What to expect at the airport this summer

Lisa Raitt: Thank you for tuning in to The Raitt Stuff. I’m your host, Lisa Raitt. And in this podcast, I’m going to share insights on current hot topics in the areas of public policy, politics and business with some guests along the way. Welcome back to The Raitt Stuff. So it’s that time of year again when we’re all thinking about I really got to get away. And we’re also watching what’s happening at airports. Last year wasn’t a great time for airports and airlines in Canada, meaning that there were some passengers who were quite upset with delays and cancellations. So I’m wondering what’s going to be happening for this year. So I asked a friend of mine, Duncan Dee, who is a former executive with Air Canada here in Canada, who I worked with on the Canadian Transportation Act review way back in 2013 to 2015. If he would come on and discuss with me what is going to be happening this summer with respect to travel. Duncan, thank you so much for joining me on The Raitt Stuff.

Duncan Dee: It’s great to be here, Lisa.

Lisa Raitt: So let’s dig right in. What is the state of play right now in terms of what it looks like for travel this summer? Meaning are people travelling more?

Duncan Dee: I think people are travelling more. If you listen to what, for example, the CEO of United Airlines said recently, while business travel is still off of its peaks, they’re seeing a renewed amount of demand for leisure travel. So he’s now saying with remote work, every weekend has become a long weekend and we’re seeing a real change in travel patterns. And I think we’re going to see that carry through to the summer.

Lisa Raitt: So let’s just talk about other places first. So if you’re going to Europe, what can you anticipate?

Duncan Dee: I think demand over the transatlantic this summer. So North Americans heading over to Western Europe and Western Europeans coming over to North America is going to be explosive. It’s going to be massive. There is a huge pent up demand, particularly given the fact that this summer we are not seeing any Covid restrictions left over, which we still saw for parts of last summer at least. And I think we’re going to see a huge amounts of demand with not quite supply matching that demand. So airfares will likely be higher and we’re going to see quite a bit of congestion, particularly on those very key transatlantic routes like, you know, the US Northeast and the Canadian Toronto’s and Montreal over to the London’s Paris, Frankfurt’s and the key Western European gateways Amsterdam and places like that.

Lisa Raitt: Yeah. So it’s going to be busy. How about within the United States domestically?

Duncan Dee: US domestic traffic has been up from a leisure perspective throughout the last year and the summer. If the Memorial Day kick-off is any indication, it’s going to be equally big. And, you know, hopefully we’ll see a much better organised US air transportation system this summer versus last summer, particularly in regards to the air navigation service provider, the FAA.

Lisa Raitt: And how about domestically in Canada?

Duncan Dee: I think we’re going to see a tremendous amount of interest for domestic travel. We always see the massive migration, the summertime migration of a lot of Western Canadians heading to the East Coast to where their family and friends are. And so we’ll see a much of the same this summer. And I think we’ll see a lot of demand as well for domestic travel, given the fact that there’s been so much inflationary pressures on people’s wallets that they may decide to stay within the country as opposed to risk having to pay more or to lighten their wallets a bit more if they head overseas.

Lisa Raitt: So we’ve covered the universe. Now on the demand side, it’s going to be a big year. Let’s talk about the supply side now in Canada, the prices are going up because there’s not as many seats available. Is that a fair assumption?

Duncan Dee: I think it’s a fair assumption in many markets, but not in all markets. We’re also seeing in Canada the emergence, this for the first summer of these low fare, low cost carriers. So we’re seeing in addition to swoop at WestJet growing and continuing to grow, we’re seeing lynx, we’re seeing flair growing. And you’ve also got this brand new jet service on Porter that’s going transcontinental. They’re going across the country from Toronto to Vancouver. And so there’s, you know, in certain markets, yes, for sure, the yields and the fares are higher. But in terms of what we’re seeing overall in some key markets like Vancouver, Calgary, for example, there’s some competition that is causing airfares to actually become lower than they were in the last year.

Lisa Raitt: Competition is good. And we should say about Porter, they’re not flying their jets out of the Toronto Island airport. They’re flying them out of Pearson. I just want to be clear on that, having been down that road many, many moons ago. So in terms of disruptions, we’ve seen a couple of things happen in the last year which are interesting. I mean, normally it’s weather that’s disruptive for the Canadian traveler. Thunderstorms appear in the in the late afternoon. It always felt on a Thursday when I was travelling for for being a parliamentarian but thunderstorms appear and that does track with respect to what’s happening at airports. But you mentioned the FAA, can you give us a little bit more of an insight as to what the difficulties are in terms of air traffic control right now.

Duncan Dee: You know what are the big issues with the air navigation service providers around the world, but seemingly in particular in both the United States and Canada is that during the pandemic, during the absolute depths of the pandemic, these air navigation authorities, whether it’s the FAA in the United States or NAV Canada in Canada, decided to offer early retirement incentives to get many of their air traffic controllers, their senior most air traffic controllers, a retirement package just to leave, just to be able to reduce their costs because they frankly didn’t know when things would recover. And with the recovery now well underway and much more strongly than many of them had anticipated, there’s now a shortage in air traffic controllers. And given the fact that it requires so much time to train up air traffic controllers, there’s a lag between the time that they hire these air traffic controllers and the time they’re actually productive. And you add over on top of that the fact that the senior most air traffic controllers, so the ones with the greatest amount of experience are the ones who took these packages and they’re being replaced by brand new air traffic controllers who don’t have the same level of experience. And you you have the recipe for the congestion we’ve seen in places like Florida, for example, where, you know, one of the air traffic control centers in Jacksonville, which controls much of the traffic going north south to and from Florida or the Northeast and the New York area, for example, where they’ve seen tremendous amounts of shortages, where they haven’t had enough air traffic controllers in place to be able to handle the traffic, particularly during the peaks. And we’re seeing the same thing in Canada. Toronto, for example, they’ve already had several instances this year where they’ve had to have ground stops where, you know, aircraft have not been able to push back because they don’t have enough air traffic controllers to direct the flights that are departing.

Lisa Raitt: And that’s NAV Canada in our country.

Duncan Dee: That’s NAV Canada. Exactly.

Lisa Raitt: One other aspect that we’ve seen pop up most recently, though, is what is happening with communications. So a couple of months ago, maybe a couple of weeks ago, there was the FAA call for a full ground stop for some of the airlines or if not all of them, because there was a communications issue between the ground and the airplanes. And then we had something happen with Air Canada last week. Can you give us a little bit more insight as to what’s going on there?

Duncan Dee: So the FAA system outage is a once in a lifetime event. It’s the notice to airmen system, which is now, I believe, translated into notice to air missions system.

Lisa Raitt: Oh, okay. NOTAM.

Duncan Dee: NOTAM, there are NOTAM system basically went out and so they couldn’t provide the information that the NOTAM system normally provides to commercial pilots that are operating into airports. You know, which runways are closed, which, you know, important information for pilots who are operating into many of these very, very busy airfields. And so what they ended up doing was they basically provided a system wide ground stop so that no further aircraft could depart those aircraft in the air they handled manually as opposed to the NOTAM system, which is manageable. But if you ended up with all of those aircraft operating like they were scheduled, then you would have seen significant delays so that they could operate with the information that the NOTAM system normally provides. The great thing about that, though, Lisa, is that the recovery from that ground stop, you know, which we haven’t really seen since 9/11, where they grounded every aircraft in the United States for several hours. The recovery was was quite rapid, was very well executed. And, you know, I was travelling the day after that ground stop and I was at O’Hare Airport and every flight that morning departed well within the on time performance standards that you normally would see for a typical operating day. In terms of what happened at Air Canada last week, Air Canada had an outage in its communicator system, which allows their operations center to be in touch and to track the aircraft that they have operating. And for that to have happened once was bad, but to happen to happen twice was very unusual. And so I believe that they should be using, hopefully the next few weeks in advance of the start of the Canadian summer peak at the end of June to prepare their systems so that that doesn’t happen at the worst of it. I mean, things were very disrupted as a result of that outage, but it could have been much, much worse had it been the summer peak.

Lisa Raitt: Let’s flip over to the airport side for a second. Airports, I think, have done a lot in the last year to try to ensure that people are moving through quicker, through security lines, through customs as best they can, and that we don’t see these long lines going out the doors at Pearson or at any other airport in the country. That’s my sense. Am I right? You can tell me if I’m not right.

Duncan Dee: You’re right. But, you know, we haven’t seen the summer peak yet, and it’s very difficult to make accurate comparisons from what we saw last summer to what we’ve seen so far, because the volumes just aren’t there to replicate what you would normally see during the summer peak. You know, we saw a little bit of it at Christmas, but again, Christmas time was affected, as you mentioned, earlier, by weather. So there was a lot of those factors that were in place at the time. But in terms of what we’re seeing this summer compared to last summer, I hope and I don’t believe we’re going to see the same staffing shortages at CATSA that kicked off the last summer peak. I mean, last summer CATSA was behind the eight ball for very well into the summer peak. They did not have their full staffing planned staffing complement until well into the end of July, so they only had a full staffing complement for their last six weeks of the summer peak and you and every listener will know that if you’re bringing in brand new staff and you’re throwing them into the worst of the operation, their productivity is very, very low. They’re all trying to, you know, work their way through a brand new experience. And really it was a very unfair situation to put a lot of these brand new CATSA screeners in to just throw them into the worst of the operation. But, you know, the one thing I’ve got to mention, Lisa, that listeners, particularly of this podcast, will be interested in is the introduction of this brand new Verified Traveller program that Canada, after the US launched it ten years ago, is finally launching at the end of June. That is going to be huge from the perspective of the frequent travelers, many of whom are Nexus members and global entry members in terms of their experience going through airport security in Canada.

Lisa Raitt: Yeah, and I commend the Minister for that as well. I think that’s going to really smooth things out.

Duncan Dee: I mean, as you know from your time at transport, the Minister had to overcome a huge amount of bureaucratic resistance to get this over the line. And this is something which Transport Canada at Casa have resisted for so, so long. And so I think it’s a positive step that frequent travellers, you know, those on this podcast who are Nexus members or global entry members are going to see a huge difference in their experience at the major Canadian airports.

Lisa Raitt: Yeah. So just before I let you go, Duncan, I wanted to ask you, earlier this week, I caught a news clip of how somebody talking about the possibility of autonomous cargo planes. Now, you and I know how risk averse the bureaucracy is everywhere in terms of this stuff being allowed. What’s your thoughts on that?

Duncan Dee: Look, I think that they need to get their heads around things like drone deliveries before they get into actual cargo aircraft that are unmanned or that don’t have pilots on board, you know, maybe a single pilot cargo aircraft to start before they get to that point. But, you know, risk averse is one thing. But also, I’m not sure we want to see fully loaded 747 cargo aircraft up in the sky with no one physically on it.

Lisa Raitt: Yeah, I think there are certain things in our transportation system that we’d like to fix. We’ll get to that one, I suppose. Speaking of fixing my last question for you, you were very kind enough to sit on the Canada Transportation Agency review panel. As I mentioned at the beginning, between 2013, 14 until 2015, you delivered your product actually just after I was unelected in 2015. But I think the material still is relevant. Is there anything that you remember from that piece of work that you think could have been beneficial to the Canadian transportation system that we just didn’t get implemented?

Duncan Dee: Look, we think an overall situation that we need to address in Canada is the user pay model. The fact that 100% of the air infrastructure is offloaded to the folks who fly, the folks who buy airline tickets, which is not something that any other country on the planet has done. You know, the US bipartisan infrastructure law that was just passed and signed by President Biden allocated 25 billion USD to airport infrastructure alone. So while they’re investing in the United States on significant improvements to their airport infrastructure in Canada, the federal government continues to take out about half $1 billion a year in ground rent. And so, you know, one of the things that I think Canada needs to do to remain competitive, not for better, more beautiful airport terminals, but just to remain competitive with what’s happening in other places, particularly the the United States, is to find a way to free up or to reinvest some of the monies that are collected from the air industry back into the infrastructure in the country that really is starting to show its age.

Lisa Raitt: Yeah, and any transport minister will tell you that the biggest discussion you would have with the finance Minister was always over the air security charge. Which, contrary to people’s beliefs, does not go to Transport Canada, it goes into general revenues.

Duncan Dee: Right, and if you take a look at the numbers, 100% of the moneys collected don’t go to support air security. So it’s really something that is a misnomer in terms of a charge on air travel in the country.

Lisa Raitt: So you’re planning on a lot of travel this summer, Duncan? 

Duncan Dee: I am. I’m going to be in Mexico in a few weeks with my parents, and then we’re going to be running around because of family commitments related to a family wedding. So, yeah, we’re going to be hitting the skies this summer.

Lisa Raitt: And I mention that not because I want you to tell your personal details, but if you ever want to know what’s going on in the sector, I would commend you to follow Duncan Dee on Twitter because he’s always out there giving us advice as to what’s going on. So what’s your handle on Twitter, Duncan?

Duncan Dee: It’s @duncandee.

Lisa Raitt: Well, thanks very much. Really appreciate you joining me today on The Raitt Stuff, Duncan. Take care.

Duncan Dee: Thanks, Lisa.

Lisa Raitt: Thanks so much for tuning in. Now, if you have any questions or comments or even requests on topics to discuss, drop me a line at lisa.raitt@cibc.com. Your interactions actually will make this better. I’m your host, Lisa Raitt, and this has been The Raitt Stuff.

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