Quarterly Financial Report For the quarter ended December 31, 2024

Management statement for the quarter ending December 31, 2024

1. Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board under the Treasury Board Directive on Accounting Standards: GC 4400 Departmental Quarterly Financial Report. It should be read in conjunction with the Main Estimates and Supplementary Estimates for the current year.

The quarterly report has not been subject to an external audit or review.

1.1 Canadian Transportation Agency mandate

The Canadian Transportation Agency (Agency) is an independent regulator and quasi-judicial tribunal with the powers of a superior court. It operates within the context of the very large and complex Canadian transportation system. The Agency's responsibilities are:

• To help ensure that the national transportation system runs efficiently and smoothly in the interests of all Canadians: those who work and invest in it; the producers, shippers, travellers, and businesses who rely on it; and the communities where it operates.
• To provide consumer protection for air passengers.
• To protect the human right of persons with disabilities to an accessible transportation network.

The Agency has specific powers assigned to it under the Canada Transportation Act:

• It is an economic regulator of modes of transportation under federal jurisdiction and develops and applies ground rules that establish the rights and responsibilities of transportation service providers and users and that level the playing field among competitors. These rules can be binding regulations, guidelines, or codes of practice.
• It is a tribunal that hears and resolves disputes like a court. It resolves disputes between transportation service providers and their clients or neighbours, using various tools from facilitation and mediation to arbitration and adjudication.

Further information on the CTA’s mandate, roles, responsibilities and programs can be found in Part III of the Estimates – Departmental Plan.

1.2 Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agency's spending authorities granted by Parliament, and those used by the Agency consistent with the Main Estimates and Supplementary Estimates (as applicable) for the 2024-2025 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

The Agency uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of the fiscal quarter and the fiscal year-to-date (YTD) results

This section highlights the significant items that contributed to the net increase in resources available for the year, as well as actual expenditures for the quarter ended December 31.

2.1 Significant changes to authorities

As illustrated in the Statement of Authorities and the Departmental Budgetary Expenditures by Standard Object tables at the end of this report, the Agency’s total authorities available for use increased by $1,734,541, or 3.1%, from $56,229,508 as of December 31, 2023, to $57,964,049 as of December 31, 2024. The increase in authorities available for use is mainly attributable to the increase in temporary funding (approximately $4.1 million) received in 2024-2025, as announced in Budget 2023. This increase in temporary funding primarily aims to increase the Agency’s capacity to process air travel complaints. This increase is primarily offset by a reduction in funding for compensation adjustments arising from the renewal of collective agreements, which occurred in 2023-24.

2.2 Significant changes to expenditures

As illustrated in the Statement of Authorities and the Departmental Budgetary Expenditures by Standard Object tables at the end of this report, expenditures recorded to the end of the third quarter increased by $1,042,894, or 7.8%, from the previous year, from $13,434,882 to $14,477,776 (see Table A: Variation in Departmental Expenditures by Standard Object).

Overall, the year-to-date expenditures at the end of the third quarter of 2024-2025 represent 70.2% of the annual planned expenditures, which is greater than the third quarter (59.5%) of 2023-2024. This is primarily due to the ramp up of personnel hired towards the end of fiscal year 2023-2024 in response to supplementary temporary funding granted in Budget 2023.

Personnel: In comparison to the previous fiscal year, personnel expenditures have increased by $1,588,182. In 2024-2025, the Agency has an increased staff complement to process air travel complaints as a result of the supplementary temporary funding granted in Budget 2023. In addition to this, personnel expenditures are greater in 2024-2025 due to increased salary rates following the renewal of various collective agreements.

Professional and special services: In comparison to the previous fiscal year, professional and special services expenditures have decreased by $402,333. This decrease is mainly attributable to the following:

1. In 2023-2024, the Agency invested additional funds in the professional development of its employees and incurred non-recurring training expenditures (e.g. leadership training for the Agency’s management team).
2. Certain expenditures incurred in 2023-2024 were related to projects that came to an end in late 2023-2024.
3. Finally, as part of meeting the Government of Canada’s commitment to reducing spending by $14.1 billion over the next five years, the Agency has reduced its spending on professional and special services in 2024-2025.

Rentals: In comparison to the previous fiscal year, the increase of $129,236 in rentals expenditures is mainly due to a timing difference in the settlement of invoices received for the rental of application software and due to a higher number of application software licenses as a result of the increase in staff complement.

With respect to all other budgetary expenditures by Standard Object, overall expenditures are similar to those of the previous fiscal year. Any difference is primarily attributable to the period in which the purchases were settled.

3. Significant changes in relation to operations, personnel and programs

There have been no significant changes in relation to the Agency's operations, personnel or programs over the last quarter.

4. Risks and uncertainties

Unpredictability of air travel complaint volumes: In recent years, the Agency has experienced a consistent and significant increase in air travel complaints. Despite receiving supplemental temporary funding to address the growing volume of air travel complaints, the number of incoming complaints has exceeded the projections. Consequently, the backlog of cases continues to grow despite the additional resources provided. This unpredictability in complaint volumes poses challenges in planning for case processing times and delivering accurate information to the public. To mitigate this risk, the Agency continually reviews and streamlines its business processes and procedures, while also adopting new technologies and tools to enhance efficiency.

Managing in the context of significant change: Over the past year, and in a short period of time, the Agency has transformed significant aspects of its air related consumer protection responsibilities. The Complaints Resolution Office (CRO) for air travel complaints was established just three months after the legislative amendments were enacted requiring substantial organizational and procedural changes, recruitment and training of new personnel, and enhanced stakeholder engagement. Additionally new proposed amendments to the APPR have recently been published in Canada Gazette Part I. The implementation of the final regulations could require additional changes to the Agency’s systems and procedures. To mitigate the risks related to the high rate of change and in order to remain agile the Agency is currently reviewing its plans and forecasts for investments in technology and systems, and its plans for employee development and training. Additionally, efforts are being deployed into stakeholder engagement and external communications products.

Sunsetting temporary funds: Budget 2023 announced that the Agency would receive $75.9 million over three years, starting in 2023-2024, to increase its capacity to process air travel complaints. The Agency over the last two years has and continues to receive twice the number of complaints it anticipated. With the temporary funding coming to an end in fiscal year 2025-2026, the Agency continues to aggressively seek efficiencies and will pursue long-term funding options in order to ensure the delivery of its mandate in an effective and timely manner. The significant portion of the Agency's budget being temporary (37% in 2023-24), also leads to a higher rate of turnover, and requires greater allocation of time and resources to staffing and training, accompanied by a decrease in productivity. The Agency is diligently monitoring and managing its financial resources to optimize staffing, onboarding, and training processes within the constraints of available funding.

Approval by Senior Officials

Approved by:

Statement of Authorities (unaudited)

Departmental Budgetary Expenditures by Standard Object (unaudited)