Quarterly Financial Report For the quarter ended September 30, 2023

Management Statement for the Quarter Ending September 30, 2023

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 Agency is an independent, quasi-judicial tribunal and regulator. It oversees the large and complex Canadian transportation system, essential to Canadians' economic and social well-being.

The Canada Transportation Act includes the National Transportation Policy, which states that competition and market forces are the prime agents in providing viable and effective transportation services. It also states that regulation may be required to meet public policy objectives that cannot be achieved by competition and market forces alone.

The Agency has specific powers assigned to it under this legislation:

• The Agency is a regulator of modes of transportation under federal jurisdiction. The Agency 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, less formal guidelines, or codes of practice.
• The Agency is a tribunal that hears and resolves disputes like a court. The Agency resolves disputes between transportation service providers and their clients or neighbours, using various tools from facilitation and mediation to arbitration and adjudication.

The Agency's mandates 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.

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 2023-2024 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

2.1 Statement of Authorities

The Agency’s total authorities available for use in 2023-2024, totalling $52,872,347, have increased by $10,290,591 when compared to the same period in the previous fiscal year as illustrated in the Statement of Authorities and in the Departmental Budgetary Expenditures by Standard Object below. This increase in authorities available for use is mainly attributable to the increase in temporary funding (approximately $10.1 million) received in 2023-2024, as announced on March 14, 2023. This increase in temporary funding primarily aims to increase the Agency’s capacity to process air passengers complaints.

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

Compared to the previous year, total budgetary expenditures recorded in the second quarter have increased by $1,735,558 from $9,161,916 to $10,897,474, as illustrated in the Departmental Budgetary Expenditures by Standard Object below. This increase is mainly attributable to an increase in the Personnel expenditure category. As a result of the supplementary temporary funding granted in Budget 2023, the Agency continues to hire personnel primarily to increase its capacity to process air passengers complaints. In addition to the increased staff complement, personnel expenditures are greater in 2023-2024 following the renewal of various collective agreements.

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. Risks and Uncertainties

Unpredictability of air travel complaint volumes: In recent years, the Agency has experienced a significant and continuous increase in air travel complaints, with peaks in the volume of complaints during major, widespread disruptions (e.g., due to unexpected passenger volumes, winter storms, IT network outages). Between April 1 and September 30, 2023, the Agency has received over 21,700 air passenger complaints, which is a 26 percent increase compared to the same period in 2022 (17,170 received). Although the Agency has been provided with additional funding in 2023-2024 to deal with more air travel complaints, the volume of incoming complaints is difficult to predict and makes planning for case processing wait times and providing accurate information to the public a challenge.

Industry Response to Legislative and Regulatory Amendments: The Air Passenger Protection Regulations (APPR) came into force in 2019 with the objective of providing clear, consistent air passenger rights by imposing minimum requirements on airlines. However, the unforeseen impact of the pandemic exposed a critical gap in the APPR concerning refund regulations. To address this, in 2020, the Minister of Transport granted the Agency the authority to develop new refund regulations. In response to the challenges highlighted by the pandemic and to strengthen the air passenger protection framework, the Regulations Amending the Air Passenger Protection Regulations were enacted in 2022. Subsequently, in June 2023, Parliament amended the Canada Transportation Act to clarify, simplify and strengthen the air passenger protection regime. Given the various changes to the legislation and regulations, industry may struggle to make the necessary adjustments to their IT systems, training, and processes, potentially leading to temporary non-compliance with specific requirements.

Sunsetting temporary funds: The air travel complaints fees or charges are to be introduced in the near future and will fund some of the operations for processing eligible air travel complaints when the temporary funding ends in fiscal year 2025-2026. Furthermore, the Agency now has the appropriate authority to cost recover activities for the administration or enforcement of any provision of the Canada Transportation Act, including regulations whose administration and enforcement is the responsibility of the Agency, for which no fees or charges from this authority will be implemented in fiscal year 2023-2024.

4. Significant Changes in Relation to Operations, Personnel and Programs

During the second quarter of 2023-2024, changes to the Agency's senior management personnel were implemented. Nadine Brisson has been appointed acting Chief Financial Officer of the Agency effective September 5, 2023, following Mireille Drouin's departure.

There have been no other significant changes in relation to the Agency's operations or programs over the last quarter, except as described in section 3.

Approval by Senior Officials

Approved by:

Statement of Authorities (unaudited)

Departmental Budgetary Expenditures by Standard Object (unaudited)