Mr. Jacques Duchesneau
President and Chief Executive Officer

House of Commons Standing Committee on Transport

Wednesday, May 7th, 2003
Ottawa, Ontario

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Good morning ladies and gentlemen,

Thank you for inviting us here today to talk about the Main Estimates.

As you know, CATSA appeared before this committee just a few short months ago. At that time, we had only just begun our operations and had not yet taken over full responsibility for Pre-Board Screening, commonly known as PBS.

With a new fiscal year before us and your committee's recent report, it is an opportune time for CATSA to be here today to answer your questions on the estimates within the context of our activities over the past year and our priorities for the coming years.

As you can appreciate, our fiscal year ended only a month ago so we are still in the process of reconciling our expenditures to close the books. However, I would like to share with you as much information as possible.

Despite the challenges to the airline industry posed by economic slowdowns, the September 2001 terrorist attacks, the emergence and growth of competitors, rising fuel costs, the war in Iraq and the outbreak of SARS, it is clear that the most far-reaching and long-lasting challenge to the air transportation industry is finding waysto implement new security measures in an efficient and effective manner. At CATSA, I believe we are well on our way toward meeting that challenge.

As you know, CATSA began operations on April 1st 2002 but only assumed full responsibility for PBS on December 31st 2002. Our responsibilities include:

• Pre-board screening of passengers and baggage.
• Purchasing and installing explosives detection equipment or EDS.
• Developing an improved pass system and random screening procedures for airside personnel, such as flight crews and caterers.
• Administering the air carrier protective program for the provision of RCMP on-board select flights and all flights to Reagan National Airport.
• Helping certain airports with the increased cost of policing.

Our five year budget is approximately $1.9 billion and our total funding comes from the consolidated revenue fund. The Air Travellers Security Charge or ATSC is not collected by CATSA nor are we aware of the revenues that are generated from that fee.

To achieve our current mandate, our expenditures will remain within our federal budget allocation and I can assure you that we run a tight fiscal ship. In fact, CATSA has been fortunate to have Michael McLaughlin join our team. Michael was previously Deputy Auditor General of Canada, so he knows first hand about fiscal responsibility and accountability.

Our funding level established last September for this year is $459.676 million, which can be broken down into $181.891 million for Capital and $277.785 million for Operations.

Capital expenditures include all costs related to the purchase and installation of EDS, while operating expenditures include labour costs for PBS and checked baggage screening, as well as policing programs and administration costs. We will not spend money for the sake of spending but rather will look for ways to save money without compromising our commitments and obligations to Canadian travellers.

In fact, CATSA has begun a review of all airport integration plans to ensure the best technical and financial solutions. To date, we have been able to identify cost savings in the area of $30 million.

We have had a busy year. As I mentioned earlier, late last year, CATSA assumed full responsibility for pre-board screening services at 89 airports across the country, covering 99% of travellers in Canada. In addition, we had the massive task of starting a corporation from scratch. Meeting our deadline of December 31st would not have been possible without the cooperation of local airport authorities and our highly skilled staff.

In preparation for our takeover and to meet our regulatory obligation, we instituted pre-board screening at some smaller airports that were previously without or required upgrades. As the member for Churchill is aware, Thompson, Manitoba was one of those airports. The Vancouver South Terminal was another.

Some of the challenges we encountered have included retrofitting airports to accommodate new equipment. The delays caused by these situations have resulted in under spending last year. However we are currently working with Treasury Board to re-profile these funds within our federal budget allocation of $1.9 billion to ensure that we are able to provide assistance to airports that still require modifications.

At CATSA, our job goes beyond equipment. In fact, we place a strong emphasis on our human resources because we believe that whatever security systems are put in place, and whatever "smart" technologies are employed, we must never lose sight of the need for our human resources in all that we do.

That is why, in addition to finding the best and most qualified staff at Headquarters, training was provided to all 3,000 screening officers including hundreds of new screeners to upgrade their skills to CATSA standards. As of January 1st 2003, CATSA has implemented a new multi-level training and certification program for all new screening officers.

CATSA's national training and certification program is exhaustive. Training hours have been doubled and even tripled in some cases. Screening officers are certified at every level of training, not just at the end of the program.

We have also been working with our contractors to reduce turnover rates, improve working conditions, increase the level of professionalism and provide a more competitive financial compensation program for screening officers across the country.

I am pleased with recent comments from screening officers about the improvements they have seen in the delivery of PBS services since CATSA's takeover.

To paraphrase one officer "Since CATSA took over pre-board screening, it has brought more respect to our job. The morale of officers is much better and in turn so is customer service".

We continue to look at ways to improve, while remaining cost conscious. We are, after all, accountable to the public through the Minister of Transport and Parliament. In fact, within the next few weeks, the Minister will be tabling our first annual report which will provide additional details on our activities during the past year.

As well, the Office of the Auditor General, CATSA's auditor, is currently reviewing our financial statements, details of which will be contained in our upcoming annual report.

Not only are we carrying out our mandate, we are being pro-active by meeting with experts from jurisdictions around the world to exchange information and learn first-hand about international best practices and to find more efficient and cost-effective ways to deliver our services. For example, Mark Duncan has travelled to England and Israel to meet with air security officials and tour the major airports in each country.

Recently, I visited a manufacturing plant in Germany that produces screening equipment and met with officials from the Nurenburg and Frankfurt airports to view their operations and see how some of this equipment functions. I also met with Interpol during a stop in France. And of course, we are in regular contact with the TSA in the US and work cooperatively to ensure that our air security systems work well together.

During our travels, we are pleased to see that Canada's security systems and procedures are in line with, and sometimes ahead of, those in other countries.

We will continue to look to our international partners for best practices and work with them to further improve air security.

As you know, the air security industry is constantly evolving with new technologies and processes. Our commitment is to be proactive in our approach and remain a step ahead, while respecting our financial obligations.

Let me now turn your attention to our priorities and plans for the coming year.

As you are aware, last November the Minister assigned two new responsibilities to CATSA; the introduction of an improved pass system for non-passengers and the screening of those same individuals accessing restricted areas. Our officials have been working in partnership with our regulator, Transport Canada as well as stakeholders and unions to develop these two systems. In fact, two non-passenger screening pilot projects were recently undertaken: one in Thunder Bay and the other in Calgary. These projects were completed late last month and a working group is presently analyzing the findings to further determine our requirements.

As for the Restricted Area Pass, we have created a working group and held stakeholder meetings with airlines, airports and unions to obtain their input on the design of this program.

We are currently evaluating the biometric component, with plans to implement a pilot project this summer.

In keeping with our commitment to continuous improvement and learning, we have opened the first of nine new training centres across the country. Some of these centres will have remote capabilities to facilitate training and certification of screening officers in other locations.

Furthermore, we will continue to deploy equipment across the country and work with local airport authorities to address any challenges that may arise.

In addition to all of these activities, we will continue to assess our programs and services to identify additional improvements and cost savings.

I consider it CATSA's mission to ensure that passengers travel with the fullest confidence in our security system. As head of CATSA, I am committed to this mission and will do what I can to contribute to a viable, stable air transportation industry for the future.

Thank you for inviting us here today. Our officials and I would be pleased to answer your questions.

Thank you.