Airlines fear carbon tax will push passengers to U.S. rivals

Canadian airlines are urging the federal government to exempt them from the Jan. 1 imposition of a federal carbon tax, which they warn will boost airfares and push passengers across the border to rival carriers and airports.

The National Airlines Council of Canada sent a letter to three federal ministers Friday cautioning the government about the reduction the levy would cause to revenues as well as marginal domestic routes.

“A carbon tax is probably the worst tool that you can envisage for aviation if you want to reduce emissions,” lobby group president Massimo Bergamini said.

Prime Minister Justin Trudeau has committed to imposing a carbon tax on provinces that lack their own form of pricing for greenhouse gas emissions.

As it stands, airlines will be required to pay the levy on flights within provinces that fall under

the federal system. Meanwhile, the government plans to work with jurisdictions to adopt a pricing scheme for interprovincial flights.

The governments of Saskatchewan and Ontario are challenging the federal carbon tax in court.

All current provincial pricing plans — such as British Columbia’s and Quebec’s — exempt airlines from a carbon tax. But the impending federal tax in provinces that don’t put a price on emissions, such as Manitoba and Ontario — where Premier Doug Ford recently scrapped cap-and-trade — are slated to face the levy come Jan. 1.