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You’re listening to a frequency podcast network production in association with City News.
Jordan Heath-Rawlings
You are listening to a Frequency Podcast network production in association with city. I went on vacation last week and I couldn’t sleep a wink before we left. Not only because I was so stoked for our first real vacation in years, but because I was scared. I knew the horror stories I knew. How bad it might be? Well, I will just say that, uh, the situation at the Toronto airport is unacceptable. So when I see there is a 400 person line with two Air Canada workers, there’s a million canceled flights. Everyone’s just panicking. They already told us, we’ll make miss our flight. I’ve been waiting for like maybe 30 minutes now, I expect to wait another, maybe an hour. More than 129,000 passengers were affected by metering and holding. I’m so in shock at this place. It is the biggest disgrace known to man. So imagine my surprise when Toronto’s Pearson Airport ranked among the world’s worst, if not the worst, all through last. Was fine, efficient. Even now, we were traveling off season between the holidays and spring break. We left super early for our flight because, well, you heard those clips and I am nothing if not a paranoid and thus extra prepared traveler. But still, Pearson worked, at least anecdotally, at least for one family. Does that. Canada’s well-documented airline mess has been cleaned up. What kinds of changes have Pearson and other large airports made to avoid the disasters we saw continually throughout 2022?
Jordan Heath-Rawlings
What lessons has the industry learned and. Will things go right back to chaos as soon as demand ramps up at the next peak travel period. What do you need to know if you’re about to book vacation? I am Jordan Heath-Rawlings. This is the big story. John Gradeck is a faculty lecturer and program coordinator of supply chain logistics and operations management at McGill University. He took a deep dive into the problems and perhaps solutions to Canada’s airport woes for the conversation.
Hello, good afternoon. How are you?
John Gradeck
I’m doing very well. I’m back from vacation. I’m relaxed. Um, and it’s a pleasure to talk about airports.
Jordan Heath-Rawlings
Good. I’m glad to see that everything worked well and you didn’t lose too many bags. I hope so. This is the thing. I am a nervous traveler. I was up all night, the night before we left because we’ve reported on all the issues at Pearson and otherwise over the past year. And then everything went so smoothly, I could scarcely believe it. Does this mean that we’re all good now?
John Gradeck
Things have been fixed. People can count on their airports being, at least moderately efficient. Again, if you’re gonna be traveling until such time as I would say March 2nd, you should be in pretty good shape from, you know, that period of time until about mid-March during school break for most of Canadian schools and Canadian families. It could get a little tense. If you really wanna make sure that you, minimize the potential for disruption on your flight, leave early in the morning. Stay away from Fridays and stay away from Sundays and make sure that you arrive, you know, two or three hours early and put an air tracker in your bag if you’re gonna be checking any bags.
So there’s, there’s a few things that are, you know, now becoming part of the, you know, the standard fair for, you know, for traveling, particularly in these days where we may might have some disruption. So that’s great general advice, but what I’d like to do is dig a a little bit deeper and try to figure out what’s changed.
Jordan Heath-Rawlings
You know, uh, airports are always a crapshoot. Air travel’s always a crapshoot, but the horror stories of last summer and the recent holiday season, what do we know about the root causes of that?
John Gradeck
Well, I think, you know, if you depend who you talk to in the industry, everybody seems to like pointing fingers at, at other players in the industry and trying. You know, kind of abdicate their roles and their responsibilities towards root cause. But I’ve been looking at it for, for several months and trying to kind of peel back the onion just a little bit to have a look at, you know, how did this, you know, start and where did this evolve and what happened at Pearson, Trudeau and Vancouver airports, uh, in June, July and August of 2022, you know, was really an accident waiting to. Airlines put a lot of capacity out there, uh, whether it’s domestic or international capacity and splice were sold, people were booking people that paid money for tickets. You had very little chance of getting a seat, let’s say, from Toronto to London or Toronto to Vancouver in middle of middle or late July, cuz the place were Christmas’s your fall. Mm-hmm. you know, the, the, the driving force behind the delays was that the airlines basically overcome. Their assets and put a lot of capacity out there without really realizing, or, or really recognizing, not realizing, but recognizing that the infrastructure required to support that schedule just wasn’t there. They weren’t, the resources weren’t there. You know, CASAA wasn’t there. C V S A wasn’t there, NCAN wasn’t there. Even her own crews weren’t there, and the airline just kept, you know, pumping up all that capacity on the you know, operations would somehow be able to go through this shortage of staff.
Jordan Heath-Rawlings
So that to me is a root cause that the airlines basically over-designed your schedules. What was done in the wake of that? And maybe let’s talk about the fall period leading up to the holidays. Like was this a matter of staffing up? Did other things change? How did airlines respond? Because that was about as bad press as you could imagine for everyone involved.
John Gradeck
Oh yeah. When you, when you talk about, you know, everybody was talking about the worst airports in the. Yeah. You know, we’re Toronto and, and Montreal airports, and we’re talking about some pretty crappy airports around the world. And you know, we, the pride of Canadian aviation has been our airports and the way in which airports are being run.
Jordan Heath-Rawlings
Uh, and all of a sudden we have this, you know, black mark thrown against. Both Pearson and Trudeau are international gateway. That kind of made press, you know, when cnn, b BBC the world was talking about how bad these two Air force were, you know, the, the, the question you have to ask yourself, what happened since?
John Gradeck
And the simple answer is that traffic reduced. I think after, you know, everybody got back to school. Mid-September, demand dropped off and the airlines had a chance to basically take a deep breath and cross their fingers to make sure that, you know, things got back onto an even keel. And it did by the time we got to October. Toronto was still, you know, not, not up to its previous stature in terms of 90% on time performance. It was still stuck around 60, 65% on time, but a heck of a lot better than it was in July at 40 or 44%. So the problem then became Christmas, and Mother Nature, you know, had some nasty surprises and nasty weather show up during, this uncommon phenomenon. We do have winter in this country, right? Um, and, but it came in with a vengeance and it happened to hit, you know, during the Christmas peak. So on December 15th and December 16th in Vancouver, you know, you had a, you know, 30 centimetres of snowfall with some freezing rain. You know, that was an uncommon snowstorm in Vancouver. But the Vancouver does get snow, and that kind of was a start of, um, a weather pattern. Kind snaked its way across the country. Started in the 16th of Vancouver. Ended up in Toronto around the 22nd, 23rd and 24th, and the same with Montreal. So that one weather system basically wrecked havoc through the aviation system and not for it being a ferocious snow storm.
We’ve had, you know, 50 or 60 centimeters of snow and we’ve had, you know, places like Toronto call out the Army. Of course, some snow removal , but this wasn’t one of those snowstorms. It just was the fact that once again, The airlines cranked up all the capacity that they could because they know Christmas season is two weeks long and that’s the season where they make the most money and they charge exorbitant fairs and the flights are full and people wanna go away for Christmas.
And at this Christmas, people have gone on airplanes because they haven’t seen family for three years. Yeah, and the airlines basically were very, very gracious in putting all that capacity out there. But then, you know what the, the problem was that there was no flexibility. In their schedules to take into account the fact that mother Nature reared it’s proverbial ahead in the winter and kind of messed things up. So the, the lack of flexibility, the lack of resilience, the lack of, of, of any capability to recover, uh, by the airlines really cause a problem to, again, exacerbate themselves over the Christmas holidays. During that lull period in the fall that you just mentioned, you know, the traffic fell off, which is great.It allowed things to, to operate more smoothly. But did the airlines or the airport authorities actually do anything to increase the capacity for when demand went back up around the holidays? I guess I’m just trying to get a sense of.
Jordan Heath-Rawlings
Are we just gambling from one peak season to another, or has there been an effort to address the underlying issues?
John Gradeck
Good question. And that’s the, the, the point of my article in the conversation was that, have we learned anything? Have we, well, I, you know what? I think some of us have, some of us have, and, and it’s, and unfortunately it’s not uniform across the industry.
Jordan Heath-Rawlings
Mm-hmm.
John Gradeck
I think that if I look. You know, the airports and I, and I look at the airport structures and I look at how the airports are, are looking at their operations, let’s say for spring break, or even looking at it for the summer of 2023, the airports are gonna be another very, very busy place because the airlines have created a schedule that cranks up those assets, those airplane assets, as hard as it can. Because they’ve lost profitability in the last three years, or tried to catch up. Just look at their Canada, you know, in a, in a fourth quarter of 2022, as we saw last week in their annual report. Yeah. They made 160 million. So they say, but you know, there’s a 350 million currency adjustment in there.
Jordan Heath-Rawlings
So, Hmm.
John Gradeck
Even with all the traffic that they had, even with all the inability that they had to, to in fact get an operation in place, they still managed, in my opinion, to lose money in the fourth. And for the whole year, they lost over a billion dollars. So I think that I’ve seen glimmers of hope coming out of places like WestJet where they rationalized their schedules and they basically have taken an attempt to kind of put together an operating plan that they say has got some resilience built into it, and they have the ability to recover.
Jordan Heath-Rawlings
Mm-hmm.
John Gradeck
Much more easily than they had, let’s say last summer. And we all know the story of Sun Wing. Sun Wing has taken the initiative to reduce their schedules, and we’ve seen cancellations across the can across Canada of their services as a reflection of the fact that they went over the edge when it came to planning services and or selling flights for which they had didn’t have adequate pilots. So Sun’s taken a step back from their schedules. West Jets kind of rationalize their services. I’m still of the opinion that, you know, air Canada still might be at risk. Hmm. Uh, both during spring break and the summer peak.
John Gradeck
Listen, airports are busy all the time, right?
John Gradeck
And pre pandemic, you know, you would expect the airport to be busy, but there’s a difference between busy and like total disaster. So what tips that over, so that dance between the airport and the airline and all of the other agencies usually takes place four or five months ahead of time. So if I look at, you know, the summer of 2020, The airlines, you know, did send to the airports, you know, the schedule of what the summer of 2023 looks like, and they’ve known since last fall what spring break is gonna look like. And then what they do is they basically just give you the airplanes.
And this is the schedule, and this is what we’re planning.
Jordan Heath-Rawlings
Hmm. No notion of passengers. Right. The airports have no idea how many passengers are gonna get on board those airplanes, they just know they have X number of airplanes coming in and. Um, but you know, the critical piece of information that’s missing, it’s, it seems since the pandemic is the airlines really aren’t providing passenger load information to the airports and to the agencies that allows ’em to make sure that they’ve got the right level of staffing required to support.
John Gradeck
Those passengers, they have enough gates because that’s what airplanes use. The problem is passengers is, is still very much an unknown quantity for the air force. And they, and they’re reacting hour by hour, minute by minute, depending on how the airlines basically have sold their schedule and the number of passengers coming in there. So passenger counts, uh, both inbound and outbound are a critical piece of information that the airports and the agencies need and they’re not. Would it be fair to say, and I don’t wanna put words in your mouth here, but we’re talking about lessons learned is one of them for the airline, simply like, don’t let your mouth write checks that your butt can’t cash. Yeah, that’s exactly what happened. That’s what, exactly what happened. They’re greedy because they’ve lost a lot of money over the last two and a half years because of the pandemic and all of the restrictions that the pandemic has provided. Yeah, and you know, the focus of attention of the shareholders of these airlines is recover the profit. Get back in there and make as much money as you can. Again, I’ll go back to your Canada’s statements on Friday. If you listen carefully to what they were saying and, and, and understand the publications of their data, it’s all financial and it’s about cost. It’s about cost containment, and it’s about, you know, balance sheet and impacts. It’s about income statements, source and uses of funds, cash flows, free cash, all the great. Nobody’s talking about service. Mm-hmm. , nobody’s talking about on-time performance.
Jordan Heath-Rawlings
Nobody’s talking about the amount of time you have to spend on the phone waiting to talk to somebody about a flight that Air Canada or anybody else has canceled, and you’re trying to figure out what, what’s the game plan here, folks?
John Gradeck
Right. So, It seems to me that as a result of, you know, the, the, the cutbacks that the airlines did within the pandemic and the resources, they lost, they lost a lot of experience. They lost a lot of customer contact expertise. That expertise is, is hard to come by, and that’s what’s causing the airlines to kind of say, well, right now our focus is on cost containment, revenue maximization, and customer service takes a back. And that unfortunately is very prevalent through the industry. And it’s not just Canada, the us, the Europe, we’re all, we’re all in the same boat. We cut off our nose in spite of our face. We . We laid off tens of thousands, hundreds of thousands of people in the industry worldwide.
Jordan Heath-Rawlings
To minimize costs during a time when we had no traffic, but we are paying the price, right?
John Gradeck
It’s gonna take months, if not years before we rebuild that level of expertise and experience and customer goodwill. Yeah. Uh, that we, uh, experienced prior to the pandemic.
Jordan Heath-Rawlings
You know, you talk about airlines being greedy and focused on cash and not service. Is this a place, at least in this country where more competition might serve us? Well, there are not a lot of Canadian carriers left, and even some of them are owned by other ones. Like, would that help or is it, is it just a matter of the infrastructure?
John Gradeck
Oh, I, I would take issue with de fact with your statement about not enough competition. Really explain. . Unfortunately, you know, the competition is not in every single city pair, but, you know, if I look at, you know, we, we’ve had three airlines start up in the middle of the pandemic.
Yeah. We’ve had flare, we’ve had links, we’ve had Canada Jet mines, we’ve seen Porter kind of rearrange. Its its operating plant to, to move into jets and fly out of Pearson.
Jordan Heath-Rawlings
You know, where do these guys wanna fly their airplanes?
John Gradeck
They wanna fly the airplanes, where the market is dense. To basically be able to attract traffic and attract people, you know, with a pricing structure that kind of undercuts the big players.Hmm. So you have, you know, guys like Flair who currently are the price leaders domestically in Canada at least, that you know, will get you from Toronto to Vancouver for 133 bucks, all in access. One way, you know, air Canada sitting at typically would’ve been around 400, 4 50, but Air Canada had to react to flair and so did West Jet.
Jordan Heath-Rawlings
So and so did the links, and everybody’s now sitting within a buck of each other at Toronto, Vancouver. Hmm. You know, and there are six carriers flying Toronto, Vancouver, July 14th, 2023. There are 33 flights flying between Toronto and v. And that is an unheard of number of floods.
John Gradeck
The market is not that big, right? That’s more than they have between New York and La , and you’re, and you’re saying, well, what’s, what’s going on here? What’s happened to the Canadian market?
And to me it’s just carriers just going nuts. Trying to maintain share of market on the part of Air Canada and West Jet and some of the smaller guys just trying to get a piece of the action.
Jordan Heath-Rawlings
Okay. And that’s what Flair and Links and Porter to a lesser degree are doing. They’re going after the larger markets, basically. Say it’s a lot easier for us to get one passenger out of that Toronto, Vancouver market then let’s say, to get one passenger out of the Toronto to Saskatoon market, or a Toronto to, or a Toronto Halifax.
Jordan Heath-Rawlings
Does that ultimately serve the Canadian traveler or not?
John Gradeck
No, it doesn’t. Of course not. You know, it, it does serve, you know, the, the cities, it serves Toronto, you know Calgary. Right? The big guys. The big guys. And so, and you, and if you wanna go to the smaller com, you wanna go to Smithers. You want to go to Fort Saskatchewan, you want to go to McMurray, or you want to go to Thunder Bay, good luck.
Jordan Heath-Rawlings
Hmm.
John Gradeck
You’re, you know, you’re, you’re gonna be flying with, you know, one or two carriers that are out there because the, the, the newer carriers aren’t interested in those smaller markets, you know, and I made, I made the testimony before the House of Commons Committee on transportation a couple of times this last fall. Saying, you know, we’ve got a problem here in Canada in terms of, uh, trying to understand what is it that we have to have in terms of a structure in Canada that democratizes transportation and then that makes air transportation, uh, you know, an unassailable human right?
Jordan Heath-Rawlings
Mm-hmm.
John Gradeck
We have a country that absolutely positively needs air transportation in order for us to survive.
You’re not gonna rail it from Toronto to Calgary, or not to, or Vancouver on a Via rail train, you know, that operates three times a. You’re not gonna do that. And so we need air transportation to basically make this country tick. And I think that, you know, that’s where the government and its regulatory bodies have in the past kind of turned to tune to say, air transportation in Canada is a user pay environment, which means the users of the air services should pay for the infrastructure associated with air, which is okay to a certain.
Jordan Heath-Rawlings
Yeah, you’re right. Why should anyone be subsidizing somebody who wants to fly between Toronto and Vancouver.
John Gradeck
Good question, but I think that, you know, there are a lot of things happening in the, in the Canadian political system that basically says, we basically subsidize, we basically cross subsidize services that we think are essential to the survival of the country.
And this is one of ’em, right? You know, if you lose air transportation, you know, you are taking a hit economically as a country. And I think that that’s where the government somehow, some way had, you know, embarked back in the. On this user pay mentality reaffirmed by the Emerson Report back in 2016, and I think the pandemic has, you know, to me, given us a lesson saying, Hey guys, you know, user pay doesn’t work. You know, the airlines are trying to reduce their debt load and recover their interest payments by flying the butts off of these airplanes. But the airports have got no nowhere else to turn to, to get revenues, but to charge you the airport improvement fees, which are climbing higher and higher. We’re at 35 bucks of Toronto and high and climbing.We’re at 45 bucks in Halifax in climbing. Those are the only tools that the airport, the airports have to kind of raise revenue to cover off the interest statements on the debts they’ve incurred over the last three years to keep the airports open. Right? And so the time the time has come in my. For Canada and for transport and for the, the leaseholders of these airports to kind of look at a different business model. Uh, and it’s either time to privatize the airports completely and let you know public funding kind of be the tool that we’ll use to kind of run the airports and make sure there’s sustainability within the airports. Or we take away the, the, the infrastructure that we currently have, which is a not-for-profit model, and just say, we’re gonna go back to government run.
Jordan Heath-Rawlings
Hmm.
John Gradeck
And then let the government, you and me, The, the infrastructure that’s required to support aviation in Canada. We started about talking about my vacation and now we’re talking about air travel as a human right. . It’s great. I have one last question to bring it back because I know people want me to ask this one. You mentioned that airlines are looking. Four or five months out as they try to make plans, as they try to suss out what the situation will be.
Jordan Heath-Rawlings
What would you tell, uh, Canadians right now who are booking flights four or five months out, whether that’s for a summer vacation or to visit family across the country or whatever, what would you tell them to do?
John Gradeck
What should they expect?
Jordan Heath-Rawlings
My, my crystal ball isn’t, isn’t working too well today. It’s a little clouded. I won’t hold you to it. I just wanna, I just want a little tape. Yeah. It’s gonna be, it’s gonna be a mess. Hmm. Prices are very high. There’s a lot of capacity out there. The airlines are salivating with all demand that’s gonna be showing up, and they put a lot of capacity out there. Those 33 flights I mentioned between Toronto and Vancouver. The odds of all 33 flights operating slim to none.
Jordan Heath-Rawlings
Huh?
John Gradeck
They now, whether they cancel short term or they canceled day of flight or later on, I’m not sure, but there’s no way in heck that those 33 flights are gonna operate. Yeah. You book now be prepared for at least three or four schedule changes. You know, don’t book a cruise three hours after your planned flight is supposed to arrive because it will not. The odds are you will get schedule changed. Uh, and then if you do, show up at the airport, do show up early. Don’t check a bag unless you have to. And if you do, check a bag, put an air tracker in the bag.
Jordan Heath-Rawlings
Gosh, that’s dismal. I’m, I’m only gonna travel in mid-February from now on. Stay away from, stay away from school break. April’s not bad. You know, crows are starting to show up. The flowers are out in invading Victoria, so, okay. It’ll be a nice time to travel across Canada, but uh, yeah, you know, as of May 15th, June 1st, stay away. Thank you so much for this, John. Really fascinating.
John Gradeck
All right. I hope I helped. Take care of yourself.
Jordan Heath-Rawlings
John Gradeck of McGill University. That was the big story. For more from us, you can head to the big story podcast.ca. We’ve got all our episodes there. You can talk to us on Twitter at the big story fpn. You can always email us with episode ideas at hello at the big story podcast.ca, and you can call us and leave a voicemail if you still like the phone. Four one six nine three five five nine three. The big story is available wherever you listen to podcasts. If you listen to podcasts on Apple or another platform that lets you review ’em, please do us the favour.
Jordan Heath-Rawlings
Thanks for listening. I’m Jordan Heath-Rawlings. We’ll talk tomorrow.
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