Regulations Amending the Transportation Information Regulations (Air Travel Performance Data Collection): SOR/2019-166

Canada Gazette, Part II, Volume 153, Number 12

Registration

SOR/2019-166 June 3, 2019

CANADA TRANSPORTATION ACT

P.C. 2019-600 May 31, 2019

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsections 50(1) ^{footnote a} and (2) ^{footnote b} of the Canada Transportation Act ^{footnote c}, makes the annexed Regulations Amending the Transportation Information Regulations (Air Travel Performance Data Collection).

Regulations Amending the Transportation Information Regulations (Air Travel Performance Data Collection)

Amendments

1 (1) Subsection 3(1) of the Transportation Information Regulations ^{footnote 1} is amended by adding the following in alphabetical order:

• large air carrier means an air carrier that operates a charter service or a scheduled service that has transported a worldwide total of two million passengers or more during each of the two preceding calendar years. (grand transporteur aérien)
• small air carrier means an air carrier other than a large air carrier that operates a charter service or a scheduled service with at least one aircraft equipped for the carriage of passengers with a certificated maximum carrying capacity of 70 passengers or more. (petit transporteur aérien)

(2) Section 3 of the Regulations is amended by adding the following after subsection (2):

(3) For the purposes of the definition large air carrier, the number of passengers transported includes passengers transported on flights operated by a regional operator on the air carrier’s behalf.

(4) For the purposes of the definition small air carrier, aircraft that are used solely for charter services are not included if the block of seats of the aircraft that is reserved is not resold to the public.

2 The Regulations are amended by adding the following after section 7.1:

7.2 (1) Subject to subsection (6), a large air carrier must provide to the Minister on a monthly basis the following information for each passenger flight it operates, including flights operated by a regional operator on its behalf and cancelled flights, that originates in or is destined for an aerodrome in Canada:

• (a) the aircraft’s registration mark;
• (b) the flight number;
• (c) the aerodromes of origin and destination;
• (d) the marketing air carrier and operating air carrier codes;
• (e) the scheduled date and time of departure and arrival at the gate;
• (f) the actual date and time of departure and arrival at the gate;
• (g) the date and time of take-off and landing;
• (h) the delay in number of minutes, by cause, if applicable;
• (i) an indication of whether passengers were provided with the opportunity to disembark, if a flight is delayed on the tarmac at an airport in Canada for more than three hours after the doors of the aircraft are closed for take-off or after the flight has landed;
• (j) an indication of whether the flight was cancelled and the cause; and
• (k) an indication of whether the flight was diverted.

(2) Subject to subsection (6), a large air carrier must provide to the Minister on a monthly basis and aggregated by flight segment, the following information in respect of passenger flights it operates, including flights operated by a regional operator on its behalf and cancelled flights, that originate in or are destined for an aerodrome in Canada:

• (a) in the case of denial of boarding within the meaning of the Air Passenger Protection Regulations,
  • (i) the number of passengers who were denied boarding,
  • (ii) the number of passengers who gave up their seat on an involuntary basis,
  • (iii) the number of passengers who gave up their seat on a voluntary basis,
  • (iv) the number of passengers boarded, and
  • (v) the reason for the denial of boarding;
• (b) the number of pieces of checked baggage;
• (c) the number of pieces of checked baggage that have been lost for more than 21 days;
• (d) the number of pieces of damaged checked baggage; and
• (e) the number of complaints received and recorded by the air carrier in respect of
  • (i) the assignment of seats to children under the age of 14 years,
  • (ii) the transportation of musical instruments, and
  • (iii) the provision of information to passengers in a timely manner, in the case of a flight delay or flight cancellation.

(3) A small air carrier must provide to the Minister on a quarterly basis and aggregated by flight segment, the following information in respect of passenger flights it operates, including flights operated by a regional operator on its behalf and cancelled flights, that originate in or are destined for an aerodrome in Canada:

• (a) the number of flights;
• (b) the marketing air carrier and operating air carrier codes;
• (c) the number of flights, as applicable
  • (i) cancelled, by cause,
  • (ii) delayed, by cause, and
  • (iii) delayed on the tarmac at an airport in Canada for more than three hours after the doors of the aircraft are closed for take-off or after the flight has landed;
• (d) in the case of denial of boarding within the meaning of the Air Passenger Protection Regulations,
  • (i) the number of passengers who were denied boarding,
  • (ii) the number of passengers who gave up their seat on an involuntary basis,
  • (iii) the number of passengers who gave up their seat on a voluntary basis,
  • (iv) the number of passengers boarded, and
  • (v) the reason for the denial of boarding; and
• (e) the number of complaints received and recorded by the air carrier in respect of
  • (i) the assignment of seats to children under the age of 14 years,
  • (ii) the transportation of musical instruments, and
  • (iii) the provision of information to passengers in a timely manner, in the case of a flight delay or flight cancellation.

(4) A small air carrier must provide to the Minister on a quarterly basis and aggregated by arrival aerodrome, the following information in respect of passenger flights it operates, including flights operated by a regional operator on its behalf and cancelled flights, that originate in or are destined for an aerodrome in Canada:

• (a) the number of pieces of checked baggage;
• (b) the number of pieces of lost checked baggage that have been lost for more than 21 days; and
• (c) the number of pieces of damaged checked baggage.

(5) The information required by subsections (1) to (4) must be provided using Transport Canada’s Electronic Collection of Air Transportation Statistics program within 30 days after the last day of the reporting period.

(6) A large air carrier must provide the information required by subsections (1) and (2) for the 90-day period beginning on the day on which this section comes into force, within 30 days after the last day of that period.

7.3 Section 7.2 does not apply in respect of a charter service operated by an air carrier if the block of seats of an aircraft that is reserved is not resold to the public.

3 The Regulations are amended by adding the following after section 22.1:

22.2 (1) Subject to subsection (3), NAV CANADA must provide to the Minister the following information for each aircraft movement at an aerodrome, on a monthly basis:

• (a) the name of the aerodrome where the movement took place;
• (b) the date and time of the departure or arrival;
• (c) the flight number or, if there is no flight number, the registration mark of the aircraft;
• (d) the code, if any, assigned to the aircraft’s operator by the International Civil Aviation Organization;
• (e) the aircraft’s model;
• (f) the aerodrome that the flight is arriving from or departing for;
• (g) an indication of whether the aircraft is taking off or landing;
• (h) the runway used; and
• (i) an indication of whether the movement was conducted by visual flight rules or instrument flight rules.

(2) The information required by subsection (1) must be provided using Transport Canada’s Electronic Collection of Air Transportation Statistics program within 30 days after the last day of the reporting period.

(3) NAV CANADA must provide the information required by subsection (1) for the 90-day period beginning on the day on which this section comes into force, within 30 days after the last day of that period.

4 The Regulations are amended by adding the following after section 41:

[42 to 49 reserved]

PART XII

Canadian Air Transport Security Authority

Information

50 (1) Subject to subsection (3), the Canadian Air Transport Security Authority must provide to the Minister the following information for each passenger screening checkpoint at an airport where boarding pass scanning technology is available, for each 15-minute period, on a monthly basis:

• (a) the airport’s International Air Transport Association (IATA) airport code;
• (b) the name of the passenger screening checkpoint and whether the screening checkpoint is designated for domestic flights, flights to the United States or other international flights;
• (c) the date;
• (d) the start and end time of the 15-minute period;
• (e) the average wait time for a passenger to reach the passenger screening checkpoint;
• (f) the greatest number of lanes used to screen passengers; and
• (g) the number of passengers screened.

(2) The information required by subsection (1) must be provided using Transport Canada’s Electronic Collection of Air Transportation Statistics program within 30 days after the last day of the reporting period.

(3) The Canadian Air Transport Security Authority must provide the information required by subsection (1) for the 90-day period beginning on the day on which this section comes into force, within 30 days after the last day of that period.

Coming into Force

5 These Regulations come into force on December 15, 2019.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Background

In November 2016, the Minister of Transport announced a commitment to create a new rules-based approach to ensuring air passenger rights in Transportation 2030: A Strategic Plan for the Future of Transportation in Canada. The Transportation Modernization Act, introduced in May 2017, moved this commitment forward in two key ways:

• (a) Directing the Canadian Transportation Agency (the “Agency”) to develop new regulations regarding air carrier obligations towards passengers (the “Air Passenger Protection Regulations”); and
• (b) Authorizing the Governor in Council to make regulations to collect information respecting the performance of air carriers and stakeholders providing services related to air transportation in regard to the air passenger experience [the “Regulations Amending the Transportation Information Regulations (Air Travel Performance Data Collection)”]. The amendments are made under the authority of subsections 50(1) and (2) of the Canada Transportation Act (the “Act”).

The Agency, responsible for developing the Air Passenger Protection Regulations, will ensure clear and consistent passenger rights by establishing minimum standards of treatment, and in some situations, minimum levels of compensations that all airlines must provide.

Transport Canada, responsible for developing the Regulations Amending the Transportation Information Regulations (Air Travel Performance Data Collection), will ensure more accountability and transparency from air transportation services by collecting data from stakeholders relating to air passenger experience and publicly reporting key performance metrics. Accordingly, Transport Canada amends the Transportation Information Regulations to establish data collection and reporting requirements for major air carriers travelling to, from, or within Canada; for the Canadian Air Transport Security Authority (“CATSA”); and for NAV CANADA.

Issues

Despite the importance of air travel, prior to the Transportation Modernization Act, there was no regulatory authority under the Act to collect and publish data regarding the air passenger experience. Currently, the lack of information collected and shared with the public regarding the performance of air travel stakeholders hinders transparency and reduces passengers’ ability to make informed air travel choices. Given the Agency’s air passenger protection rules, a lack of data would also limit the ability to measure the effectiveness of the Air Passenger Protection Regulations.

Objectives

The objectives of the amendments are to collect and publish air travel performance information necessary to

• assist in assessing and monitoring the effectiveness of the Agency’s Air Passenger Protection Regulations;
• assess and monitor air passengers’ experience, and make evidence-based policy changes; and
• monitor industry performance trends and inform consumers.

Description

Subsection 50(1) of the Act states that the Governor in Council may make regulations requiring information to be provided to the Minister. The Transportation Information Regulations ^{footnote 2} require Canadian and foreign air carriers to provide certain information — such as the flight number, number of passengers enplaned and deplaned, and the mass of freight transported — to Transport Canada with respect to scheduled and charter services that they operate. ^{footnote 3} These information reporting obligations apply to both domestic and international flights originating in or destined for an aerodrome in Canada.

As set out in paragraph 50(2)(d) of the Act, information that must be provided to the Minister may include “the performance of air carriers and providers of services in relation to air transportation with regard to passenger experience and the quality of service.” These amendments to the Transportation Information Regulations will establish new information collection and reporting obligations related to passenger experience for air carriers, CATSA and NAV CANADA.

The amendments will establish information reporting requirements for

• certified air carriers (Canadian and foreign) that operate a charter service or a scheduled service, and that:
  • Transported 2 million passengers or more globally during each of the two preceding calendar years (“large air carriers” ^{footnote 4}, or
  • Transported fewer than 2 million passengers globally during each of the two preceding calendar years, but operate at least one aircraft with a certified maximum carrying capacity of 70 passengers or more for operations where seats are resold to the public (“small air carriers” ^{footnote 5};
• CATSA; and
• NAV CANADA.

To avoid creating significant administrative burden on small air carriers, the proposed data obligations will only impose detailed reporting requirements on large air carriers, while small air carriers will only be subject to aggregated data reporting requirements. This treatment is consistent with less onerous requirements placed on small air carriers under the Air Passenger Protection Regulations which the proposed data obligations help monitor and assess. Air carriers that do not transport 2 million passengers or more globally per year, and only operate aircraft certified to carry fewer than 70 passengers will not be subject to the reporting requirements. However, air carriers subject to reporting requirements will be required to provide data for flights operated by regional operators (regardless of size) on their behalf. For example, if a large air carrier operates on behalf of a small carrier, the reporting requirements will be submitted under the requirements of a large air carrier (i.e. monthly).

Large air carriers will be required to submit monthly reports on data related to on-time performance, such as departure and arrival times; delays; and cancellations on a per-flight basis. They will also provide information on denial of boarding; lost and damaged checked baggage; and complaints related to child seating, transportation of musical instruments, and the timely provision of information to passengers aggregated by route (flight segment). These requirements are set out in subsections 7.2(1) and (2) and (5) to (7) of the Regulations Amending the Transportation Information Regulations (Air Travel Performance Data Collection).

Small air carriers will be required to submit quarterly reports on data related to the number of cancelled and delayed flights; denial of boarding; and complaints related to child seating, transportation of musical instruments, and the timely provision of information to passengers aggregated by route (flight segment). They will also be required to provide data on lost and damaged checked baggage aggregated by arrival aerodrome. These requirements are set out in the proposed subsections 7.2(3) to (6) of the Regulations Amending the Transportation Information Regulations (Air Travel Performance Data Collection).

CATSA will be required to submit monthly reports for each passenger screening checkpoint at all airports with boarding pass scanning technology. The data reported will include average security screening wait times; the number of passengers screened; and the number of security screening lanes used to screen passengers, aggregated by 15-minute periods. These requirements are set out in section 50 of the Regulations Amending the Transportation Information Regulations (Air Travel Performance Data Collection).

NAV CANADA will be required to submit monthly reports on aircraft movements at each aerodrome where it operates. These requirements are set out in section 22.2 of the Regulations Amending the Transportation Information Regulations (Air Travel Performance Data Collection).

All the stakeholders listed above will be required to submit the information through Transport Canada’s Electronic Collection of Air Transportation Statistics (“ECATS”) program. Further guidance on the amendments will be published in guidelines on the Transport Canada website.

The amendments will come into force on December 15, 2019.

Regulatory and non-regulatory options considered

Voluntary (non-regulatory) options

Voluntary options, such as memoranda of understanding (“MOUs”), were considered for this proposal. This would involve the adoption of MOUs between Transport Canada and CATSA, NAV CANADA, and every small and large air carrier that operate passenger flights that originate in or are destined for an aerodrome in Canada (approximately 75 air carriers). The cost to Transport Canada of negotiating piecemeal agreements would be significant.

Regulatory options

Regulatory option 1: Create the same detailed reporting requirements for all Canadian and foreign large and small air carriers. While this would create uniformity in the level of data reported, this could impose a significant administrative burden on small air carriers, which only account for about 2% of passenger seats on flights that originate in or are destined for an aerodrome in Canada.

Regulatory option 2: Create detailed reporting requirements for large air carriers and aggregated reporting requirements for small air carriers. This option would ensure that Transport Canada receives sufficient data to achieve the objectives of this proposal, while also reducing the administrative burden on small air carriers.

Ultimately, amendments to the Transportation Information Regulations in line with regulatory option 2 were chosen for the reasons set out below:

• Accurate data from air transportation service providers are necessary to achieve the policy objectives of these amendments, which could not be achieved on a voluntary basis.
• There is little incentive for regulated air transportation service providers to voluntarily disclose detailed data that could reveal poor performance or non-compliance with the Air Passenger Protection Regulations.
• Given the importance of the information collected, Transport Canada should have access to a range of enforcement tools, including administrative monetary penalties where appropriate, in order to address any non-compliance commensurately and effectively.
• Amending the Transportation Information Regulations creates certainty and continuity for stakeholders, most of which are already familiar with the regulatory framework under the Transportation Information Regulations as well as with the ECATS submissions database.

Benefits and costs

The quantified benefits and costs of the amendments are a present value net cost of $12.51 million. Of the benefits that can be quantified, Canadians who directly access data reports online will enjoy a welfare benefit worth $1.52 million. Other substantial benefits, including a growth in reliable data for future regulatory development, are unquantifiable. Air carriers, CATSA and NAV CANADA will assume a total present value cost of $9.95 million to collect and report data. Transport Canada will assume a total present value cost of $4.07 million to process data and publish reports online. The present value total cost of the amendments is $14.03 million. A detailed cost-benefit analysis report is available upon request.

Analytic framework

This cost-benefit analysis considers the benefits and costs of the regulatory changes (the policy scenario) compared to a world in which these changes did not occur (the baseline scenario). Monetized values are reported in present values over 2019–2028, discounted at to 2019 using a rate of 7% and expressed in 2017 Canadian dollars unless otherwise noted.

Changes since publication in the Canada Gazette, Part I

In the regulatory impact analysis statement published in the Canada Gazette, Part I, in December 2018, the quantified impacts of the proposed regulations were an estimated net cost of $16.3 million.

The cost-benefit analysis has been updated to reflect regulatory changes made in response to stakeholder comments following publication in the Canada Gazette, Part I. Most significantly, updated definitions for large and small air carriers reduced the number of affected air carriers from 17 (plus two new entrants) to 12 (plus two new entrants), resulting in lower costs. To a lesser extent, shifting the initial submission date from September 2019 to April 2020 reduced both the expected costs and benefits. Finally, the base year for discounting was changed from 2018 to 2019, which marginally increased the present value costs and benefits.

Regulated community

This analysis considers the incremental benefits and costs on Canadian carriers and consumers.

In 2018, there were 12 (5 large and 7 small) Canadian air carriers operating scheduled or charter services, where the seats were resold to the public, that originated in or were destined for an aerodrome in Canada that meet the application criteria for the amendments. Two of the small air carriers are expected to expand service and carry two million passengers within the period of analysis. They will be considered large are carriers after above the two million passenger threshold. Two additional Canadian air carriers that would meet the small air carrier criteria are expected to begin operations within the period of analysis. Just over 60 foreign carriers also operated scheduled or charter services, where the seats were resold to the public that originated in or were destined for an aerodrome in Canada.

NAV CANADA and CATSA will also be required to submit data to Transport Canada.

Baseline scenario

Canadian air passenger carriers currently collect extensive data on flight times, passenger loads and baggage handling for various reasons. The current Transportation Information Regulations require Canadian air carriers to provide the Government with certain data such as financial information, flight times, cargo and passenger totals. This data is used for national transportation policy development, operational planning, and to assist in developing an annual report providing a brief overview on air travel performance in Canada. In addition, Canadian air carriers sometimes voluntarily share data with national and international industry associations. In the baseline scenario, Canadian air carriers would continue to track, compile and report data that are required currently by the Transportation Information Regulations and for business intelligence reasons.

During the period of analysis, air passenger traffic in Canada, as measured by origin-destination passengers, is expected to increase at an average annual rate of 3%. In 2017, there were nearly 90 million air passengers in Canada aerodromes. This is expected to rise to approximately 126 million by 2028. ^{footnote 6} Air travel demand is expected to grow in proportion to the general economy, aided by persistently declining real fares (net of inflation). The extent to which real fares decrease depends on a variety of factors, including the impact of competitive pressures and evolving demand. Growth is expected to be stronger for passengers travelling internationally (3.7%) and across the United States (U.S.) border (3.4%) than domestically (2.1%).

Policy scenario

The amendments are not expected to significantly alter the demand or supply for air travel in the policy scenario relative to the baseline scenario. As shown in the “Distributional impact analysis” section below, the cost per passenger is around $0.06. Even if that cost is passed entirely onto the passenger, it is not expected to reduce the demand for air travel. Likewise, when costs cannot be passed on to passengers, the increase in marginal cost for Canadian air carriers will be insufficient to reduce the availability of seats or flights; therefore, supply will be essentially unchanged.

The newly accessible data will better inform travellers before purchasing flights, but this information is not expected to impact the decision to fly or not; therefore, overall demand would be unchanged.

Reporting requirements

As stated above, a total of 14 Canadian air carriers (approximately seven large and seven small) will be required to collect and submit new reports to Transport Canada. NAV CANADA and CATSA will be required to submit new reports on aircraft movement and security screening wait times at Canadian airports, respectively. A detailed list of data elements per report is available in Table 9 of the Appendix to the CBA report.

Large air carriers will be required to submit four new monthly reports. The On-Time Performance Report will include all information that is collected on a per-flight basis. This report will contain around 35 separate data elements for each flight operated over the reporting period.

The Denied Boarding Report, the Lost / Damaged Baggage Report, and the Recorded Complaints Report will contain data aggregated by flight segment. Each report will contain around eight data elements for each flight segment.

In 2018, the five large Canadian air carriers operated just over 960 000 flights on approximately 1 100 routes. In the first year of the amendments coming into force, Canadian air carriers will submit approximately 32 million unique data elements. Adjusting for industry growth, this total will rise to 43 million by 2028.

Small air carriers will be expected to submit three new quarterly reports. The Flight On-Time Performance / Denied Boarding Report would contain data reported by flight segment. This report will include around 20 unique data elements for each flight segment operated by the air carrier over the reporting period. The Recorded Complaints Report will contain eight unique data elements for each flight segment operated by the air carrier over the reporting period. The Lost / Damaged Baggage Report will contain data for each arrival aerodrome. This report will contain around six data elements for each destination aerodrome served by the air carrier.

In 2018, the seven small air carriers operated around 60 000 flights on 145 routes. Adjusting for industry growth, small air carriers will be expected to submit around 6 600 data elements in the first year of the amendments coming into force, increasing to 8 000 data elements in 2028.

CATSA is currently tracking wait-time information for each 15-minute period that each screening checkpoint is open. The amendments will require CATSA to submit monthly reports with this data. In the first year of the amendments coming into force, CATSA will be expected to submit reports containing 5.7 million unique data points in the first 12 months of the amendments coming into force. This will rise to nearly 7.5 million unique data points by 2028.

NAV CANADA currently tracks and reports most commercial aircraft movements in Canada to Statistics Canada. This will also be shared with Transport Canada. An estimated 55 million data elements will be submitted in the first 12 months that the amendments enter into force. This will rise to 74 million data elements by 2028.

Benefits

The majority of the benefits of the amendments are not quantified. The amendments provide the Government of Canada with a big-data source where analysis and its potential applications will enhance and support air travel policy development.

The total present value of the quantified benefit of the amendments is $1.52 million. This is the expected welfare increase for Canadians who directly access air passenger performance reports from the Canadian Centre for Transportation Data (CCTD) website. Between April 1, 2017, and April 30, 2018, around 98 000 unique visitors accessed Transport Canada or Canadian Transportation Agency websites concerning air passenger travel. The average length of each visit was around four minutes. Assuming similar web traffic for the CCTD website, that increases at the same rate as passenger growth, around 135 000 unique visitors will directly access the air travel reports on the CCTD website per year on average from the middle of 2020 to 2028. Individuals accessing the air travel data through the CCTD website will receive a welfare benefit that would not be possible without the amendments. The value placed on time spent accessing the CCTD website is based on the national average hourly wage rate obtained from Statistics Canada. ^{footnote 7}

The quantified benefit is likely an underestimation since it only considers the time spent directly accessing the data online. For example, many individuals may download datasets for deeper analysis spending more time reviewing the data. If all Canadians who directly accessed the data were to spend at total of 37 minutes on analysis, the total present value quantified benefit would be $14.04 million, which is sufficient for the Regulations to have a net present benefit.

On the other hand, many more individuals may see a portion of the data, or some analysis of it, produced and hosted by a third party, which may inspire longer or additional visits. For example, Embry-Riddle Aeronautical University and Wichita State University publish the Airline Quality Rating (AQR) for air carriers in the U.S. based on similar air traveller data made available by the United States Department of Transportation. ^{footnote 8} If the results of analysis of the data reached an average of 1.24 million Canadians (who still reviewed this information for four minutes), then the total present value benefit would be $14.03 million, which is sufficient for the Regulations to have a net present benefit.

Substantial non-quantifiable benefits will also be derived from the amendments.

• Data provided to Transport Canada at the flight and route level will enable Transport Canada to assess and monitor the effectiveness of the Air Passenger Protection Regulations.
• The amendments will give regulators enhanced ability to assess and monitor air passengers’ experience to make policy changes based on better evidence ^{footnote 9}
• By making data publicly available, the amendments may encourage competition among air carriers on the basis of on-time performance, baggage handling, and denied boarding.

The data may also allow for a more efficient planning by the Canadian airport authorities. Improvements in these areas will be an indirect benefit to consumers.

Costs

The present value of the total costs associated with the amendments is $14.03 million. Canadian air carriers, NAV CANADA and CATSA will assume a total present value cost of $9.95 million to collect and submit data. The total present value of government costs are estimated around $4.07 million to build and maintain data submission and reporting portals, as well as analyze the data.

Costs for air carriers

The total present value cost to Canadian air carriers is approximately $9.95 million. Over the period of analysis from 2019 to 2028, the average annualized total cost is $1.42 million.

Air carriers will incur three types of costs. In the first year of the amendments, air carriers will incur costs to purchase, develop or modify data collection processes (set-up costs). Once a system is in place, air carriers will assume costs to collect data (collection costs), and will subsequently produce and submit reports to Transport Canada (submission costs). A summary of the costs to industry is presented in Table 1.

Table 1: Summary of industry costs for large and small air carriers

(Total present value cost over the period from 2019 to 2028; $2017)

	Set-up Costs ($, millions)	Collection Costs ($, millions)	Submission Costs ($, millions)	Total Costs ($, millions)	Average Annual Total Cost per Carrier ($)
Large air carriers	3.87	3.11	1.41	8.39	119,892
Small air carriers	0.10	1.00	0.46	1.56	22,262
Total	3.97	4.11	1.86	9.95	71,077

Set-up costs

Air carriers will assume costs to modify their existing systems or implement new data collection processes to begin collecting the required data. Initial set-up costs, assumed in the first-year of the amendments coming into force, total an estimated $3.97 million.

The average expected set-up costs are $553,000 for large air carriers and $14,600 for small air carriers.

Collection costs

The total present value of data collection costs is $4.11 million. Ongoing collection costs assumed will be the time to maintain automatic collection systems and/or the time to record the information manually.

Over the period from 2019 to 2028, the annualized average collection cost per large carrier is $63,325 and $20,351 for small air carriers.

Submission costs

The total present value cost of submitting reports is $1.86 million. Submission costs are incurred in order to compile, review, approve, and submit reports to Transport Canada. These are assumed monthly or quarterly, depending on the requirement of the airline. The estimated submission times are based on similar reports required in other jurisdictions. ^{footnote 10}

For the 2019–2028 period, the average annualized submission cost per large carrier is $28,661 and $9,270 for small air carriers.

Cost for NAV CANADA and CATSA

The total present value cost to NAV CANADA and CATSA is $11,000.

Submission reports for NAV CANADA and CATSA are designed to minimize the incremental cost for these agencies by mirroring the content and the format of reports already in use.

NAV CANADA currently tracks most commercial aircraft movements in Canada and reports this data to Statistics Canada. CATSA currently records wait-time information for each airport passenger screening point for every 15-minute period that a screening checkpoint is open.

In the baseline scenario, NAV CANADA and CATSA will collect, analyze and quality check the data for their own reports.

The incremental impact of the amendments will be one hour for each agency, per reporting cycle, to prepare the data file, transmit to Transport Canada, and confirm receipt.

Cost to Government

The total present value cost for the Government is estimated at $4.07 million. Costs are divided between developing and maintaining the online services as well as enforcing the amendments.

Online services

Additional hardware and the initial programming to create a new submission window capable of accepting multiple submission methods (direct business-to-business, file upload, or manual entry), and updating the reporting website, will be a one-time cost of $750,000. Half of a full-time equivalent (FTE) government employee with a computer science classification will be required to maintain the hardware and the website in each subsequent year.

Submitted data will be published on the CCTD website. One FTE with a computer science classification will be required to design and program the air traveller data reporting web pages in the first year. In subsequent years, the equivalent of one half of an FTE will be needed to maintain and update the reporting website. The total present value cost to Government to provide online services is $1.77 million.

Compliance promotion, enforcement and analysis

The total present value cost for compliance promotion, enforcement and analysis is $2.30 million. Promotional material will require the equivalent of two months (or 0.17 FTE) to produce. Enforcement and analysis will be conducted by employees in the Economics and Social Science classification. Activities will consist of analyzing reports to ensure accuracy and completeness, and following up on late or incorrect submissions, when necessary. Enforcement and analysis will require 3.5 FTEs annually.

Consolidated cost-benefit statement

Table 2: Cost-benefit statement

	Base Year	Discount Rate	Price Year	Final Year	Total (Present Value)	Annualized Average
	2019	7%	$CAN 2017	2028	-12.51	-1.78
A. Quantified impacts (CAD, 2017)
		2019	2025	2028	Total (Present Value)	Annualized Average
Benefits	Canadian public ($, millions)	0.00	0.17	0.15	1.52	0.22
Costs	Air carriers ($, millions)	3.91	0.69	0.60	9.95	1.42
	Government ($, millions)	0.91	0.32	0.26	4.07	0.58
	NAV CANADA / CATSA ($)	0	1,028	839	10,052	1,431
Total costs ($, millions)		4.81	1.01	0.87	14.03	2.00
Net benefit ($, millions)		-4.81	-0.84	-0.71	-12.51	-1.78
B. Qualitative benefits Reinforce the objectives of the Air Passenger Protection Regulations. Provide data to support the development of evidence-based regulations.

Sensitivity analysis

Uncertainty has been taken into account in this cost-benefit analysis by assigning probability distributions to several variables. The results of the cost-benefit analysis summarized in Table 2, above, is the middle value calculated using the median of probabilistic inputs.

To further control for uncertainty, simultaneous Monte Carlo simulations of 10 000 observations were run to obtain 95% confidence intervals for total costs and benefits. The low and high values of the 95% confidence interval for estimated costs and benefits are presented in Table 3. The modelling of government, NAV CANADA and CATSA costs did not use probabilistic inputs, so results do not vary. Finally, sensitivity tests were conducted to determine which factors contributed the most to the variation of outcomes. As shown in Table 3, the amendments will impose a net cost between $8.45 and $17.90 million. Collection costs for the On-Time Performance Report and the Lost / Damaged Baggage reports contributed the most to the variability in the analysis.

Table 3: Low, middle, and high values of the 95% confidence interval from 10 000 Monte Carlo simulations (Present value — $, Million)

		Low	Middle	High
Benefits	Canadian public	0.98	1.52	2.02
Costs for air carriers	Set-up costs	3.01	3.97	4.97
	Collection costs	1.33	4.11	8.09
	Submission costs	1.01	1.86	2.78
Total cost	All stakeholders (including Government)	9.43	14.03	19.92
Net benefit		-8.45	-12.51	-17.90

Note: Values in this table are presented as the present value using a 7% discount rate.

The central results of the cost-benefit analysis were calculated using a 7% discount rate. It is a lower net cost compared to the result when a lower rate (or no rate) is applied.

Table 4: The net present value of the central case at different discount rates ($, Million)

	No Discounting	3%	7%
Present value of benefits	2.15	1.84	1.52
Present value of costs	17.75	15.93	14.03
Net present value	-15.60	-14.09	-12.51

Distributional impact analysis

Five of the affected air carriers are regional operators that serve mostly northern or remote communities. The other nine air carriers operate flights to larger urban centres or fly international routes.

Air carriers serving northern or remote communities carry around 1% of the air passengers on flights covered by the amendments. As shown in Table 5, regional carriers will assume around 13% of the total present value cost of the amendments. National carriers and carriers that fly international routes, will assume around 87% of the total present value cost of the amendments, while carrying around 99% of passengers.

Based on passenger forecasts using the average annual growth rate, the average cost per passenger for regional carriers is $0.14. The average annual cost for national carriers is $0.02. The combined average annual cost per passenger will be $0.06.

Table 5: Summary of distributional impacts

	Portion of Enplaned Passengers (%)	Portion of Total Costs (%)	Average Cost per Passenger ($)
National / international carriers	99	87	0.02
Regional carriers	1	13	0.14

“One-for-One” Rule

The amendments are considered an “IN” under the Government of Canada’s “One-for-One” Rule. The annual administrative costs to comply with the regulatory requirements over a 10-year time frame are estimated to be $151,634 for all stakeholders, or $10,831 per air carrier. ^{footnote 11}

Administrative costs are calculated as the time to prepare reports, then review and submit each report. Submission times per reporting cycle are based on estimates for similar reports in other jurisdictions. The estimated time required for large air carriers to collect and report their submissions is 50 hours per month. This total is based on the estimated time for similar reports in other jurisdictions. ^{footnote 12} The detailed breakdown is provided below:

• 20 hours for the On-Time Performance Report;
• 20 hours for the Lost / Damaged Baggage Report;
• 5 hours for the Denied Boarding Report; and
• 5 hours for the Recorded Complaints Report.

The estimated time required for small air carriers to collect and report their submissions is 50 hours per quarter. The detailed breakdown is provided below:

• 25 hours for the Flight Performance / Denied Boarding Report;
• 20 hours for the Lost / Damaged Baggage Report; and
• 5 hours for the Recorded Complaints Report.

For each report, a data scientist or comparable employee (with a wage rate of $38.08 per hour in 2012 dollars) will take three quarters of the submission time to compile and prepare reports. A senior manager (with a wage rate of $50.17 in 2012 dollars) will take the remaining time to review and approve reports before submitting them to Transport Canada. For both positions, the wage rate is adjusted by a factor of 25% to account for overhead costs.

Small business lens

The small business lens does not apply to these amendments, as there are no costs to small business.

Consultation

Industry stakeholders have been aware of this regulatory initiative since May 2017, when the Transportation Modernization Act was tabled in Parliament. Parallel to the development of a new air passenger protection framework by the Agency, Transport Canada began discussing data and performance issues by initiating a working group with key stakeholders, including air industry and government representatives. In the spring of 2018, after the Transportation Modernization Act received royal assent, Transport Canada began consultations with industry stakeholders and the Canadian public to discuss regulatory amendments needed to support the implementation of the new legislation.

Data and Performance Monitoring Working Group

The Data and Performance Monitoring Working Group (the working group) was created under the umbrella of the Air Consultative Committee, co-chaired by Transport Canada and the Canada Border Services Agency. Composed of aviation industry and government representatives, the working group provided a platform to discuss data collection and performance monitoring issues. During the winter of 2018, both in-person and teleconference meetings were held in preparation for the proposed regulatory amendments. Participation included three Canadian air carriers, four airports, one Canadian airline association and four federal agencies.

During these meetings, air carriers provided insight on the scope of their data collection practices for measuring passenger experience. A survey was also circulated to members of the working group and key feedback that was incorporated into the proposal includes the following:

• Air carriers operating aircraft with fewer than 39 seats do not have the resources to handle additional reporting burdens;
• Smaller air carriers — for instance, those flying aircraft with fewer than 70 seats — have limited resources to implement additional reporting requirements;
• Many stakeholders play a vital role in passenger experience, not just air carriers. Therefore, performance data should also be collected from other providers of services related to air transportation; and
• It may be difficult to collect comprehensive data on the seating arrangements of children, transportation of musical instruments, compensation provided to passengers, and flight notifications and announcements.

Stakeholder consultation paper

On May 28, 2018, Transport Canada circulated a consultation paper to key stakeholders, including airport authorities, industry associations, consumer associations, and Canadian and foreign air carriers (through several international associations, including the International Air Transport Association). The consultation paper detailed elements of the amendments, including a list of data reporting requirements. It also incorporated feedback gathered from the working group. This part of the consultation process was held until August 17, 2018.

Stakeholders identified a number of issues and recommendations, including the following:

• Air carriers, airports, and consumer and airline associations suggest increasing the consistency with current U.S. reporting requirements, such as limiting the scope of data collection (i.e. domestic flights only) and publicly reporting metrics using aggregation and percentages;
• Air carriers recommend reducing administrative burdens by limiting reporting requirements to a per-flight basis, rather than by passenger, and to only report flight delays over a specific time period;
• Air carriers are concerned about the misrepresentation of data collected, resulting in unfair comparisons. Consumer associations consider this comparison as necessary to measure performance; and
• Some air carriers and consumer associations prefer identical reporting requirements for carriers of all sizes, but disagree on whether the data should be reported on a monthly or quarterly basis.

Public consultations were conducted through online questionnaires, formal written submissions and by participating in online forums, posted on Transport Canada’s consultations website. Consultations took place from May 28 to August 28, 2018. The results demonstrate strong public support for the amendments, showing that the public is in favour of having this information accessible as they would consult published air travel performance data when booking air travel.

Prepublication in the Canada Gazette, Part I

These amendments were prepublished in Part I of the Canada Gazette on December 22, 2018, for a comment period of 60 days. Transport Canada received comments from 15 stakeholders, including industry and consumer groups. The comments highlighted the following key issues:

• 1. Implementation: Several airlines and industry associations were concerned about the timeline for implementing the amendments. Airlines argued that they need more time to plan IT investments and projects. They are concerned about meeting the data collection requirements even with the 120-day grace period following the coming-into-force date of July 1, 2019. As a result, a one to two-year implementation period was recommended before data collection is required.
• 2. Regulatory alignment: A number of air carriers wished to see greater alignment between these amendments and the Agency’s Air Passenger Protection Regulations, particularly with respect to the definitions of “large” and “small” air carriers. Other air carriers maintained that all air carriers should be subject to the same reporting obligations, regardless of size. Some carriers also expressed concerns about the requirement to collect data on events taking place outside Canada.
• 3. Costs and burden: Some air carriers expressed concerns over the costs and labour that would be incurred in trying to comply with the data reporting obligations. This was particularly a concern for small air carriers and northern operators, which currently lack the infrastructure to automatically collect data and would therefore incur high costs in manually recording data for each flight.
• 4. Need for greater clarity: Some air carriers sought clarity on some of the obligations proposed in the prepublication process.
• 5. Granular data: Some industry stakeholders raised concerns about the collection and publication of granular data. In order to account for confidentiality and commercial sensitivities, some stakeholders argued to have the data published in percentages or rates.

Addressing stakeholder concerns and recommendations

The feedback gathered from the consultation processes was collectively considered and incorporated into Transport Canada’s amendments. Some key changes that were drawn from stakeholder feedback include the following:

• 1. Implementation: Based on implementation concerns expressed by air carriers, the amendments will not come into force until December 15, 2019. Air carriers, NAV CANADA and CATSA will continue to have an additional 120 days after this new coming-into-force date before they must file their first data reports. Given the significance of establishing a regulatory framework that protects passengers, this gives an appropriate amount of time for stakeholder compliance.

Moreover, in response to a few specific areas of data collection where some stakeholders have expressed difficulties in meeting currently (e.g. baggage, denied boarding by cause), TC will work with stakeholders to develop reporting guidance instructions to accommodate stakeholders during their transition.

• 2. Regulatory alignment: In order to address stakeholder comments, the definitions of “large” and “small” air carriers will be aligned with those in the Air Passenger Protection Regulations. With regards to events taking place outside of Canada, the amendments will no longer require air carriers to provide data on tarmac delays that take place outside of Canada. However, the amendments will continue to apply to both domestic and international flights.
• 3. Costs and burden: Transport Canada has made an effort to reduce the costs and burden associated with the amendments. For instance, the amendments no longer apply to air carriers that only operate aircraft with fewer than 70 seats, in order to account for costs assumed by smaller carriers. Air carriers with 70-seat aircraft that fly fewer than two million passengers globally a year will now only be required to report aggregated data. Transport Canada also decided to focus on data elements that are already collected by air carriers, NAV CANADA and CATSA, or that could be collected without significant incremental efforts. For example, Transport Canada has reduced data requirements related to denied boarding to a per-flight segment basis (rather than per passenger). To accommodate current data collection practices, Transport Canada has further simplified data requirements related to musical instruments, flight notifications, and child seating, which will now only require the number of recorded complaints.
• 4. Greater clarity: In order to ensure that the data reporting obligations are clear, Transport Canada will create a sub-working group consisting of carriers who will assist in the development of guidance instructions, which will complement the data reporting obligations.
• 5. Granular data: The amendments require data to be submitted to Transport Canada in raw counts or totals (rather than percentages or rates) because the goals of the amendments are not only to assess the effectiveness of the Air Passenger Protection Regulations, but to use the data towards developing evidence-based policies. For this reason, raw data is required for the purpose of policy development, and data will be consulted with the working group before publication in order to account for confidentiality and commercial sensitivities and to ensure a fair comparable between air transportation service providers.

In summary, the consultation process facilitated by Transport Canada provided an effective platform to gather information about current data collection practices. It highlighted ways to improve the breadth of measuring passenger experience to assess the effectiveness of the Agency’s Air Passenger Protection Regulations.

Regulatory cooperation

The information collected through these amendments are aligned with the Canadian Transportation Agency’s Air Passenger Protection Regulations.

These amendments also create specific Canadian requirements that may differ from existing regulations in other jurisdictions. For instance, the United States currently requires air carriers to report performance data on domestic flights only, while Transport Canada’s amendments will, in a manner somewhat similar to the framework in the European Union (EU), require certain data to be reported on all flights that originate in or are destined for an aerodrome in Canada. The EU regulation focuses on collecting data related to flight delays and cancellations from air operators (that operate a number of flights over a certain threshold in EU airspace) for the purpose of developing performance targets, whereas Transport Canada’s amendments will also collect data on other metrics related to passenger experience such as denial of boarding, checked baggage and security screening wait times. The U.S. rules also require air carriers to report the total number of lost or damaged baggage and total instances of denied boarding, on a network-wide basis, across all flights they operated in the month. Transport Canada’s amendments, however, will require air carriers to break these data down by routes (flight segments) flown that month.

These Canadian-specific requirements are necessary. The Canada Transportation Act creates a more comprehensive air passenger protection regime that applies to all flights to, from and within Canada and includes new rules that are established by the Agency’s Air Passenger Protection Regulations. As the amendments will, among other things, also help assess the effectiveness of the Agency’s air passenger protection rules, it is necessary to collect sufficiently detailed data in order to achieve that objective. By collecting specific data, such as the number of lost or damaged baggage by route, Transport Canada will also be able to assess problem areas and make evidence-based policy decisions.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, the strategic environmental assessment process was followed for these amendments, and a Sustainable Transportation Assessment was completed. The assessment took into account potential effects to the environmental goals and targets of the Federal Sustainable Development Strategy. No significant environmental effects from these amendments were found.

Gender-based analysis plus

These amendments are not expected to create positive or negative impacts on any of the population groups, as part of the gender-based analysis plus (GBA+). In examining these amendments in the context of the GBA+ analysis, Transport Canada looked at similar regulations from other jurisdictions that currently collect air travel performance metrics. In doing so, Transport Canada concluded that these amendments will have no differential impacts on the basis of identity, including race, gender, ethnicity, religion, age, and mental or physical disability.

Rationale

The amendments will achieve the policy objectives of this proposal while ensuring that only information that is critical to assessing the air passenger experience, monitoring industry performance trends, and informing consumers is collected from the regulated community.

The data reporting obligations will apply to passenger flights that originate in or are destined for an aerodrome in Canada. Where a passenger takes more than one flight to arrive at the final destination, air carriers will only be required to provide information on the flights that departed from or arrived in Canada. This will allow Transport Canada to assess the experience of all air passengers travelling to and from Canada, as well as the performance of all stakeholders in the Canadian air transportation service chain, to develop evidence-based policies.

Without the amendments, Transport Canada would not have the information needed to monitor trends and issues affecting the passenger experience; evaluate the need for policy changes; and assess the effectiveness of the Agency’s Air Passenger Protection Regulations. Making key data on the passenger experience publicly available will also be beneficial to the public by helping Canadian travellers make informed decisions.

Consultations with stakeholders informed this proposal. Transport Canada undertook consultations throughout the regulatory development process and has considered the feedback, including the type of information that could be collected and reported in the short term; the appropriate level of administrative burden needed to achieve the objectives; and alignment with the broader Canadian air passenger protection framework. Transport Canada will further incorporate a 120-day implementation period after the coming-into-force of these amendments before regulatees must file their first reports.

The amendments will result in a net cost of $9.95 million. However, the data collected will be needed to assess the effectiveness of the Air Passenger Protection Regulations and to monitor the air passenger experience with a view to making evidence-based policy changes. These amendments are expected to generate benefits in the long term by allowing Transport Canada to become a more efficient and effective regulator.

Implementation and enforcement

Implementation

The amendments will come into force on December 15, 2019, and include a 120-day implementation period to give the regulated community time to fully adopt and implement the new requirements. While the air transportation service providers subject to this proposal will be required to begin collecting data upon the coming-into-force of the amendments, the first data reports will only be due 120 days afterward.

Stakeholders, particularly air carriers, are already familiar with the ECATS program and with existing data reporting requirements under the Transportation Information Regulations. Upon the coming-into-force of the amendments, Transport Canada will publish additional resources and conduct outreach activities with stakeholders. These include the following:

• Contacting air carriers individually to inform them of the new reporting obligations through ECATS;
• Developing a user guide to assist air carriers with the new reports and additional ECATS website functionalities;
• Developing a Frequently Asked Questions resource on the new reporting obligations; and
• Making contact resources available to answer questions on reporting instructions.

Transport Canada already uses the ECATS reporting infrastructure, and internal staff will incorporate the new surveys and analytical tools required in time for submission of the first data reports. Data submitted through the ECATS system will be verified and validated by Transport Canada IT systems and by Transport Canada staff.

Compliance and enforcement

Transport Canada’s goal is to create a fair and equitable compliance and enforcement environment that allows the regulated community to take corrective actions first. The enforcement of these amendments will be achieved through the compliance and enforcement regime set out in the Canada Transportation Act, including the creation of corresponding administrative monetary penalties (AMPs) ministerial regulations.

Transport Canada will generally consider imposing an AMP only after employing other compliance tools intended to promote voluntary compliance (e.g. oral counselling, warning letter). Where compliance is not achieved on a voluntary basis, or where there are serious or repeated violations; however, it may be appropriate to impose an AMP. The amount of the AMP may be determined based on a number of factors, such as whether the violation was carried out by an individual or a corporation, the seriousness of the violation, and the circumstances of the violation.

Compliance and enforcement of these amendments will require additional Transport Canada resources, including the hiring and training of an enforcement officer.

Contact

Greg Zawadzki
Director
National Air Services Policy
Transport Canada
Place de Ville, Tower C
330 Sparks Street
Ottawa, Ontario
K1A 0N5
Telephone: 613‑993‑4361
Fax: 613‑991‑6445
Email: greg.zawadzki@tc.gc.ca