carrier directors.

The deal itself is that the government will sell, lease or otherwise transfer all the ANS property and assets that are used by Transport in providing ANS. That includes lands, buildings, electronic systems, aircraft, and existing agreements, including CAATS, chattels and intellectual property. NAV CANADA will assume all obligations and liabilities related to those assets.

All employees in support of ANS, approximately 6,400 of them, will be offered employment with NAV CANADA with equivalent benefits. There are no financial guarantees provided by the government. So this is a sale, and once the sale is done, there are no additional guarantees by the government.

As for the price, as I mentioned, the value of the asset was originally estimated, with financial advisers, meaning Nesbitt Burns, at approximately $1.3 billion gross in November 1994. Since that time, there's been considerable improvement in this activity. The revenues have gone up through the air transportation tax. We've also introduced overflight fees, which will bring in approximately $160 million a year. Also, there's been a significant amount of operating efficiencies through lower overtime and other things.

On December 8, 1995, we signed an agreement with NAV CANADA, as we said. We agreed on a price of $1.5 billion net for the assets, which equates to approximately $1.8 billion gross to $1.9 billion gross. That's because in addition to paying the government $1.5 billion in a cheque, NAV CANADA will also be responsible for accumulated employee benefits that are on the books, such as overtime, sick leave, and outstanding grievances. They will not charge for state military aircraft flying over the country from other countries. They will also pay for all adjustment costs, such as early retirement or early departure incentives, which would normally be paid by the government if this had remained a government entity.

The instrument of transfer includes an agreement to transfer. This sets out the terms and conditions and has a large number of appendices and schedules, which includes all the assets and employees.

Also, there's obviously the legislation. In addition to the Civil Air Navigation Services Commercialization Act, there's also the Aeronautics Act.

As for the Aeronautics Act, obviously, safety will be ensured through that act. Part VIII of the Canadian aviation regulations will address the provisions of the civil air navigation services. Regulations will be in effect prior to the transfer of ANS.

Bill C-20 establishes the supremacy of the Aeronautics Act. Nothing in Bill C-20 affects the application of the Aeronautics Act. Changes in facilities and services will be subject to the Aeronautics Act, as well as any regulations made under that act that relate to aviation safety or the safety of the public, and amendments to the Aeronautics Act to authorize a minister to make an enforcement order to maintain or increase civil air navigation service.

The legislation itself is organized into a number of sections, such as definitions and interpretations, transfer arrangements, provision of services, and charges. There's a fairly large section on human resources and labour relations, services to humanitarian and emergency flights, control and enforcement, a general section, financial arrangements, and consequential and conditional legislative amendments.

.0955

About definitions and interpretations, NAV CANADA is defined as the ANS corporation. So whenever we see ANS ``Corporation'' in the bill it refers to NAV CANADA.

There's a clause on transfer arrangements. There's a clause on provision of services. NAV CANADA is obligated to take over all civil air navigation services provided by Transport Canada and to provide these services to the same extent. While NAV CANADA can make changes to these services, it will be required to follow a process whenever such changes are considered by its board to affect a significant user or group of users in a material way. Such changes include introduction or increase in services, termination or decrease in services, and closing or relocating facilities.

Changes may be implemented sixty days after public notice, subject to the satisfaction of the minister that safety is being maintained. Safety will be ensured by regulations pursuant to the Aeronautics Act. The minister may request an aeronautical study to show that service changes will not negatively affect safety. The minister may also direct NAV CANADA to maintain existing services or introduce or increase services in the interest of safety. The negislation includes consequential amendments to the Aeronautics Act.

NAV CANADA has a monopoly on certain services, subject to a limited number of exceptions. It has a monopoly on air traffic control services, flight information services, and aeronautical information services. The most significant is that DND will continue to provide the full range of air navigation services for its own purposes.

NAV CANADA is designated to ICAO as a Canadian authority for air traffic services and aeronautical information. NAV CANADA may plan and manage the use of airspace subject to the Governor in Council's right under the Aeronautics Act to make regulations on the classification and use of airspace.

NAV CANADA's technical and operational standards for the provision of navigational aids may be included by reference in regulations by the minister. There will also be regulations to establish minimum insurance requirements for the provider.

On slide 27 we have a list of designated northern and remote services that are established prior to transfer. Provincial and territorial governments were consulted on that list. If termination or reduction of services on this list is likely to affect a significant group of users or residents in a material way, the change can only be made if agreement is reached with all affected provinces and territories and users accounting for more than two-thirds of the associated revenues. If such an agreement is not obtained, NAV CANADA may seek approval of the minister, and it will be up to the minister to decide, about the inclusion of the impact on residents and the criteria for determining the materiality and recognition of the importance of air transportation to communities in remote parts of the country.

NAV CANADA will establish and publish levels-of-service policies. The Governor in Council may direct NAV CANADA to provide services for northern and remote communities, if there were others to be added to the list, in the interests of national security or pursuant to international agreements. NAV CANADA would be eligible for financial compensation in the first two cases. If it's international agreements it would not.

NAV CANADA may impose charges for the availability or provision of service. DND aircraft would be exempt from charges. In return, the Minister of National Defence would allow NAV CANADA to impose charges for services provided by DND. Foreign-state aircraft would be exempt unless otherwise directed by governor in council.

The charges must observe a set of principles. The charging principles provide for the protection of the users. NAV CANADA may impose the same charges as Transport Canada has in the past.

.1000

Notice must be given to all interested individuals or groups. Notice must invite representations. Having considered all representations, NAV CAN may announce its decision not less than sixty days after giving public notice. Charges may be implemented not less than ten days after such public announcement. Implementation charges may be different from charges initially proposed, provided it generates no more revenue.

Users may appeal. There's an appeal mechanism, and it's the National Transportation Agency. The appeal process is expeditious and tightly defined. The appeal may be made on grounds of charging principles. Refunds may be given by way of credits on future invoices. The potential for roll-backs and refunds provides a strong incentive for NAV CANADA to observe charging principles.

The agency must make a decision within sixty days. An additional thirty days can be used in special circumstances. Decisions of the agency are final and binding, although a judicial review remains a possibility.

NAV CANADA may seek the minister's approval of new or revised charges in the first two years, without appeal, to provide greater certainty of revenue flows in the critical early years. The minister will make a decision based on conformity with the charging principles. Owners and operators of aircraft are jointly and severally liable for payment of charges. NAV CANADA has the power to seize and detain aircraft for non-payment of charges.

In terms of HR and labour relations, employees transferring to NAV CAN cease to be public servants at the time of transfer. Anyone who rejects employment with NAV CANADA ceases to be a public servant after six months of being designated. Our workforce adjustment directives, that is, early departure and early retirement incentives, do not apply to designated employees.

The collective agreements and arbitral awards are continued and remain in force until expiration. NAV CANADA assumes the role of the employer in the case of the grievance, conciliation and arbitration. For purposes of the Canada Labour Code, employment of transferred employees is deemed to be continuous, and organizations certified as bargaining agents under the Public Service Staff Relations Act are deemed to be certified under the Canada Labour Code.

Employees will be entitled to severance pay upon transfer, and that's because they're ceasing to be public servants. However, whatever they get in severance pay on transfer they will not get when they leave NAV CAN. They will only get the time of service from the time they start with NAV CAN.

In the event of work stoppage, NAV CANADA will be required to provide necessary services for humanitarian and emergency flights. NAV CANADA unions must enter into an emergency support agreement. Where the agreement is not reached within ninety days before expiration of the collective agreement, a mediator or arbitrator will be appointed with the power to conclude an emergency support agreement.

As to control and enforcement, there are two types of sanctions: applications to a superior court or to a province for an order, and summary convictions and fines.

Finally, the Official Languages Act will apply to NAV CAN as if it were a government department. Government departments may enter agreements with NAV CANADA to provide the types of service they provide to other government departments and agencies. An example of that would be if the Department of Supply and Services wanted to prepare their payroll, especially for the first couple of years, they would be entitled to do so.

In terms of financial arrangements, the minister may enter into an agreement with NAV CAN to provide payments to NAV CAN during a transition period. That's covered in the act. That could cover a total of $1.44 billion, which is approximately the amount we would have received from the air transportation tax. The reason we have put that in is NAV CANADA may not be able to bring in its user fees quickly enough to get started.

Finally, in terms of consequential amendments, there will be some required to the Excise Tax Act because the air transportation tax will be totally eliminated after two years.

.1005

Also, amendments to the Aeronautics Act will be required to authorize the minister to make and enforce an order to NAV CANADA to provide services for reasons of safety, to authorize the minister to make regulations in respect of minimum insurance requirements and to relinquish the Minister of Transport's and the Minister of National Defence's authority to charge for services being transferred to NAV CAN.

Finally, a couple of consequential amendments will be required in this act if Bill C-14, the Canada Transportation Act, is passed before this act. We'll also need a bill to replace the Statutory Instruments Act if Bill C-14 is passed before this particular act.

That is a quick overview of how we arrived at this arrangement and a bit on the legislation.

Thank you, Mr. Chair.

The Chairman: That was quick and remarkably thorough.

Mr. Crête.

[Translation]

Mr. Crête (Kamouraska - Rivière-du-Loup): Thank you for your presentation. The document is very clear and very specific. I find it quite interesting.

I'd like you to give us some quick overview of how things will work concretely when NAV CANADA has taken control and we're at a stage where decisions will have to be made about regional and local airports, for example, or installations where you have air traffic monitoring.

Through what process could a province or users have input on a decision to decrease the number of installations available at a given airport or even to cut off services all together?

In the same vein, what will happen to employees when their job isn't protected any more, after the two year period?

Third, you said something about a list of northern area services becoming accessible. Would it be possible to get that list while our committee is still reviewing the question and before the bill is passed?

Mr. Gauvin: To answer the first part of your question, I'd say that NAV CANADA will have to work like a private business. If they want to make changes in some airports, they'll probably first be a consultation process that will have to be published. At the end of the day, if the Department of Transport decides that safety won't be affected, the changes will be made.

Mr. Crête: That means that the economic and regional stakeholders won't necessarily be involved in the decision.

Mr. Gauvin: No, not necessarily.

As for the employees, at the outset, the company will need all its employees because they'll have to set up the organization. As time goes by, if they see they can save money because they need fewer employees then they'll be free to lay people off just as the government is doing today.

However, the programs offered by the government, early retirement incentives and early departure incentives will be enforced at NAV CANADA. The company has accepted to maintain exactly the same programs the government has today with a view to helping employees when layoffs occur.

What was your third question about?

Mr. Crête: The list of services in the northern areas.

Mr. Gauvin: We have that list and we can give it to you. We will send it to the committee. Actually, I think it's in the document.

Mr. Crête: It's in the document. I'm sorry, I haven't had time yet to... Thank you.

[English]

The Chairman: Mr. Gouk.

Mr. Gouk (Kootenay West - Revelstoke): Thank you, Mr. Chairman.

I do have quite a few questions on this, so I'll try to take them in order, and as we hopefully come back around, I'll deal with the others.

There's one I want to jump right into. In this big document I got last night there's a section called ``Financing the Deal'', which is section L within part 4. In it you talk about how NAV CANADA has to come up with a $1.5 billion certified cheque on transfer day. Some of the things that have been talked about are that they are going to go to a public issue, that they are going to make or sell bonds, and that the public or investors are going to be able to buy these bonds.

.1010

In keeping with that, could you tell me first of all the amount that Transport Canada or the government is transferring to NAV CANADA for accrued pension benefits to date with the employees who are transferring? Approximately how much is that?

Mr. Gauvin: We're still working on that, but the figure very approximately is about $1.3 billion.

Mr. Gouk: I would assume that once they get this money they're going to have to invest it in order to raise interest, in order to make it a self-fulfilling, self-carrying plan. Would they be allowed to buy NAV CANADA bonds with that pension fund?

Mr. Gauvin: We believe there is something under the pension regulations or pension legislation that would not enable Canada to use that money to buy NAV CANADA.

Mr. Gouk: Are you saying that you believe there is or that there is?

Mr. Gauvin: There is.

Mr. Gouk: Okay. That makes a big difference. Thank you.

I'd like to move next to labour disputes, dealing primarily with clauses 73 and 74, commencing on page 38 of the document. The plan put forward by the department in this documentation is very contrary to Transport Canada's present plan. Presently, in the event of a strike air traffic controllers report to work and do the same job they always did. They're technically on strike, but they still go in and they still provide all the duties.

Now, in 1971 air traffic control went on strike for the first and last time. That one was ended by back to work legislation in a legislated settlement. It was in fact so devastating that the next time there was a threat of a strike, they were legislated back to work before they got out because of the catastrophic effect of the 1971 strike. Subsequent to that they have had this new ruling that the government's list of designated employees in the event of a strike includes everybody who works there, and the duties include everything they do.

Are you telling me that you are now going back to a system that will be pre-1971, or certainly pre-designation of this new rule that came out, and that in the event of a labour dispute we could in fact have a full-blown shutdown of the aviation transportation system in this country?

Mr. Daniel Paris (Senior Negotiator, Personnel, ANS Negotiating Team, Department of Transport): In the legislation there is a proviso for emergency services during a time of strike. That is a different model from the one that existed in 1971. To answer your question, it's different from a post-decision of the Supreme Court in 1982 that allowed the department to provide the services. So there could be a strike activity in terms of economic impact, but it would not affect the humanitarian and essential services for air traffic. It would be different in that sense.

Mr. Gouk: In the earlier days that included aircraft in distress, emergency flights, flights gathering supplies to northern communities, and military flights on air defence exercise or actual operations. Could you tell me what is different in the current model?

Mr. Paris: Previously the definitions were not in the legislation. Right now they have to come up with a list of what those essential services are. The process is quite different from what it was, but its effect will be similar; it will maintain those essential services. We will have to see how it comes out in terms of services because it would be a negotiation of what would be the essential services, but they have to respect the principles. The principles are in the legislation. That's different from the set-up that existed in 1971.

Mr. Gouk: Notwithstanding the fact that it's maybe written out in legislation now, that was what they provided in 1971. What you're telling me, sort of, is that what we're going to have now is no different from what we had then, except now it will be spelled out. It will be spelled out that they must provide the things that they did in fact actually provide in 1971 during that strike.

Mr. Paris: Well, it's just probably my knowledge of exactly what was provided. I want to know exactly what services were provided. I understand there were some that were maintained, but the current list or what's in the legislation should cover broadly the principles of maintaining the emergency services.

.1015

Yes, there could be a strike affecting a flight that is not an emergency service.

Mr. Gouk: We know that the strike was devastating in 1971, and in fact we're now much more heavily dependent on air transportation as a transport mode for business and for the economy of this country. We know that we depend on it much more heavily now, and consequently we know that we're not going to permit a strike to continue for any length of time. We end dock workers strikes by legislation and we end rail strikes - we have within this term of Parliament - by legislation. The interesting thing is that if we happen to be in recess and there's a call back to legislate the air traffic controllers back to work, all MPs are going to have trouble getting here, particularly those in the west and the east.

Mr. Mulder: We'll still have the trains.

Mr. Gouk: Interesting.

Mr. Mulder: More seriously, NAV CANADA falls under the Canada Labour Code, so the government has certain powers to ask for arbitration and negotiation on all these.

As you probably know, Mr. Gagliano, the Minister of Labour, is looking at Part I of the Canada Labour Code to see whether or not for all industries, including those in the federal regulation in transportation - so it includes NAV CANADA - the government should have more powers to deal with essential services in order to speed up negotiations or to facilitate arbitration or to get some binding arbitration. NAV CANADA, when it's out there as a not-for-profit entity, will fall under that and will be treated like the railroads and the airlines, etc. - if there is a strike, you're right.

Mr. Fontana: This is a rather unique set-up. It's a not-for-profit organization that includes board members from the controllers and employee groups. Therefore the employees are in fact owners of this corporation. That's like nothing else that you can point to historically.

I hope that, given the fact that the employees are owners of their own company, they will take to the table a view of an employer-employee relationship very different from the traditional view.

The Chairman: I didn't hear a question in that, Joe.

Mr. Fontana: It was in the interest of highlighting that point.

Mr. Jordan (Leeds - Grenville): There's always a feeling when the government is moving out of an area that is a basic service such as this and turning the responsibility over to another group. I think Canadians traditionally have taken a certain solace and a certain confidence in the fact that the government is running it so our interests will be looked after.

I'm concerned about the provision of services to remote communities when profit is the motive. There's a tendency - and I think we've seen this in certain remote areas - to say, gee, that would be expensive to serve, so let's try to be not too committed to that area.

You have certain things spelled out in here. You stated that there is an awareness on your part that that could be a problem. I'm not sure if that's reassuring enough.

The feeling of the Canadian public right now is that the government is sort of abandoning them to the private sector. They haven't had great experiences with private sectors looking after their interests. When profit will be the only determinant, won't you be in a constant battle to determine what's a basic service and what's serving your remote community and what's in the interests of nation-building? What provision is in there in good, strong terms to suggest...?

You say that a certain majority of users are in favour. I think it's two-thirds. What about the one-third, though, who are Canadians too and are paying the shot in other ways to be served in remote communities?

Just how forceful do you think the government is going to be if NAV CANADA decides that it is going to attempt to cut back because something is not being very profitable? That threat is always going to be there. Indeed, it's there with postal services, rail services, and anything else.

.1020

I think you really have to spell it out in very clear and concise terms that at no point could you ever visualize that nation-building isn't one of your prime priorities, and you have to build that into the price when they're buying it: now look, you have some responsibility here to all Canadians.

I just want to make very sure you're aren't getting into the idea of ``let's unload it and then we'll sort it out later''. I'd rather see it stipulated in very broad and basic terms, or guidelines, that this should never ever be tolerated or abandoned. In the most remote areas, at least the level of service to which they're now accustomed has to be maintained.

Mr. Mulder: Mr. Chairman, I could turn it over to Gordon Wilson, but before I do so, I think the member has an excellent point. We have certainly recognized that. At least we like to think so.

Over a year and a half we've been dealing with this issue to ensure that something special is done for the northern and remote areas of the country. We've had extensive negotiations with the provinces, the users and community groups, and the territorial governments on that. What's in the legislation is a result of all that. It recognizes the fact that in northern and remote areas the issue of the technical level of service may not be sufficient. Gordon Wilson will indicate that. I want to stress that what we think we've come up with is the result of that consultation, but also NAV CANADA has been very supportive of making sure we do have some special orientation towards the north and the remote areas.

Gordon could go into the processes we have to do it. I want to stress that on page 27 of the deck it states that we even have special powers for the minister. If there's no agreement, the Minister of Transportation may even step in and do something and seek approval.

Mr. Gordon Wilson (Legislative Specialist, ANS Negotiating Team, Department of Transport): The normal process for a change in service, either a termination or a material reduction in sevice, is one in which there's a notice and an opportunity for all interested parties to comment but at the end of the day NAV CANADA makes that decision. But clauses 18 to 22 of the legislation specially recognize the service to northern and remote communities in a number of ways.

The first is that whereas elsewhere in the country the requirement to file as public notice and invite representations applies to changes that would affect a significant group of users in a material way. The language is different for the northern and remote. It says ``a significant group of users or residents''. That language was intended to indicate that there was a special interest in these parts of the country; that the role of air transportation was that much greater there.

So first there's that opportunity. Then there's the point we discussed of how whereas in other parts of the country it's NAV CANADA's decision, subject to the requirement of safety, when it comes to northern and remote there's the opportunity for a province or a territory to say they don't agree, as well as the quota of users that was previously mentioned.

Then, of course, there is the opportunity that if NAV CANADA stills feels it should be able to change the service, it can go to the minister. But then the minister has an opportunity to say no, that service should be continued.

I would also add that the list of services that appears in the reference binder is quite extensive. It is not limited to sites and services north of 60 degrees. It does include services in seven of the ten provinces. So it's a fairly extensive list.

The Chairman: Mr. Crête.

[Translation]

Mr. Crête: Still about the northern installations, if I'm to go by the answer you've given, that the decisions will be made only based on economic aspects except for the safety side then one could come to the conclusion that the board of directors will be made up only of representatives from our largest national carriers.

.1025

There won't be any representatives from the northern communities or any other communities to defend regional economic interests. So we could wind up in a situation where NAV CANADA interests are more in sync with broader national interests without there really being any other... So the door is opened to safety disappearing in some airports.

For example, on your list I see that some airports are designated as being northern ones. On the other hand, others are not like the airport at Sept-Îles and Mont-Joli and there must be others like them sprinkled across Canada.

Two, three, four or five years down the road we might wind up with NAV CANADA making decisions with serious economic impact.

If there's not at least one seat on the board of directors to discuss points other than safety, then we'll be... I like the example of Canada Post. The risk is of winding up in this area with what happened at Canada Post seven or eight years ago with the whole thing resulting in a moratorium.

So does this give a true idea of the kind of decisions that might be made?

Mr. Mulder: Mr. Chairman, may I answer in English?

The Chairman: Of course.

Mr. Mulder: I'm married to a francophone, but I'm often told that I speak French like a dutch cow.

Mr. Crête: These days English cows are a bad example.

Mr. Mulder: I was born in Holland.

[English]

The issue - and Gordon Wilson might elaborate in more detail - the member raised is rather fundamental and it will come up several times. It's the membership of the board of directors. As Paul Gauvin outlined, the five user representatives have to be done in consultation with the overall airline industry, with all the representatives, through ATAC and other organizations in the aviation industry. Therefore, the outcome has been to date... We think the same thing will happen in the future. It isn't just the major carriers that are represented.

For example, currently one of the representatives is the former head of AirBC and as you know AirBC operates extensively in the northern parts of British Columbia and into Alberta and the north. So there is representation on the board already from smaller airlines that serve remote areas and certainly the -

[Translation]

Mr. Crête: But it's still the third largest company. I mean, we're not talking about regional or local carriers. We're talking about a fairly large company.

Mr. Mulder: Excuse me, but AirBC is not a national carrier. It's a local and regional carrier.

[English]

The other one is that NAV CANADA has an advisory committee of about fifteen people. This committee includes all of the regional airlines and regional associations. So, for example, Quebec's air transport association is on it, the northern air transport association is represented on it, and the intent is... When the chairman and the president of NAV CANADA show up you can ask them ifthey have extensive consultation and input from this advisory committee that's broadly based and that includes people from the remote areas.

Finally, as Mr. Wilson has indicated, we think we have protected northern remote areas by giving them special treatment. They can't be treated the same way as Montreal or Ottawa would be treated. The Mont-Joli or the Saguenay areas or areas farther north into Quebec will get special treatment.

Is there anything else you want to add, Gordon?

Mr. Wilson: The only thing I'll add is that the membership of the Air Transport Association of Canada is nominating four directors. It is not limited to major national carriers. It extends right from companies like Air Canada and Canadian to third-level carriers and even to flying clubs, so it has broad membership of sizes of carriers and regional distribution.

[Translation]

Mr. Crête: Wouldn't it be a good idea to spell out, in the legislation itself, that board members must have in their ranks, for example, one representative from the very big companies, people from middle sized companies and local representatives so that you don't wind up with the unwelcome surprise of always having people from the major carriers designated as representatives?

Mr. Gauvin: We considered that possibility. At the end of the day, it was decided that four members would be elected by ATAC which represents all companies from everywhere in Canada. It's ranks are made up of small as well as big companies. The decision was that four members would be elected by ATAC.

.1030

Mr. Crête: I figured out that was the decision. I'm only wondering if you think that method affords enough protection for the smaller ones.

Mr. Gauvin: We think so. There are so many companies and groups in Canada that it would be hard to keep in contact with all of those groups. On the basis of numbers, we decided that ATAC represented all those different companies.

[English]

Mr. Mulder: Mr. Chairman, once you start categorizing the nationals, the regionals and the locals, you get general aviation, emergency services, charter airlines, helicopter airlines, big helicopter firms, and small helicopter firms. Once you start categorizing and everybody gets their representatives, we'll have a board of 25 and nothing will ever work. So at some stage, you have to say it would mean more to have a meaningful board and to also get union representation on it, along with some independents. We said we'll leave it to the aviation industry to consult as to who should be representative from the industry on the board. But as I said, if you go too far, when do you stop?

[Translation]

Mr. Crête: Thank you.

[English]

The Chairman: Mr. Gouk.

Mr. Gouk: I'd like to go back for a moment to the issue notes - in this case section (i), which deals with my old favourite, AWOS, the automated weather observation systems. In this, I understand that Transport will get rid of the 24 AWOS units that are currently owned. It is turning them over not to NAV CANADA, but to Environment Canada. For a period of not less than five years, NAV CANADA will purchase from Environment Canada weather observation information, amongst other things, and Environment Canada will use AWOS.

Put aside for a moment the fact that I think AWOS is a piece of junk and that I have a lot of reasons for saying that - I'll come back just briefly to that. In many airports... I'll use the Kelowna airport as an example because it has AWOS. Presumably Kelowna is one of the sites where Environment Canada will provide observation services to NAV CANADA using AWOS. Kelowna also has air traffic controllers who will be employees of NAV CANADA and who are accredited weather observers.

My question would be why NAV CANADA would want to enter into an agreement, or why it would be reasonable that they should, to purchase information from a piece of equipment that I, for one, say is faulty, even if it can be corrected later, when they in fact have their own personnel whom they already pay and who are accredited to provide those observations for themselves.

Mr. Mulder: Mr. Gouk has raised some very good points. The first thing I want to do is.... You will not get any argument from me that AWOS is less than a success. We've had a lot of successes in Transport Canada over the last four or five years. AWOS is not one of them. We've had our share of problems, but that doesn't mean it's a total failure. It isn't as bad, perhaps, as the member alluded with his choice of words.

Mr. Gouk: It's worse.

Mr. Mulder: No, it's not worse. In a number of cases it does provide regular information quite effectively. There are some big gaps, but it does work in a lot of cases. A lot of basic information is provided continuously.

Secondly, we've identified about six or seven major areas where it doesn't work properly. These include the celometers and clear below ten thousand. As you probably know, since the member keeps track of those issues very effectively, we have a program under way at the Department of the Environment that we started over six months ago to rectify those problems. Tests are being done now. I think that at about eight or nine sites across the country we're running a parallel operation. We're using human weather observation and technical weather observation to see if the solutions we came up with last summer and last fall are working. We will know by June whether or not the changes we've made in the software programming are going to deal with most, if not all, of the issues that were deficiencies in AWOS. Those improvements have been discussed with NAV CANADA, and the member is certainly right in saying that if AWOS is still inefficient, we may have a problem.

As the member indicated, the deal is to have the Department of the Environment provide those services in NAV CANADA. At the same time, certainly air traffic controllers and radio operators and so on who are within NAV CANADA will also have some weather observation roles.

The idea is to make this a joint partnership. The technology from Environment and their weather forecasting and weather information will be a major input, but certainly NAV CANADA will do some itself. They can't, however, have weather observers scattered in all the sites where either we currently have AWOS or propose to have AWOS once we've fixed it.

.1035

Mr. Gouk: What I'm suggesting is, first of all, in sites where they do have their own personnel, even if AWOS worked perfectly - and I won't get into a long debate right now on AWOS itself - why would they want to buy that information from Environment Canada when they have their own accredited people? AWOS only does observations. If you have people there who are certified to provide those observations, why would they be required -

Mr. Mulder: They aren't under obligation to. If they don't need or don't want the observation, they're not obligated to buy it. They can just say they'll take it from 200 sites where AWOS exists, or other Department of Environment information, and from other sites where they have their own information, sufficient for their purposes. They don't have to buy it.

Mr. Gouk: I would just like to confirm one comment you have in here before I move off that subject. At the moment I can't find where it is. I glanced through this last night, because I did get it late.

Transport says AWOS is safe. Did none of the airlines disagree? They are not concerned about the safety of using AWOS? Is that a statement Transportation Canada is making?

I wish I could find it.

Mr. Mulder: To be categorical on all those issues, all the analysis has shown that it's safe to the extent that their deficiency has nothing to do with safety. Also, as the member knows, we have put out notes on this. We have put out detailed information on where, in certain cases, AWOS is less than perfect.

We're dealing with that, but we feel it's not a safety issue. It's an operational issue and it's a lack of information. We tell the pilots when they fly into areas, don't assume in certain conditions AWOS will provide you with everything you might need.

The Chairman: Mr. Fontana.

Mr. Fontana (London East): Mr. Gouk expects perfection out of the system. The fact that AWOS can't detect rain, fog, or clouds is -

Mr. Gouk: Yes, those are inconsequential things -

Mr. Fontana: - inconsequential to the equation, of course.

Mr. Gouk: Clouds, rain, visibility - what the hell, they don't really matter.

Mr. Fontana: We were in Kelowna together, and I think Mr. Gouk has raised some good points. But as I understand it, this corporation will be able to make the decisions that are important to ensure it operates effectively and efficiently, and the government is going to ensure it operates safely for the travelling public.

I know there's a benefit for the government. There's no doubt the government benefits in a number of ways, financially and operationally, from the financial transaction, and the industry itself and the users of the system have demanded this thing for a number of years.

This is rather a unique arrangement that Canada has been able to put in place. I don't think something like this exists in this format anywhere else, where government is at the table to protect the public interest. We appoint three members of the boards of directors. So hopefully while you have legislation and regulation, you also have government representatives on the board of directors who are going to ensure to a certain extent that the public interest is protected. I think that's very important. The fact that you have employees who are going to be there as partners in this venture is also important. You have the users and the operators of the system. This is a rather unique Canadian model, and I think it's going to go a long way.

My question is about the consumer. The industry benefits big time here. I know Mr. Crichton, when we originally started to talk about the benefits to the consumer.... There's no doubt the consumers are really concerned and perturbed about the amount of taxes and costs they have to pay as part of that airline ticket. I know our commitment is to get out of the air transportation tax, which obviously is a big-ticket item to the travelling public. Mr. Crichton, if I'm not mistaken, said over a ten-year period - and maybe I'm wrong - there could potentially be $1 billion worth of accrued benefits ultimately to the user and to the consumer. They're the forgotten party in this. So I'm sure when the department and the minister assessed the benefits for all parties, including the government and the users of the system, they were looking at the consumer also in this whole thing.

I know my colleague Mr. Jordan talked about a profit. Well, the unique nature of a not-for-profit organization is that you had better spend your money either on technology or on services so you can't get taxed on any profits. If there are no profits, you'd want to reinvest. That's the rather unique nature of a not-for-profit corporation.

.1040

So may I ask you, in terms of the users - because I intend to ask the same question of NAV CANADA when they'll be here - what benefits you see in the short, medium, and long terms for the consumers?

Mr. Mulder: You make some very basic points that are very much part of the underlying elements of this legislation.

To deal with some of the points you raise, first, how do we benefit the users and the consumers? The best way we think about is by putting the users more directly in control of providing the services. The aviation community at large will have a big say as to how NAV CANADA is operating the new air navigation system under their control. They will make sure not only that it is up to date technologically and safe, but also that costs are kept to a minimum, because it's the airlines who have to pay for it and in turn they have to reflect in ticket prices the extent to which costs go up. So putting them more in charge of it has a built-in incentive to keep the costs down.

I think it's very much the intent of the NAV CANADA board of directors to make sure that happens. As you said, Mr. Crichton has said that they think that in the long run they can reduce the user charges to the aviation community, which then can be passed on to the people who buy airline tickets.

The other issue, of course, is, as you said, that there's not any profit. To the extent to which there are surpluses in the day-to-day operations, they can put it back. They have three areas in which to do it. First, they have to pay up a longer-term debt. Second, they've got to invest it back into the system. Third, to the extent there's a surplus, presumably they will reduce the user charges to the aviation community.

The third thing - and if you want him to, Paul Gauvin can comment more on this - is that the intent is for the government to phase out the air ticket tax over two years and the new corporation, NAV CANADA, will set up a new set of user charges that will replace the air ticket tax. So they will have a chance to price this in a way they see as being fit, based on consultation with the users and the community at large.

Mr. Fontana: My final question relates to the technology. We've all heard, even recently, about some of the problems the United States are having with their computerization, their air navigation systems, and the tremendous amount of money needed to upgrade. I know that the government was well on its way to the CAATS system to improve that technology.

Do you feel that this vehicle, NAV CANADA, with all of the opportunities and in a sense the being not-for-profit, has a greater opportunity of making sure that technology is at the forefront - in other words, that they will be able to expedite it a lot more quickly than perhaps governments could be, in light of the financial situations in which governments find themselves?

Mr. Mulder: Yes. I think Mr. Fontana again raises a very legitimate point.

I wouldn't want to leave the impression that everything that's done within government is inefficient and ineffective - far from that. But because we're part of the government, we have a set of rules and a set of accountabilities that are different from those in the private sector.

I hate to use the word ``CAATS'', but I'll use it anyway, since the member introduced it. When we develop major systems, we have to deal with made-in-Canada policies, we have to deal with industrial and regional benefits, we have to go through a much more complicated process of bidding, a much more complicated process of managing the system, and so on. That all adds costs and inefficiencies to it, as does changing players over time, and it winds up that on balance the government doesn't do nearly as good a job as the private sector does in managing major system changes. So we think, grosso modo, that NAV CANADA should over the next 10 to 20 years be able to do it better and more effectively than you might be within government.

Mr. Gouk: Maybe I'll try to do a few short ones, just to clear a few areas up.

Referring to the legislation itself, paragraph 35(1)(f), which is on page 17, refers to ``unreasonable or undue''. Could you give me the department's explanation or definition of unreasonable or undue in those circumstances?

Mr. Wilson: That language was taken, in fact, from the objects of NAV CANADA in their letters patent. It is language that clearly has a judgmental factor to it. But the intention there is that any charges that would fundamentally change the role of those sectors of aviation in Canada would be unreasonable or undue if they were set at a level or in a way that would fundamentally change the nature of the role of recreational and private aircraft in Canada.

.1045

Mr. Gouk: Moving to your amendment section of the legislation, there's a part that refers to section 16.1 of the Excise Tax Act and that says ``no tax''. I don't have any doubt that they're referring to the airline ticket tax. I don't have a copy of the Excise Tax Act. Can you tell me whether in the Excise Tax Act where you're amending that, ``no tax'' refers only and specifically to the airline ticket tax? In this case where we say ``no tax'', would that potentially leave us open to say no GST?

Mr. Gauvin: All we're referring to there is the air traffic tax.

Mr. Gouk: I know what's meant. I'm asking if the specific wording is contained in section 16.1 of the Excise Tax Act or if we simply have a miswording there that needs to be corrected to make the intent clear.

Mr. Wilson: My understanding is that the mere reference to tax is language that appears in the Excise Tax Act, and that section deals only with the air transportation tax.

Mr. Gouk: Okay, I just wanted to make sure we were clear on that.

Going to your slide number 32, the last item you have is that the implementation charge may be different from the charge initially proposed, provided that it generates no more revenue. Is it not possible that they could be talking about a $1,000 impact per airline, and they change it in such a way that only airlines that fly on certain days or to certain destinations, for example, are going to pay that and the others aren't?

You have a substantial difference on the input for some sector of the aviation industry, yet you're saying that it won't matter provided that the net revenues are still the same. Does that not create the potential for a problem?

Mr. Wilson: There is no restriction in that text on the nature of the change other than the total revenue. However, all other provisions of this act and the charging principles would apply. There would still be a limitation on the nature of what the revised charge would look like, but it would only be in terms of other provisions in this act.

The motivation for this language was one, however, in which there was a desire to make the consultations with users meaningful, such that after putting out a public notice and consulting with users, if NAV CANADA heard what they considered to be a legitimate suggestion for a change, there would be no discouragement for them to reflect that change. They would have some substantial latitude in which they could reflect the views they heard during consultations without having to go back through the process that might have discouraged them from acting on representations.

Mr. Mulder: Mr. Chairman, could I just elaborate? Mr. Gouk is dealing with a very important clause, the user charges principle. In that clause 35 on page 17, there are other areas that deal with that. NAV CANADA cannot charge differently between domestic and international and between different types of domestic and international carriers. I know your example is hypothetical, but it shouldn't be allowed.

Mr. Gouk: Moving to the bottom of slide 33, I just wanted to question you. You say that the potential rollbacks and refunds provide a strong incentive for NAV CANADA not to introduce a charge that wouldn't be upheld in the first place.

I'm being slightly facetious, but I'd like your comment on this. If they introduce a charge that nets them, say, $2 million in additional revenues that later get rolled back so they have the use of this $2 million, or however much it might be, for a period of up to two years before they have to give it back, is that such a strong disincentive?

Mr. Mulder: There is a provision under paragraph 35(1)(i) on page 18 of the bill that says that you can't generate any more revenue than you need in order to meet current and future financial requirements. I don't know whether $2 million would be deemed that, but if they go too far this way, they're exceeding the limit.

.1050

Mr. Gouk: So it's ultimately rolled back. They get the free use of that money for a period of time and then they give it back.

Mr. Mulder: Yes, I know. But if they do that significantly, I don't know where you draw the line, whether $100,000 is the matter, or whether it's $2 million or $5 million.

Mr. Gouk: More so than the existence of the situation, I was more curious about your comment. One last thing -

The Chairman: We might squeeze one more in.

Mr. Hubbard.

Mr. Hubbard (Miramichi): Thank you, Mr. Chairman. I have a couple of quick points.

As my colleague Mr. Jackson was leaving, he brought up an issue that the papers have picked up on recently about technology, particularly with Pearson Airport in need of some upgrading of equipment.

In terms of the $1.5 billion - and I think some of us from New Brunswick have trouble dealing with those big figures, Mr. Gauvin - it's certainly a lot of money. With the upgrading that might be needed before the takeover by NAV CANADA, who is responsible for that? Or is that a problem that NAV CANADA has to deal with after they take over the system?

In terms of the system generally, we know we have a very safe and secure system, but in other countries there are major problems and we have to compare Canadian methods with those of other countries. Are the conditions here in Canada today top of the line? Are they in need of a lot of investment in the near future? Are we prepared to meet obligations that we have in terms of that? What, in your opinion, is the outcome of this whole process in terms of technology?

Mr. Chairman, I also have to be concerned with these centres. We're led to believe there can be major changes made in terms of the provision of services across the country, that only a few sites might serve the whole nation in the very near future. Being from Atlantic Canada, from the east coast, we have to be concerned that the whole system doesn't move somewhere else. In terms of the future of this system, then, could you make some comments on that?

Mr. Mulder: Those are about four very valid points, Mr. Chairman, and I'll deal with them in order.

Before I do that, I want to echo again that because of the introduction of technology that we've had over the last few years, we've had a few more problems than we should have had, including the one that the member refers to. Recently, because of a power failure, we had a temporary shutdown for about an hour or so at Pearson, which is something we don't want to have happen.

Of the four points that I believe the member raised, one is the upgrading of the equipment. We are currently still responsible for introducing new systems and upgrading the equipment, and we have not diminished in that. We are continuing with the introduction of new computer technology and in managing major contracts such as CAATS and AWOS and various things along those lines. We have not stopped that and we will continue to do it until the day it is turned over to NAV CANADA. We haven't slackened off in that area at all.

Secondly, in terms of Canada versus the U.S. and other countries, we like to think - and most of the experts internationally have agreed - that we have one of the best systems in the world, if not the best. It doesn't mean it's perfect at all times, but on balance we have put more technology into place over the last twenty years, we have had very well trained air traffic controllers, we have provided a very good level of service, and we also have had a very safe system. So ours really stacks up just as well as Eurocontrol does, or the FAA.

As a matter of fact - and this is not because I want us to feel better relatively - the FAA has recently had some problems that show that in some areas. They're doing now what we started to do five or ten years ago. They have their own problems that are unique to the U.S. Congress and to their own way of operating. Again, however, I don't want to stress that we are as good as we might be, because we do have some problems, but on balance we're very good.

In terms of future investments, that's up to NAV CANADA to decide. They have investments to make just to continue with existing systems and the contracts that we have in place, so they have to carry that out. And as Mr. Gouk and some of the members know, technology changes so rapidly that you certainly have to continuously make new investments either in hardware or software or in integrating the various systems. So I'm sure that NAV CANADA in future will have extensive investment requirements just to keep up with day-to-day technology and to reduce costs to the users. For example, they certainly have to deal with integrating between the European and North American system and what you do to facilitate transatlantic flights - and it's the same over the Pacific and various areas like that. So I'm sure they'll continue to have it, but we don't think it's inordinate. It isn't as though we have been disinvesting in our system. We have a pretty good one, but they will continue to have a sizeable program.

.1055

The final question Mr. Hubbard raised was about moving elsewhere. It is again up to NAV CANADA to decide where they want to provide their services. Certainly the issue they will have to deal with over time is whether or not this country continuously needs so many air traffic control towers or flight service stations or area control centres. It's up to them. I assume they will look at this objectively and see where that might be. I have no idea what the impact might be in the long run for the Atlantic region or any other region of the country. That's for them to decide.

Mr. Hubbard: Are the control towers owned by the airports? Are they owned by the -

Mr. Mulder: We are selling, literally, the seven area control centres, including the land. We are leasing the land on which the air traffic control towers are situated, but the air traffic control towers themselves are owned by NAV CANADA. For example, in Moncton they will lease the land where the air traffic control tower is, but they will actually own the facility that's sitting on top of the land. The area control centre in Moncton will be transferred holus-bolus to NAV CANADA. They can decide what to do with it over the years. It will be the same way in Gander, Montreal, etc.

The Chairman: Mr. Gouk, you have time for two very fast questions and two short responses.

Mr. Gouk: Okay. The first one is about Transport employees on extended sick leave who do not accept a new position. Will they be subject to continuing with Transport until the end of their extended sick leave if it should be longer than six months?

Mr. Paris: My understanding is they will have an offer from NAV CAN, but the effective date of starting employment is their return to work.

Mr. Gouk: The other one is the international agreement, one area where there is no compensation. Is it possible the government, for whatever reasons - for politics or for other benefits - may make some deal, say with the United States, that we won't charge you for these services when you come there, in return for which you will do something for us, something that is for the benefit of the Canadian people at large and maybe could be very well justifiable but that would diminish the revenue for NAV CANADA? You put specifically in the legislation that they would not be compensated for that. Is this possible? If so, why would they not be compensated if the government makes some kind of future deal that diminishes their revenue?

Mr. Mulder: I don't have the specific answer to that, but before Paul or Gordon Wilson have it, you should know - probably the member is aware of it - that we have entered into an agreement where NAV CANADA will be a participant in all the major international discussions and negotiations we have. Whenever I hear navigation is on the table, they will be represented. So at least they will know what's being discussed now.

Whether or not we would be so nefarious as to do that...

Mr. Gauvin: I suppose through extension your example is that an agreement could be made that would cost money for NAV CAN and they would have to absorb it. But as Mr. Mulder mentioned, they will be an observer or at the table for all negotiations.

Mr. Gouk: So we may get it, but they'll see it coming.

Mr. Gauvin: Well, they'll be part of it.

The Chairman: Well, the time has come. Thank you very much. It was a useful start.

.1100

Next are Richard Sowden and Peter Foster, from the Air Canada Pilots Association. Mr. Foster and Mr. Sowden, for the purposes of the hearing we'd like you to keep your comments to about ten minutes to give members time for questioning. I'll let you know when we get close to the end if you haven't already concluded.

Captain Richard Sowden (Chairman, Tactical and Air Safety Division, Air Canada Pilots Association): Mr. Chairman and honourable members, my name is Richard Sowden. I'm an Air Canada captain and I represent the Air Canada Pilots Association. I serve as the chairman of the technical and air safety division.

The Air Canada Pilots Association, newly formed in 1995, is the body representing 1,625 pilots flying for this country's largest airline. We operate 500 flights daily and over 130 aircraft, ranging from Canadian-built Bombardier regional jets to Boeing 747s.

There's an old saying amongst pilots that when flying, our three priorities are to aviate, navigate and communicate. As the demands of Canada's air navigation system dictate how we conduct two of our three priorities, you can readily imagine why we appreciate this opportunity to speak before you.

With regard to Bill C-20, it must be understood that, as with all issues regarding Canada's air transport system, this association's primary concern is to ensure that the travelling public will be served with the safest system possible. We're not against the commercialization of the air navigation system. Our ultimate concern rests not so much in who provides these services but rather in how they are provided.

It's the view of the Air Canada Pilots Association, ACPA, that if we are to commercialize the system, then all necessary steps must be taken to ensure the maintenance of the highest standards of safety and service in the face of the inevitable cost rationalization that will follow this bill. Safety should never be compromised as the result of a cost-benefit analysis.

Approaching a commercialized air navigation system, ACPA would agree that there may be reasons to commend the idea. We would hope a commercialized ANS would be more accountable to the needs of all of its users. The users will be paying for the system. We want to ensure an open dialogue and direct accountability as to whether the needs of all the users are being met, whether high safety standards are being maintained and whether this is achieved efficiently.

We would hope the commercialized ANS would be more user-friendly. Our pilots are flying daily in an increasingly complex technological environment, operating sophisticated aircraft designed to optimize efficiency and be flown by two-man crews. We continue to carry out these operations in some of the most diverse and challenging weather conditions imaginable. All these factors contribute to flight crew workload and hence to the level of safety. It is imperative that a new ANS be made to evaluate and adapt to new methods and technologies to reduce cockpit workload of flight crews and maintain or ideally improve flight safety.

We would hope that a commercialized ANS is adaptable to the introduction of the rapidly emerging new technology. It is our sincere hope that a new commercialized system will be adaptive to emerging technology when such technology provides opportunity to improve safety, efficiency and the ease of use of the system.

We would hope that a commercialized ANS would be secure in the funding necessary to modernize the system and ensure its long-term development. The overall intent of this bill is to reduce the cost of the system. While we at ACPA agree that there is fat to be trimmed, we would also like to be comforted that the knife will not cut through the muscle.

We would hope a commercialized ANS would be responsive to the needs of all the groups that rely upon it and not just serve the interests of the commercial carriers that use it the most. We fear that the air carriers, as the system's primary revenue source, may exert influence on NAV CANADA that could prove detrimental to the needs of others.

Bill C-20 defines the user NAV CANADA must serve as the aircraft operator. While the aircraft operators ultimately foot the bill, we must not forget that aircraft operators are in fact not the actual hands-on users of the system. Pilots are; air traffic controllers are; flight service station specialists are.

.1105

An adequate voice must be afforded to all pilots and users when determining the standards of service. We would hope that a commercialized system focusing on cost recovery would not lose sight of the needs of all its users, large or small, pilot or airline.

We would hope that a commercialized ANS would encourage ready and affordable access to the instrument flight rules, IFR, air traffic system by the general aviation user. We fear that if the fee structure of the commercialized ANS in any way discourages the utilization of IFR, safety will be jeopardized by pilots allowing their skills to deteriorate due to lack of practice, or, worse still, by general aviation operators and pilots pushing weather conditions under visual flight rules to avoid the cost of flying IFR.

While, as we stated from the outset, we support the concept of commercialization of the air navigation system, we would like to emphasize our deep concern over the development and maintenance of air safety standards within the new ANS.

Under Bill C-20, NAV CANADA must provide services in accordance with technical and operational standards that are to the minister's satisfaction. These standards must be adequate with respect to aviation safety and safety of the public. They must not impose an undue obligation on the providers of the ANS and be reasonable, taking into account practices in other countries.

To be quite frank, as an individual charged with flying passengers from take-off to touch-down with complete safety on a miserable night in high winds and with limited visibility, the terms ``adequate'', ``undue'', and ``reasonable'' do not engender a high level of comfort in me, nor in the members of our association.

This leads us directly to the core of our concerns. Bill C-20 does not provide a precisely defined benchmark as to what constitutes reasonable safety standards and leaves too much discretion for their development in the hands of NAV CANADA. The bill does not provide a precise definition of the internal NAV CANADA safety structure or the associated risk-management practices. Furthermore, Bill C-20 does not define the role of NAV CANADA's advisory committee, nor does it commit the corporation to consider its advice.

Bill C-20 explicitly defines the users of the ANS system solely as the aircraft operators; that is, the owners or the lessees of the aircraft using the system. Clause 15 commits NAV CANADA to consult only these users when considering changes to the system, irrespective of the fact that pilots and the ANS personnel with whom they interact are the people who are actually using the system on a daily basis and are the most directly affected by the decisions and standards adopted. Consequently, the decision process at NAV CANADA with respect to service levels and standards will be made to satisfy the interests of users; that is, the aircraft operators, with whom economic considerations are paramount. As a result, pressures may be brought to bear on NAV CANADA to diminish current safety standards in the interest of lowering costs.

Oversight of safety standards will be the responsibility of Transport Canada, which in recent cases has shown itself to be either incapable or unwilling to resist pressures from the industry to relax regulatory standards in the name of cost rationalization.

If the above sounds shrill and alarmist, bear in mind that the pilot community can point to several current examples in which this association and others feel that the regulatory authority has allowed itself to be manipulated into perpetuating unacceptable standards or has allowed standards and service to fall below the accepted world standards.

As the first example, the recently proposed amendments to the flight and duty standards, as set out in the draft Canadian air regulations, continue to perpetuate some of the most lax and unsafe pilot flight and duty time limitations in the developed world.

The issue of flight and duty time limitations has been the subject of much discussion and research by the National Aeronautics and Space Administration. Initially Transport Canada made some consideration of these factors. However, the most recent versions of the proposed regulations simply ignore much of the scientific research and perpetuate our outdated and unsafe duty limitations.

The members here who plan to travel on Canadian aircraft should know that, in full compliance with our new standards, the pilot flying you on your next trip could be at the end of a week of consecutive 14-hour days with the duty day on your particular flight having been extended to 17 hours due to a weather delay. This type of regulatory insanity hardly evokes confidence in the ability of our system to ensure safe standards.

We are of the belief that Transport Canada was successfully manipulated into allowing such a situation by extensive lobbying on the part of the airline industry. These same industry interests will be the main revenue source for NAV CANADA - in other words, the primary customer. They will have influence as to what constitutes appropriate standards, and as the users defined by the bill they will participate in making the decisions on how to lower system costs and ultimately lower the fees they pay.

.1110

Bill C-20 asks us to accept that Transport Canada's oversight will ensure the maintenance of safety standards in the commercialized ANS, yet we can cite examples where Transport Canada has allowed the cost considerations to justify service reductions that directly reduce safety to below ICAO standards.

I'll quickly summarize the points that are covered in the last part of the presentation, that is that the latest round of reductions in airport fire rescue services comes to mind. CFR services have been reduced below ICAO standards and in some airports have been removed with the responsibility handed over to the local municipal fire department.

Mr. Gouk has touched on the issue of AWOS, and we support the opinions of other associations that AWOS has been rushed in with consultation but without adequate consideration of its technical and human limitations.

In summary, the overzealous application of cost benefit analysis to safety issues is akin to telling a soldier about to participate in an attack that statistically speaking, very few of the bullets fired actually hit someone. Honourable members, those bullets will find a mark. It's our job and that of the aviation community as a whole to absolutely minimize the likelihood of a mishap and to limit the consequences when it does happen. Safety is expensive, but so are the economic and human costs of an accident.

Thank you, Mr. Chairman.

The Chairman: Thank you very much, Mr. Sowden.

Mr. Crête.

[Translation]

Mr. Crête: Thank you for your presentation. You have made us very aware of the importance of safety and the pressures that could be put on NAV CANADA to make money its priority instead of safety.

In your opinion, how could we concretely make sure that NAV CANADA isn't too strongly tempted and takes safety seriously enough in its purchases, its way of operating and so forth? Do you have any proposals for us on that?

[English]

Capt Sowden: Unfortunately I'll respond to your question in English. Although I lived in the province of Quebec for many years, my French skills have deteriorated to the point that I can't answer a question such as this.

As we stated, one of our first objections is that the definition of ``user'' in the act disenfranchises a large segment of the aviation industry. A user is defined as an aircraft operator. Well, that leads us to believe that the only people who are users, as far as NAV CANADA is concerned, are people who own and operate aircraft. This does not take into account all the pilots, nor does it take into account all the air traffic service specialists and the flight service station people. It's clear that this definition must be changed to truly reflect the users of the system.

The internal safety system within NAV CANADA must be more precisely defined. As we stated, the risk management practices should be defined. There must be some benchmark of what those risk management practices are, and there are certainly well-known documents out there that define risk management assessment processes.

The last point that concerns us is the structure of the advisory committee reporting structure. We're very heartened by the make-up of the advisory committee that was elected at the recent NAV CANADA meeting; however, we're uncomfortable with the present reporting structure to the board. We're unsure how that advisory committee can make its opinions heard and how they raise issues with the board.

We are of the understanding that the advisory committee will report through Mr. Crichton to the board. It's not a personal attack but it's an attack on the system. We want direct access to the board of directors rather than through any sort of intermediary.

.1115

[Translation]

Mr. Crête: Do you think it would be relevant for us to set out in the preamble of the legislation, and very clearly so, that commercial transactions must be subject to safety standards and this would basically become a legal point in a preamble that might be suggested in an amendment?

[English]

Capt Sowden: I think that would be an excellent idea.

[Translation]

Mr. Crête: What should there be in that kind of preamble? I've set out the basic principle, but how about the rest? What would help us guarantee the principle? You mentioned a few elements, is there anything else?

[English]

Capt Sowden: I think the preamble must state that commercial decisions will be made on an order of priority that defines safety first before we move on to the other sides of cost-effectiveness. I'm very apprehensive about a system that doesn't state right at the beginning that safety is absolutely the most important thing and that everything reasonable is done to ensure it.

Cost-efficiency is very important to me. My job depends on cost-efficiency and survival. But there comes a point where we have to define that safety is paramount. I think ensuring in the preamble that the first consideration in any commercial decision is safety would be an excellent idea.

Mr. Gouk: I'd like to touch on a couple of things you've said. I've had lengthy discussions with airline pilots, so I'm aware of quite a bit of the background. There are a couple of things I'd like to get just for my own use as this thing proceeds.

First, you brought up the idea of AWOS. The document provided to us by the department states that major carriers, most members of the Air Navigation System National Advisory Committee, and Transport Canada do not consider AWOS unsafe for aviation use. Would you be inclined to agree or disagree with that statement as it stands now?

Capt Sowden: I would disagree with that statement. Certainly the position of our pilots' association is that AWOS is not acceptable as it stands right now.

Mr. Gouk: One of the problems we have is that many people tend to support a policy not fully understanding some of things. I certainly wouldn't go into it now, but if any members present are concerned about why we think this thing is unsafe, I'd be happy to explain it after.

The second thing I want to ask you about deals with the labour situation, the potential of a strike within NAV CANADA. I would ask you, as a senior pilot, if you would be prepared, on a day like today, if there were no air traffic control, to take off out of Ottawa and fly to Vancouver, or even to Toronto?

Capt Sowden: No, I would not be prepared to do that. That would be absolutely ludicrous and it would be -

Mr. Gouk: Suicidal.

Capt Sowden: - gross negligence on my part to do that.

Mr. Fontana: Where does it say he has to do that?

Mr. Gouk: It doesn't say that anywhere, Joe. I just want to make sure people understand a strike shuts down aviation, from a pilot's perspective as well as everyone else's.

That's all I have. Thank you, gentlemen. I may in fact be talking to some of you later, but that gives me enough to go forward with.

The Chairman: Mr. Keyes.

Mr. Keyes (Hamilton West): At the outset, I'm a little concerned, Mr. Chairman, that the witness's eloquence is surpassed only by what I can get the vibes of as a bit of scaremongering on his part. If he didn't intend it to come across that way, I hope he would set me straight, but I have some difficulties with many of the statements he's made here today, given the fact that safety, without compromise, without any doubts in the minds of anyone in any mode of transportation in this country, is recognized to be the highest priority of this government, of this ministry, and in fact of everything we do in transport in Canada.

That having been said, Transport Canada, it is well documented, established the safety regulations and standards that would apply to NAV CANADA. To ensure the high level of safety, the department would monitor the corporation's operations and ensure compliance in this direction, as it now does in the operations of commercial air carriers across the board. I don't clearly understand, given all that, why the witness would come forward and suggest there is going to be some derogation of safety on NAV CANADA's part.

.1120

Capt Sowden: It's an interesting question. We base our statements on past performance that we have seen in recent times of how the regulator has chosen, in particular in the example of flight and duty times. It's an old chestnut with any bunch of pilots if you get them locked up in a room together.

Mr. Fontana: That has nothing to do with this particular regulation anyway.

Mr. Keyes: Joe, I want to hear his full answer first.

Capt Sowden: The way I'm choosing to direct the answer is to say we have been less than satisfied with Transport Canada's handling of a number of issues, including AWOS, crash and fire rescue and flight and duty times, in its ability to use all the information provided to make the safest decision possible. We have seen deterioration in areas.

Do I think our entire system is unsafe? The answer is no. Do I have concerns that there will be a degradation in the standards if there isn't an appropriate system? The answer is yes.

Mr. Keyes: Can you give me an exact or precise issue where you feel there would be derogation of safety with the implementation of this not-for-profit corporation?

Capt Sowden: A perfect example would be the removal of navigational facility capability at an airport because it costs too much money to maintain it.

Mr. Keyes: But regulations would not permit that to occur.

Capt Sowden: Not necessarily. You can remove the piece of equipment -

Mr. Keyes: They would, Mr. Sowden. Regulations would not permit that to occur. Mr. Sowden, this is where I'm coming to as well.

Capt Sowden: Might I be permitted to finish my answer?

Mr. Keyes: Certainly.

Capt Sowden: The example I chose to cite shows that removing a certain level of equipment, such as a full instrument landing system approach, and keeping a less precise approach would compromise safety, in our opinion.

Mr. Keyes: Was there a necessity for the full ILS approach at the time of the decision to remove it?

Capt Sowden: There would be a requirement for it to fly under weather conditions to get aircraft in and out of there. It's a precise guidance system to the end of the runway, providing full vertical and lateral navigation capability to the airport.

Mr. Keyes: And you want to make these available at every airport in the country?

Capt Sowden: No. That would be unreasonable.

Mr. Keyes: Well, that brings me back to my question to you, Mr. Sowden. Decisions are going to be made and monitored by the department to ensure that if there is need and it's demonstrated, as the overseer, we, the Government of Canada, have a responsibility to ensure the safety of the travelling public.

Mr. Sowden, I am positive that if you had any concern about getting into the cockpit and taking off, as you said, with a plane-load of passengers in a situation you would deem unsafe, you would not do it, would you?

Capt Sowden: That is correct. I would be -

Mr. Keyes: I think my question's been answered.

The Chairman: We don't have enough time for a full round, but I can get a little question from Mr. Crête and one from Mr. Gouk.

Mr. Fontana, you will have the last question.

[Translation]

Mr. Crête: Are we to understand that there is no confirmation that safety is the first criterion and that the negative impact could be felt more strongly in small airports in terms of decreasing safety; there is, in fact, a risk that those smaller ones have to replace parts that aren't available more often or even that they might decide not to modernize their equipment or whatever. Will the impact be harder on the smaller airports than the bigger ones?

[English]

Capt Sowden: I'm unsure of the exact answer to that. In every airport there could be a case for some question in that area, but without some longer thought, I couldn't give you an answer to that.

The Chairman: Mr. Gouk.

.1125

Mr. Gouk: I want to clarify the point between Mr. Keyes and you with regard to concern about possible deterioration of service.

Is it your contention that the problem is not with NAV CANADA - Mr. Keyes says the regulations would not permit this - but with the regulatory agent itself, namely the government? Utilizing the examples you gave of the CFR, AWOS, and flight duty times, they would in fact and have already demonstrated that they may do something that in your opinion would make the system less safe than it otherwise should be.

Capt Sowden: I think that statement is more correct. That is true and that is our opinion.

Mr. Gouk: Your concern is not so much with NAV CANADA. Of course they're going to try to make some cost-saving moves, as they should. But your concern is the regulator that approves or rejects these things.

Capt Sowden: And it's the interrelationship between the said two corporations, given their commonality in a lot of areas and where their genesis was.

Mr. Gouk: Thank you.

The Chairman: Mr. Fontana.

Mr. Fontana: I don't think we're here to debate whether or not safety is to be compromised. I think the government has indicated that by becoming the regulator of the system, not the operator, it is to concentrate in fact primarily on safety and regulations. That perhaps remains the responsibility of the government and hence the public interest is being served. The operator of this system is not dictating the safety of the system. The Government of Canada is going to continue to determine what the safety of the system is and the public ought to be assured of that.

I don't think you understand yet. By reading the bill and the various clauses and sections that distinguish between the operator of the system and the regulator of the system, which is the government of Canada, and hence the people... I'm sorry, sir, the negative tone of your presentation... I must tell you that flight duty times have absolutely nothing to do with this bill - absolutely nothing.

If you have a problem with that - I mean obviously you have - you can still avail yourself of being able to talk to the regulator, which is the federal government, Transport Canada, as it relates to flight duty time. But to suggest... If I were a travelling person listening to you over the radio waves, I'd have a problem with whether or not I would even fly Air Canada - you obviously represent them - based on what you've said today.

Some of your statements have been highly irresponsible, sir, highly irresponsible. If you read the bill, the Aeronautics Act talks about safety and protects what you were saying. You talked about charges. There is no way... Proposed section 101 - if you would care to look at the bill - protects. It says that you can't do certain things, that the minister reserves the right, that Transport Canada reserves the right to ensure that safety is not compromised whatsoever.

You can't charge something or remove something if in fact it's going to cause some compromise in safety, and under the charges part of it paragraph 35(1)(b) covers that. I would have hoped, Mr. Sowden, that in fact you would have taken the time to read the act before you made such irresponsible statements as to how, in fact, or to even try to cause some questions in the minds of the travelling public about how safety is going to be compromised, because I think...

Capt Sowden: Is that a question or is that a lecture?

Mr. Fontana: Yes, well, maybe you might take the opportunity of reflecting on some of the statements you made earlier. Forget about the flight duty time. We can have another day or another discussion, because that has absolutely nothing to do with this. Take the time to reflect on what you said in terms of safety and some of the problems you obviously have with this bill as it relates to your ability to fly airplanes, and thus provide the service that Canadians expect.

The Chairman: Thank you, Mr. Fontana. Mr. Sowden, I will give you a moment to respond, if you care to.

Capt Sowden: I didn't feel there was a question in there to respond to. If there is a direct question you would like me to respond to, I would be happy to. Failing that...

Mr. Fontana: Would you care to change your statement? That's the question then.

Capt Sowden: No, I don't have any reason to change my statement. I did read the bill. And I will raise the point that I object to your tone also.

Mr. Fontana: Fine.

Capt Sowden: You're entitled to your opinion, as are we. We were asked here to give our opinion. If you don't happen to agree with it, I appreciate that. However, we have a right and a duty to represent our constituency.

A voice: You're being irresponsible.

A voice: Don't fly.

The Chairman: Thank you, Mr. Sowden. Thank you, Mr. Foster.

A voice: Don't fly.

.1130

An hon. member: Joe, maybe ask them why they drew out of CALPA.

The Chairman: Gentlemen, that's quite enough.

On to the Air Transport Association of Canada and Mr. Philippe Sureau. Mr. Sureau, if you can keep your remarks to about ten minutes, that will give us time for questions, which as you have seen are lively.

Mr. Philippe Sureau (Chairman of the Board, Air Transport Association of Canada): I hope mine will be less controversial.

Mr. Chairman, members of the committee,

[Translation]

this is ATAC's submission on Bill C-20. ATAC is the national trade association founded in 1934 representing all sectors of commercial aviation in Canada.

ATAC's members include, from the air navigation system. user community, because that's what we're talking about today: national airlines, large charter airlines, charter companies, regional airlines, small charter airlines, helicopter operators, small and large flight schools, specialty operators and foreign air carriers.

ATAC's Canadian operator members come from all ten provinces and the two territories and span the entire spectrum of Canadian commercial aviation. A copy of ATAC's 1995 annual report is enclosed for the information of committee members.

ATAC members have supported commercialization of the ANS for the past 10 years after funding and operational problems in the system began to have significant adverse financial impacts on air carriers. Capacity constraints in the system due to both a shortage of skilled personnel and appropriate technology were causing serious delays which in turn were costing air carriers millions of dollars per month.

Given the financial constraints facing the federal government and its relative inflexibility to adopt specialized human resource policies, ATAC came to the conclusion that a new solution was required for the longer term. There were other national aviation associations who also felt the status quo was no longer acceptable. These groups were the Canadian Airline Pilots Association, the Canadian Air Traffic Control Association and the Canadian Business Aircraft Association. Together these groups urged successive ministers of Transport to find a new and better way to operate the ANS.

We pointed to initiatives underway in other countries to ``corporatize" or ``commercialize" their ANS networks.

In the spring of 1994, under the leadership of then Transport minister Douglas Young, Transport Canada convened an advisory committee of ANS stakeholders to study the feasibility of commercializing the ANS and what type of corporate structure it should devolve into. ATAC participated actively in the work of this committee which met on a number of occasions over the following year. The work of the committee culminated in a recommendation that the ANS be sold to a private sector non-share capital corporation, safety regulated by Transport Canada and with key stakeholder representation on its board of directors.

.1135

The government accepted this recommendation recognizing that it represented a very broad consensus amongst diverse stakeholder groups - something which does not occur frequently in the aviation industry.

In this respect, I would like to quote from the evidence adduced before this committee on November 1st, 1994, in the testimony of Mr. David Lewis, president of the Air Controllers Union: ``I want to draw your attention to the unique nature of the Alliance of Aviation interests created by our initiative during its conceptual development over the last five years. Simply stated, we are presenting a fresh and creative model of the collaborative approach among owners, managers, operators and professional associations which can set the example for many other endeavours in the way ahead for economic development in Canada in the next century."

As members of the committee know, NAV CANADA was incorporated last May, reached agreement in principle with Transport Canada in December and executed the Transfer Agreement on April 1, 1996. The last major hurdle left is the passage of Bill C-20 which is essential to the completion of the transaction.

On behalf of ATAC members, I urge you to give favourable consideration to Bill C-20 as written. This legislation contains all the essential elements required to make NAV CANADA a safe, successful and responsive organization to the public interest.

Commercial air carriers represented by ATAC strongly support NAV CANADA and the provisions of Bill C-20. As the people most dependent on the ANS and as the customers who will be required to fund 98% or more of its operations, we believe the letters patent, by laws and Bill C-20 strike a proper balance amongst the various stakeholder interests.

As commercial carriers, we look forward to NAV CANADA not only achieving lower cost structures but also developing operational systems and procedures which expedite air traffic, thus reducing the operating costs of the airlines.

[English]

As the chairman of ATAC, I would like to stress again the broad representation or character of ATAC, particularly in respect to small and medium-sized carriers. Ninety percent of ATAC's operator members are not affiliated in any manner whatsoever with the two national airlines. Seventy-five percent of ATAC's operator members fall into the category of small local service, specialty flight training or helicopter operators, and this membership is spread through every province and territory.

The terms of reference of the nominating committee for the appointment of directors to ATAC's board requires that 10 of 13 directors be from the local service, flight training, helicopter, small aircraft, charter and regional airline sectors.

Many of the world's largest foreign airlines are associate members of ATAC. Some examples are British Airways, American Airlines, United Airlines, Delta Airlines and USAir. These airlines will account for the majority of overflight fees to be assessed by NAV CANADA, which in turn will amount to over a third of NAV CANADA's revenue base. ATAC member companies represent over 90% of the revenue generated by Canadian commercial aviation.

The ATAC board of directors has undertaken to ensure that the appointments it makes to the NAV CANADA board of directors will include persons sensitive to the interests of small and medium-sized aviation firms.

In conclusion, ATAC urges this committee to endorse Bill C-20 so the transaction can proceed. It is worth noting that our actions are being watched around the world. For instance, the International Air Transport Association considers NAV CANADA structure as a model for air traffic control systems in other parts of the world.

I will be pleased to answer any questions committee members may have in this respect.

The Chairman: Thank you very much. You just made the time.

Mr. Crête.

[Translation]

Mr. Crête: Thank you for your submission.

.1140

I'd like you to elaborate somewhat on how the rate structure for users of NAV CANADA's services would work. For example, is there a rate for overflight? How do you see NAV CANADA rates structure working?

Mr. Sureau: First of all, I'd say, as a representative of the association and not as the representative of any carrier in particular, that it's not up to me to express views which might be personal or favourable to my own company. I think that this is not the place for that and that it would not be compatible with my role here today.

Two things can be said. First, that the association has taken the steps it finds relevant to ensure that the people making those decisions... NAV CANADA will not be an emanation of ATAC nor will it be managed by ATAC. NAV CANADA is going to have its own dynamics, its own board of directors and its own stakeholders and will be accountable both to Transport Canada - we saw that before concerning safety - and its board of directors.

The discussions we have had lead us to believe that three elements were considered.

First, the introduction of the charges for overflying our country. I think that's an excellent point. It allows us to share out costs on a broader base of carriers especially amongst carriers who only overfly our country. You know that almost two flights out of three cross over Canada without using it as a landing or take off point. So that is an important factor and that's what is actually done by the rest of the world. Whether in Europe or in Asia, there are charges for overflight and they must be collected. Based on the figures I have been given, that will represent 30 per cent of NAV CANADA's income.

Secondly, it is estimated that the costs set for medium or big carriers - let's call them Air Canada and Air Transat if we want to name names - would be compatible with what is actually being charged in our countries. That means consideration must be given to the mass of the aircraft, the distance, the fact that a take off or landing can cost more and so forth. It's a whole set of criteria already familiar to us because we're already subject to them in other countries.

As for the third point, I can't say that any decision has been made. However, I believe that in the case of aircraft operators in general, rather than having them pay a per transaction or per flight amount, there seems to be provision for having them pay a set, basic rate which would allow for staying within reasonable limits while continuing to have in this country, an extremely prosperous, or at least, active general aviation.

Mr. Crête: At the beginning of your submission, you introduced your ATAC members. I'd like to know how you do your decision-making. Do the members all have a role to play and identical power on an individual basis or is the weight of each member in the position's adopted by ATAC based on the amount of the dues paid or the importance of each one? How is it defined? I want to know what the real weight of the small stakeholders is in your association.

Mr. Sureau: That's a very good question. We ourselves are a carrier that does seem big as compared to the smaller ones, but we're small as compared to the bigger ones. So we must be conscious that financial type pressure can be put on us in an organization that has a budget of slightly over one million dollars. It's clear that companies like Air Canada or Canadian Airlines have a lot of weight in terms of revenue base.

However, I would say the association is healthy and presently has financial reserves that could allow it, for example, to do without one of those big players if there was a conflict of interest at any given point. So it's important to know that financially speaking, there's no economic dependence at this precise point in time.

On the other hand, I'll give you an example. I especially don't want to get back to the debate on duty time because the person sitting here before me apparently made à faux-pas. But let's take the following example, because you want something concrete. If ATAC had been influenced by a company like Air Canada or Canadian, its position could have been to use union standards - which are not safety but labour standards - because everybody then would have been on the same level playing field and faced with equal restrictions or costs.

.1145

Now, that was not ATAC's position. On that, the Air Canada and Canadian representatives on our board of directors did what had to be done, which is that they abstained or supported us to get conditions that would be more favourable to members as a whole while, of course, respecting the safety elements.

You could say that in that instance the bigger members showed some reserve. In general, if they were to abuse their position, they'd lose the credibility they're trying to gain through an association like ours.

Am I a puppet on a string because I'm a representative of a smaller company and I'm the chairman of the board this year? I don't think so. I never had that impression. On the contrary, I get the impression that my opinion and that of my colleagues is really being listened to.

You know, during a meeting of ATAC's board of directors, that can sometimes last a full day, I'd say that 80% of our time is spent talking about things that are of interest to people who are neither from Air Canada, Canadian, nor Air Transat.

[English]

The Chairman: Thank you. Mr. Gouk.

Mr. Gouk: I would like to start by saying I'm in support of this whole movement, and I'd like particularly to acknowledge the part ATAC played in seeing this through to a not-for-profit corporation as opposed to a crown corporation. Some factions - and I'm not referring to the government - were clearly pushing for the crown solution, as opposed to this, but I think this is the right way.

Could you tell me, just for my own information, what your civilian occupational background is?

Mr. Sureau: I happen to be the executive vice-president of Air Transat. I am the founder of the company. I am also the vice-president of marketing for Transat as a group, as a comprehensive company involved in all aspects of tourism. I'm not a pilot.

Mr. Gouk: No, I didn't think you were.

One area I'd like to touch on with you is something I brought up with both previous witnesses this morning, and that is the situation, or potential situation, of a labour disruption within the new NAV CANADA. This obviously is going to affect almost every member of ATAC except those who are able to fly in accordance with VFR during the time of that strike. From your perspective, and possibly speaking on behalf of ATAC, would you like to see some kind of clear dispute settlement mechanism contained in this legislation?

Mr. Sureau: First of all, I am not sure I can speak on this without consulting the board, because it is definitely a subject that would, in my view, require a board decision if I wanted to be really bold and clear.

What I could say is that common sense should prevail, and common sense says dispute resolution is always good to have afoot in advance, and not wait until we have our noses to the wall and have a problem. So any mechanism that would allow us not to have such a disruption, in my personal view, wouldn't be an embarrassment but more of a solution to problems.

Mr. Gouk: Thank you.

The Chairman: Mr. Keyes.

Mr. Keyes: I want to thank the witness for a very thorough and obviously well researched presentation. He's had a thorough read of Bill C-20.

In light of the statements made by the previous witness, and given that one of the members of ATAC is the airlines, the very companies that have much to lose if safety is compromised in any way, would ATAC agree that only the highest standards of safety would be adhered to, that NAV CANADA would provide the travelling public with the safest system possible?

Mr. Sureau: The biggest asset any commercial airline has is the confidence of the public. Nobody would ever fly with an airline where it was felt that airline was not taking safety as a primary goal of its operation. Of course we have to make cash, we have to make money, we have to be profitable companies. But there is no profitable company if you don't have a company, if you're bankrupt because no customer wants to fly with your airline.

So I would say the goal for ATAC in proposing that structure for NAV CANADA as being, for instance, a not-for-profit or a non-share-capital organization is basically to make sure this is not going to be turned into a milk cow for anybody. It would be sort of the opposite.

.1150

I wouldn't say we are trying to make money off of that. What we are trying to achieve is to have the highest safety level at a cost the industry can support, which is quite high as a matter of act. There is no question about having a second-class type of safety in the system in Canada.

The Chairman: Joe.

Mr. Fontana: I want to thank you for those statements.

I want to ask one question as it relates to the smaller carriers, as opposed to the larger carriers. When it comes to ensuring the fees for the services that ANS or NAV CAN will provide down the road, for now and at least for the first two years, it will continue to be the ATT or the tax. When that is reduced or dropped, then a new system will obviously come in place.

Some of your members are smaller airline companies that in fact feed the majors such as the Air Canadas and the Canadians, and perhaps your own. Do you see that a rate structure should take into account...? You know there is shared ticketing. If the fee is such that the small carrier, and hence the small communities that are now being served by the small carriers and not necessarily by the Air Canadas and Canadians any more - it's the regional airlines, the smaller airlines... If in fact the fees don't reflect the short haul favourably, you could have a lot more people losing that service. Hence they will be unable to fly and other airlines will therefore have to pull their services out.

Has ATAC made the representation that you need to distinguish between the needs of the small communities and the small short-haul airlines that feed the majors? If you bury the price in a particular ticket, the small airlines may not get their proportionate share or their costs may be higher than those of the majors.

Mr. Sureau: I think it's a very complex question you are putting here, because it of course leads us into trying to compare what the actual cost of the ATT is, for instance, for domestic flying in Canada. We know the ATT is quite high at this point in time. It can be as high as 7%, on top of which we have the GST. So we'd have to compare. It being a percentage, it is applied on the fare. So depending on what the fare is, the tax is calculated according to the fare. In the case we are talking about, it's no longer related to a fare. It's related to a service and it's related to the size of the aircraft and the length of the trip. It's a completely different approach.

I don't want to be making the problem into such a complicated thing, but you have to see it in a way that is as broad as the issue is. For instance, if you take a ticket that is a discounted ticket from a small community to a main centre, the ATT is very small because the fare is small. If you take a high fare, the ATT is high. So now what do you compare your NAV CANADA charge to? It becomes a tough issue.

In my view, what is clear is that - and I don't want again to change the subject - the situation with the airport policy for small airports may be putting the small community in more jeopardy than the ANS. I don't think the ANS is providing any threat to the small communities because of the way the bill is structured.

I don't want to get into this now because we don't have the time to do it, but I would question the airport policy somewhat. Maybe it should be rethought in terms of the smaller airport, because the impact you are stressing might be there.

Mr. Fontana: You're right, it's not the ANS. It's the charges and the impact on the small airline vis-à-vis the small communities that are being served by those small airlines.

The Chairman: I have one very short question from Mr. Crête and that's it.

[Translation]

Mr. Crête: What proportion of your association's funding comes from big carriers as compared to the smaller ones.

Mr. Sureau: That's a good question. I couldn't tell you off the top of my head, but I get the impression, if I don't want to sound too dumb, that we probably...

All depends on how you would define a big carrier. Do you consider me to be a big carrier or not?

.1155

Mr. Crête: Let's establish three categories. You have the very big ones...

Mr. Sureau: You have the two big ones, the others and then the smaller ones.

Mr. Crête: Yes.

Mr. Sureau: That's a good question for which I don't have an exact answer. Do you want me to tell you how much I pay?

Mr. Crête: No.

Mr. Sureau: About $35,000 a year. I don't mind at all. My annual contribution to ATAC is about $35,000 a year.

Mr. Crête: Broadly speaking, would the big carriers be providing 80% or 85% of the total?

Mr. Sureau: No. Less than that.

Mr. Crête: Okay.

[English]

The Chairman: Thank you very much, Mr. Sureau.

[Translation]

Mr. Sureau: Thank you, Mr. Chairman.

[English]

The Chairman: I thank the committee. We'll see you on Thursday at 9 a.m.

This meeting stands adjourned.

Return to Committee Home Page