Why it costs so much more to fly in Canada
Published Tuesday, August 5, 2014 6:00AM PDT
***Story originally aired on March 18, 2014***
With 75 per cent of the Canadian population living within 90 minutes of the U.S. border it's no surprise that nearly five million Canadians went cross border shopping for cheap U.S. flights last year. That's the equivalent of 64 Boeing 737 sized flights full of Canadians every day.
"It's really bad for the Canadian economy. In my view, the Canadian economy would actually generate more tax revenues to the government[if] those passengers were here spending the money and paying GST on the sandwich that they buy at the airport," said Mike Tretheway, aviation industry analyst and InterVISTAS chief economist.
Air Canada executives told a Senate investigation in 2012, that per passenger, fees at airports south of the border are 230 per cent lower than at the Canadian airports they compete with, proof that Canadian travellers are being grounded by airline fees, surcharges and taxes.
"There are a lot of different people and a lot of different entities who can impose fees, taxes, surcharges. There are airline surcharges such as fuel, for example. There are airport fees, airport improvement fees. There's government fees and taxes, duties, GST," said Richard Job, head of airline contracting at Flight Centre.
There is also the airport improvement fee. Since 1993, YVR has collected over $1,327,062,000.
Mike Tretheway is especially critical of airport security fees in Canada.
"When you think about 9-11, nine times more people died in office buildings than died in aircraft. Aviation is a tool that is sometimes used, but the risk we face from terrorism and other kinds of bad guys, is a general risk to society. And that should be paid for by society generally," he said.
Canadian air travellers also get dinged by fees to offset the dropping loonie.
"You totally hope if and when the loonie does gain in value again that you see those surcharges disappear. But fuel surcharges have been around for a long time now and we haven't really seen those drop when the price of fuel has dropped," said Job.
And finally, you can also blame the federal government for the high cost of air travel. Ottawa charges Canadian airports massive rental fees, almost $4.8 billion since 1992. That cost is then offset onto airlines in the form of huge landing fees, some of the highest in the world.
All of these fees are then passed on to the air traveller in the form of higher ticket prices.
"The Canadian government does nothing for the airports. There's nothing they invest in the Vancouver airport or the Victoria airport or Prince George and Kelowna. They pay rent and nothing comes back at all. This is simply a cash grab," said Tretheway.
What's the solution to stop Canadians from heading south to fly?
A Senate committee studying the problem says the federal government has to stop treating airports like toll booths. They've already paid more than their book value to Ottawa in rent. The Senate report says the federal government should stop charging airports rent and transfer those airports to the authorities that already operate them. Until it does that, the exodus of travellers heading south will continue.