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Study on Emerging Issues related to Canadian Airline Industry

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Statement made on 11 June 2012 by Senator Dennis Dawson

Hon. Dennis Dawson:

Honourable senators, wine is a tough act to follow when you are talking about The Future of Canadian Air Travel: Toll Booth or Spark Plug.

I was going to read long extracts of the report to honourable senators, but I know that I have competition for their attention. I know it is 3-0 now for Los Angeles and people on one side of me are listening to that hockey game. There are also two by-elections going on in Quebec and the Liberals are leading 2-0, so I know senators have other issues they want to deal with.

As far as this report is concerned, I invite honourable senators to go to the committee's website.

I see my deputy chair is here. I want to thank him for the work he did on the committee and the steering committee.

I am promoting a lot of people through the Transport Committee. Senator Frum, who is the one who raised the subject of air transport with Senator Housakos so that we would debate it, has now been promoted to other committees. Senator Eaton, who is speaking with her leader, has also been promoted. She was on the steering committee dealing with this issue. I want to thank all of them for the work they did, including Senator Verner, who is now on the steering committee, and the members of the committee.

I want to thank them all because this is a unanimous report. When one gets a unanimous report that can be perceived as criticizing government, one also wonders what charm did the chair of the committee have. He did not have that much. The reality is that this is a non-partisan subject in the sense that it started under Mr. Mulroney in the early 1990s and went on with Mr. Chrétien and Mr. Martin in the 1990s. It is time we look at it again and I want to thank the members who brought this subject up at committee.

With the support that we got from the people who came before the committee, there was no report we could make other than saying to the government, "You have to stop looking at airports and air travel as a source of revenue, and you have to look at it as a source of investment."

In 1992-93, when the government in Ottawa transferred the 26 national airports to the individual communities, we saw a change. Although airports required spending, the finance minister at the time, Mr. Martin — I like to think that I can speak favourably of him — realized that airports could be a source of revenue. That is when the government started charging rent.

Take Winnipeg airport for example, which was transferred in 1993 for $1 million. Today there is a new airport in Winnipeg and the Canadian government has not invested one cent. The airport authority must lease a building for $100 million. The building was paid for by the people and users from Winnipeg, and the financing provided by the market.

It is not right that airport authorities pay rent to the federal government. Over the past 10 years, the rent has totalled almost $4 billion. The money could have been invested in the airport instead of being a source of revenue, which has resulted in an extremely complicated situation.

About 75 per cent of Canadians are one hour away from the American border. Over the last year, 4.5 million Canadians crossed the border to take their flights. That is the equivalent of Canada's fifth biggest airport, which is Ottawa. Some people think it is Halifax, but it is Ottawa. It was 4.5 million people last year and it will probably be 5 million people this year because it is going up 15 per cent per year. That was not a problem in 1993, 1994 and 1995 when the Canadian dollar was at 65 cents. People did not cross the border to take flights in those days. Since then, the Americans have been subsidizing the building of airports. Both Plattsburg and Burlington airports advertise as American airports for Montreal. They even have bilingual service; some of them are probably more bilingual than some of our Canadian airports. They give service to Canadians. A city with 45,000 people has 300,000 passengers, and about 95 per cent of them come in from Montreal. Why is that? It is because they subsidize the building of airports; they do not charge rent; and they do not charge security fees or any of those taxes that are charged in Canada. People can travel for a much lower cost from the U.S. than they can travel from Canada.

There is also the example of Buffalo airport, near Toronto. One million passengers at Buffalo airport are from the Ontario region. The Toronto airport authority has lost those passengers and therefore Canadian taxpayers and users, in short the consumers, must pay more airport taxes because people board flights in Buffalo. Why? Because airports have always been seen as a source of revenue rather than a means of economic promotion.

We need a national air policy. We have to get the people to sit down and talk about the billions in tourism dollars that we are losing to American airlines. The 4.5 million Canadians that go to American airports has to stop because it is 15 per cent to 20 per cent a year and growing. If we do not act on this soon, it will only get worse; it will not go away.

We are asking the government to sit people down at the table and develop a national airline policy. Stop seeing it as revenue. Stop paying rents for buildings that you did not invest in. The Winnipeg airport is the caricature but every single airport in Canada is living on investments that they made by themselves and they send a cheque to Ottawa for rent. It is not rent. You pay rent to the owner of a building, but if you pay for the building and pay rent for it, then there is an injustice; and we have to correct that. The report was unanimous.

As an example, I arrived in Ottawa about 35 years ago this week. I was sworn in at the House of Commons on June 8, 1977. The first file I had in my riding was on the Quebec City airport. Every day during the by-election campaign people said something had to be done about the airport. I arrived in Ottawa and went to the Department of Transport on Kent Street and asked to see the minister. The issue was that you had to go back to Ottawa to get money for airport renovations. The decision to turn the 26 national airports back to the local authorities was a good one.

However, one has to understand that now that is done, we have to go to the next step. We have to give them their airports so that they can develop them without having to report to Ottawa and send cheques to Ottawa. Airport authorities have to be able to plan for the next 50 years.

Some airports have 40 years left on their agreements with the Government of Canada; and they have 35-year borrowing contracts. Everyone knows that these airports will never be sent back to the federal government and that they will always be operated locally. Why not do it officially and do it right now?

I thank the members of the committee once again for the unanimous report. Honourable senators, I hope that this report is adopted.

Some Hon. Senators: Hear, hear.

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