Ottawa looks to ease high airfares
Flaherty ‘concerned’ about millions of Canadians fleeing to U.S. airports in search of cheaper flights
OTTAWA— Canadians flocking to U.S. airports in search of cheaper fares have convinced the federal government to look at easing sky-high fees and taxes that are driving up the cost of Canadian tickets.
Under fire from Canadian airlines and airport operators along with the millions of passengers making the trek to airports stateside, Ottawa conceded Wednesday that the trend is worrisome.
“Yes, we are concerned about that,” said Finance Minister Jim Flaherty.
“(Transport) Minister (Denis) Lebel has been working on a consultation project with the airlines, with the airport authorities in Canada, who are very important on this issue, to try to see what we can accomplish, and we’ll hear more from him over time.”
Flaherty did not give any details on what is being considered or when the public might hear what Ottawa hopes to accomplish.
His comments came after the Conference Board of Canada added to the chorus of concerns about the economic toll that sky-high fees and taxes are taking on the Canadian travel sector.
According to the board, an estimated five million passengers cross the border annually to fly from U.S. airports to escape fees and taxes that result in much higher prices for Canadian flights.
“Cross-border airfare shopping is being driven by a perfect storm of factors that also includes differences in wages, aircraft prices, and in- dustry productivity as well as U.S. aviation policies,” said the study’s author, Vijay Gill. “For air carriers flying from American airports, these add up to a 30 per cent cost advantage.” The report examined fees at Toronto Pearson International Airport, as well as major airports in Vancouver and Montreal and their cross-border competitors. Some price factors — such as the rise of the Canadian dollar in recent years to near parity with the U.S. currency — are beyond the control of Canada’s policy makers, the Conference Board acknowledged. But, of the five million Canadians heading to the U.S. to fly, the Board estimates Canadian authorities could lure about two million of them back to airports here by adjusting Canadian airline policies. Among the report’s recommendations are reducing taxes and fees, re-examining the trans-border Air Travellers Security Charge, bringing Canadian aviation policy more closely in line with the U.S. approach, and adjusting airline pricing strategies.
Gill said governments in Canada can no longer turn a blind eye to the price disparity.
“There is a growing recognition within the policy circles that this is actually real and apparent and people do react to prices,” he told the Star.
A Senate report in June said Ottawa should “stop treating airports as a source of public revenue and start treating them as economic spark plugs.”
As a start, the report said government should stop charging ground rent, which costs airports — and travellers — some $270 million a year.
“There are policies like rent which have been long-standing irritants that we’d like to see some progress with,” said Daniel-Robert Gooch, president of the Canadian Airports Council.