Quarterly Financial Report for the quarter ended December 31, 2020

Management Statement for the Quarter Ending December 31, 2020

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 (CTA) is an independent, quasi-judicial tribunal and regulator that has, with respect to all matters necessary for the exercise of its jurisdiction, all the powers of a superior court. The CTA has three mandates:

• It helps 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, travelers and businesses who rely on it; and the communities where it operates.
• It protects the human right of persons with disabilities to an accessible transportation network.
• It provides consumer protection for air passengers.

To help advance these mandates, the CTA has three tools at its disposal:

• Rule-making: It develops and enforces 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 take the form of binding regulations or less formal guidelines, codes of practice or interpretation notes.
• Dispute resolution: It resolves disputes that arise between transportation providers on the one hand, and their clients and neighbours on the other, using a range of tools from facilitation and mediation to arbitration and adjudication.
• Information provision: It provides information on the transportation system, the rights and responsibilities of transportation providers and users, and its legislation and services.

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 CTA's spending authorities granted by Parliament, and those used by the CTA consistent with the Main Estimates and Supplementary Estimates (as applicable) for the 2020-2021 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 CTA 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 CTA’s total authorities available for use in 2020-2021, totalling $44,511,936 have increased by $7,764,231 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 is primarily attributable to the temporary funding of $7,562,923 received in order to respond to a higher number of service and accessibility related complaints as announced in the Economic and Fiscal Snapshot 2020.

2.2 Statement of Departmental Budgetary Expenditures by Standard Object

Compared to the previous year, total budgetary expenditures recorded in the third quarter have increased by $752,709, from $8,669,154 to $9,421,863, as illustrated in the Departmental Budgetary Expenditures by Standard Object below. This expenditure increase is mainly attributable to an increase in the Personnel and Professional and special services categories. These increases are offset by a reduction in the Transportation and communications category as explained below:

• The expenditures in the Personnel category have increased by $636,783 and is primarily attributable to the additional resources required to address the continued influx of air travel complaints.
• The expenditures in the Professional and special services category have increased by $203,388. This increase is primarily attributable to expenditures incurred in relation to the Government of Canada 2.0 Fit-up Standards project.
• The expenditures in the Transportation and communications category have decreased by $93,826 and is primarily due to the COVID-19 travel restrictions.

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

Since the coming into force of the second phase of rights and protections under the Air Passenger Protection Regulations (APPR) on December 15th, 2019, the CTA has received an unprecedented number of complaints. At the close of 2019-20, a total of 13,467 complaints were carried forward for processing into 2020-21. In addition to this, since the mass disruption of air travel beginning in mid-March as a result of the COVID-19 pandemic, the CTA has received approximately another 12,000 complaints. By comparison, 826 complaints were filed in 2015, 3,367 in 2016, 5,565 in 2017, 7,650 in 2018 and 19,392 in 2019. This is a 23-fold growth in volumes over 5 years and would be challenging for any organization.

While the CTA has received temporary funding increases from Parliament in response to this situation, it mostly had to handle these pressures through process efficiencies and long hours of hard work. Without a permanent funding strategy, there is a risk the CTA will not be able to effectively deliver its mandate of consumer protection for air passengers. As CTA resources are stretched thin to accommodate this burgeoning caseload, its capacity will be eroded in its other core mandate areas: protecting the rights of persons with disabilities and promoting the efficiency of the national transportation network.

As travel begins to ramp up again, the CTA's ability to deliver timely dispute resolution services to Canadians will depend on having adequate and predictable funding.

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

During these difficult times, the CTA continues to maintain its normal operations while its employees practice social distancing. The CTA's dedicated employees are almost all working remotely and provide service using electronic means.

Although there have not been any significant changes to CTA programs as a result of COVID-19, the CTA did issue temporary adjustments to certain APPR provisions to ensure that airlines had sufficient flexibility to adjust flight schedules as global air travel was thrown into chaos by the COVID-19 pandemic and related travel restrictions. These temporary adjustments ended on June 30, 2020 and all requirements of the APPR are now applicable. Between September and October 2020, airlines submitted new requests to the CTA for temporary adjustments to certain compensation and rebooking requirements in the APPR. Consultations on this matter were held between December 11, 2020 and January 29, 2021, after supplemental data were provided by the airlines. The CTA is currently considering all information submitted and will make its final decision shortly.

In addition, due to the severe operational and financial disruptions to the transportation sector caused by COVID-19, the CTA, with the approval of the Governor-in-Council, delayed the coming-into-force of a number of targeted provisions of the Air Transportation for Persons with Disabilities Regulations (ATPDR) until January 1, 2021. Most provisions of the ATPDR – over 200 – came into force, as planned, on June 25, 2020.

The CTA has since received additional requests from transportation service providers for temporary exemptions from some provisions of the ATPDR due to the impacts of COVID-19. The CTA has launched consultations on this matter, in part to ensure that the disability community has an opportunity to provide input.

Approval by Senior Officials

Approved by:

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Statement of Authorities (unaudited)

Fiscal year 2020-2021

	Total available for use for the year ending March 31, 2021*	Used during the quarter ended December 31, 2020	Year to date used at quarter-end
Vote 1 – Program expenditures	39,479,955	8,538,752	23,773,333
Budgetary statutory authorities − Employee Benefit Plans	5,031,981	883,111	2,649,333
Total authorities	44,511,936	9,421,863	26,422,666

Fiscal year 2019-2020

	Total available for use for the year ended March 31, 2020*	Used during the quarter ended December 31, 2019	Year to date used at quarter-end
Vote 1 – Program expenditures	33,217,966	7,801,571	21,902,219
Budgetary statutory authorities − Employee Benefit Plans	3,529,739	867,583	2,528,538
Total authorities	36,747,705	8,669,154	24,430,757

Departmental Budgetary Expenditures by Standard Object (unaudited)

Fiscal year 2020-2021

Expenditures:	Planned expenditures for the year ending March 31, 2021	Expended during the quarter ended December 31, 2020	Year to date used at quarter-end
Personnel	34,349,619	8,353,538	23,820,673
Transportation and communications	224,349	33,965	87,913
Information	550,346	55,471	215,656
Professional and special services	2,623,351	526,866	1,027,976
Rentals	1,503,367	272,962	589,103
Repair and maintenance	246,620	95,456	96,639
Utilities, materials and supplies	355,857	61,128	139,445
Acquisition of land, buildings, and works	3,522,137	-	-
Acquisition of machinery and equipment	1,134,825	22,028	444,687
Other subsidies and payments	1,465	449	574
Total net budgetary expenditures	44,511,936	9,421,863	26,422,666

Fiscal year 2019-2020

Expenditures:	Planned expenditures for the year ending March 31, 2020	Expended during the quarter ended December 31, 2019	Year to date used at quarter-end
Personnel	27,261,314	7,716,755	22,012,194
Transportation and communications	653,046	127,791	356,505
Information	393,843	36,044	224,782
Professional and special services	2,789,609	323,478	998,059
Rentals	902,147	175,110	504,979
Repair and maintenance	141,193	24,353	27,798
Utilities, materials and supplies	160,466	36,064	60,166
Acquisition of land, building and works	3,522,137	-	-
Acquisition of machinery and equipment	923,950	229,559	246,261
Other subsidies and payments	-	-	13
Total net budgetary expenditures	36,747,705	8,669,154	24,430,757