Thank you, Mr. Chair.

Good morning.

I am pleased to appear before you today.

Air Canada is proud of the services it offers Canadians. We serve more than 180 airports around the world, including 50 airports in Canada. In 2023, we offered nearly 55 million seats and welcomed more than 46 million passengers, whom I thank for having chosen us.

In the domestic market, we offered Canadians nearly 25 million seats. We are the only carrier to serve all the provinces every day of the year.

At the outset, I would like underline that the Canadian air travel market is highly competitive. Close to 70 international carriers operate to Canada and compete with Canadian airlines. Some of these carriers are two to three times larger than Air Canada, including Delta Air Lines, Air France KLM, British Airways, American Airlines, Turkish Airlines and others.

In fact, Canada has three of the world's 50 most globally connected hubs. This is a significant achievement. No other country, apart from the U.S. and China, has three hubs in this ranking. This highlights that the air travel market in Canada is dynamic and competitive and that Air Canada can compete and succeed at the global level. The level of connectivity offered by Air Canada facilitates trade, tourism and immigration. It allows us to employ 40,000 people and support more than 190,000 indirect jobs.

There has also been a significant increase in competition in the domestic market, with other carriers increasing capacity, including WestJet, Porter and Flair. While in 2001 Air Canada's capacity share of the domestic market was around 75%, it's currently around 43%.

There are 24 airlines serving the Canadian domestic market, including 20 offering more than 50,000 seats per year. Three carriers have more than 10% of the capacity for a total of 82% of the capacity. Let me share with you some facts to put this into a global perspective.

In Australia, Qantas has 58% of the capacity, and more than 90% of the total capacity belongs to two carriers. In total there are 13 carriers.

In France, Air France has 54% of the domestic capacity, and four carriers have more than 10%, for a total of 95%. There are 10 carriers.

Finally, in the U.S., by far the largest market, 20 times bigger than Canada, probably the most competitive market in the world, four carriers have at least 10% of the capacity for a total of 80%. Only 28 carriers offer more than 50,000 seats per year, compared to 20 in Canada.

However, we face unique challenges in Canada that limit the airlines' ability to stimulate the market, offer more attractive fares and develop our Canadian airports. First of all, our geography is a special challenge. Canada has relatively few major cities, distances are long and the climate difficult. We also have a model in Canada under which travellers bear all costs and certain revenues are not reinvested. Travel could be made more affordable if that model were reviewed.

For example, airports pay rent to the government, and that totalled around $400 million last year. They also make payments in lieu of taxes to municipalities.

In addition, Canadian travellers are subject to high fees and charges. This includes security fees that have risen by 30% in the 2023 budget, now exceeding $34 for an international flight. In the U.S. the equivalent fee is at $5.60 U.S.

As well, airports charge airport improvement fees to fund infrastructure that can reach $46 per flight in Canada compared to $5.50 in the U.S., where the government reinvests excise taxes into the system and has announced $40 billion U.S. to support airport infrastructure.

Finally, air navigation fees are also higher in Canada.

The impact of the Canadian model has been well documented and extensively studied.

The same findings were made by the Senate Standing Committee on Transport and Communications in 2012, in the Canada Transportation Act Review, the Emerson Report, released in 2015, and, more recently, by the Montreal Economic Institute.

Here's an excerpt from the Emerson Report:

“Canada is unique among its competitors in charging onerous rents and taxes that undermine competitiveness.”

This committee issued a report last year, recommending a review of all costs imposed on airports and airlines and the reinvesting of all rents collected in airport infrastructure. We welcome that conclusion.

In conclusion, we are here today to state once again how important it is to adopt policies that acknowledge the role of our industry, which, as the Senate put it in 2012, is to be “a spark plug” not “a toll booth”.

Thank you.