Good morning.

This year, the Air Transport Association of Canada is celebrating 90 years of representing this country's commercial air transport industry.

Our 175 members are engaged at all levels of commercial aviation and flight training in every region of Canada. Our membership ranges from very large domestic, transborder and international carriers to regional carriers, flight training organizations and the Canadian air transport support industry.

Our members offer services to all regions of this country, including to northern, rural and remote communities.

The high costs of operating air services in Canada are affected by many factors. A significant portion of these fees are charges that are added directly to the price of tickets or indirectly through fuel excise taxes, carbon taxes, airport taxes, regulatory costs, outrageous APPR compensation and charges, and non-subsidized services.

These costs combined make it impossible for airlines to offer competitive services in Canada, compared to other markets or other modes of transportation.

It is fair, however, to say that the Canadian air travellers have more options today in travel decisions as they are no longer limited to one or two airlines.

In addition to Air Canada and WestJet, today's consumers can travel with Porter Airlines and other large carriers to most major markets and cities in Canada. Greater travel options put a downward pressure on prices. The government needs to embrace even greater competition by limiting the huge barriers to entry into our market, as well as those that limit return on the investment.

The northern and remote regions of Canada are geographically large and face a different reality. The user-pay model is not and cannot be applicable to those markets. The concentration of services is sometimes the only way that service can be guaranteed, given the sparsely populated, huge territory.

The merger of First Air and Canadian North is a prime example of the consolidation of air operator resources that is needed to maintain service to small and very remote communities that depend on air service as a lifeline. That merger was key to their combined ability to provide the service needed to airports, which are a vital socio-economic link to the rest of Canada. Many airports are also important feeders of international passengers to and from major airport hubs in Canada.

Interline agreements are an option, but the government should perhaps go a step further. Many airlines linking the major Canadian hubs to the larger northern markets such as Yellowknife and Whitehorse should be strongly encouraged to also service the less lucrative, smaller, northern, outlying markets, perhaps through interline agreements.

Competition in the air transport industry can also be felt in the critical labour shortage in Canada for pilots and aircraft maintenance engineers, or AMEs. Demand for experienced pilots and AMEs is draining regional airlines of their resources.

Indeed, the demand for experienced pilots and AMEs is draining regional airlines of their resources. The larger airlines in Canada are hiring more pilots and AMEs than this country produces in any given year. They hire away from the regional carriers. Faced with an imminent labour drain, the regional carriers have a choice between lowering the frequency of service or cutting out routes altogether.

Therefore, ATAC considers the following basic but necessary first steps to be key to the competitiveness of Canada's aviation sector.

The government needs to reinvest at least the majority, if not all, of the aviation-generated revenues back into aviation infrastructure. This is essential to maintaining our industry. We don't stand a chance of being competitive as long as the government continues to see aviation as no more than a cash cow.

Regional aviation is a vital link in Canada’s connectivity and government investment in regional and northern air infrastructure is long overdue. The government has to recognize that the user-pay model can’t possibly work in northern, rural and remote communities as that model just can’t sustain operations in these regions that depend almost entirely on aviation.

Finally, establish a federally backed funding program for qualified Canadian students attending professional flight schools or for post-secondary institutions providing aircraft maintenance engineer programs approved by Transport Canada. This would help attract the vast number of pilots and maintenance personnel so desperately needed to address critical shortages that are seriously impacting service to Canadians.

Thank you.