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Air Canada CEO Calin Rovinescu (Paul Chiasson)
Air Canada CEO Calin Rovinescu (Paul Chiasson)

Airlines losing customers to U.S.: Air Canada CEO Add to ...

Air Canada chief executive officer Calin Rovinescu is sounding the alarm on the growing clout of U.S. airports poaching Canadian travellers, saying Ottawa's aviation policies are harming this country's airline sector.

Florida's Spirit Airlines will begin flights in January from terminals in Niagara Falls and Plattsburgh, N.Y., part of a trend where carriers at U.S. airports are stepping up efforts to lure Canadians with bargain fares.

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American airports enjoy major cost advantages over their Canadian counterparts, translating into vastly lower landing fees charged to carriers and reduced ticket prices for U.S. destinations, Mr. Rovinescu said.

"We increasingly see Canadians driving across the border to Buffalo, to Plattsburgh, to Seattle to get on flights because they are cheaper," he told the Canadian Club of Toronto on Friday. "Consider Buffalo - nearly 40 per cent of the cars parked at that airport's long-term spots are Canadian licence plates."

Canada's biggest airports paid a total of nearly $260-million in federal rent last year, a cost that "drives up our costs dramatically and unfairly, thereby making Canada less competitive," Mr. Rovinescu said.

He estimates that Air Canada would save almost $1-billion a year "if it were a U.S. airline with the same volume of business."

Besides rent, other revenue-generating sources for Ottawa include the Air Travellers Security Charge, aviation fuel taxes and GST, say critics, who note that the U.S. government subsidizes American air terminals.

Mr. Rovinescu and low-cost American carriers say that Ottawa should overhaul the high-tax aviation regime. JetBlue Airways Corp. and Denver-based Frontier Airlines will consider Toronto, Montreal and Vancouver as potential destinations if Ottawa were to scrap rent and chop other taxes to clear the way for airports to slash landing fees.

"The elimination of ground rent would make Canadian airports cheaper to fly to, and that would be helpful," said Daniel Shurz, Frontier's vice-president of planning and strategy and a former executive at Air Canada.

Scott Laurence, JetBlue's vice-president of network planning, said the New York-based carrier is turned off by the expensive nature of operating in Canada. "JetBlue would like to fly to Canada, but we rely on low costs in order to offer travellers low fares."

Ottawa has said it plans to stick with its rent-collection strategy.

 

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