When Joseph Fooks and his parents decided to fly to New York for a long weekend, they could have headed to Pearson International Airport, a mere 30 minutes away from their home in Richmond Hill, Ont. Instead, they packed up their new Lexus SUV and made the three-hour drive across the border to Buffalo Niagara International Airport.
The Fooks family wanted to take advantage of JetBlue's $89.70 (U.S.) one-way fares between Buffalo and New York. They figured they would save a combined $600 (Canadian) on their round-trip by flying from the United States, compared with the cost of taking an Air Canada flight from Toronto.
"Every dollar adds up," said Mr. Fooks, 25, clutching his boarding pass at the gate. "The savings on the plane tickets cover our entire three nights' hotel stay in New York."
In search of similar deals, one in six Canadians flying to a U.S. destination are now turning their backs on Canada's airports and taking advantage of cheaper American fares.
The trend is picking up speed. Over the past decade, the number of trips taken at U.S. airports by Canadians has more than doubled, according to an analysis of 14 American airports by The Globe and Mail.
Last year, a record 2.3 million Canadians flew to or from the U.S terminals studied by The Globe. The loss of those passengers hurts Canada's domestic airline industry, but it also has had a much wider impact. Local companies are losing the revenue that airport traffic generates. Businesses with far-flung operations are facing higher flying costs for employees who use Canadian airports. In an age where a top-notch air hub is seen as a vital ingredient in attracting enterprises to a region, Canada's leading airports are finding it challenging to increase their passenger traffic.
The leakage of passengers to U.S. airports is costing Canada at least $1.1-billion a year in economic output, according to AirTrav Inc., a Toronto-based consulting firm. The drain is also raising questions about the federal government's policy toward air travel. For years, Ottawa has treated large airports as cash cows to be milked for revenue. But the surging number of Canadian travellers flying from U.S. airports suggests that the government's desire for airport revenue is ultimately self-defeating and a hindrance to economic growth.
The federal government has resisted pleas for change, although Kristine Burr, assistant deputy minister of policy at Transport Canada, told a Senate committee in October she recognizes that airports and airlines "feel the cost structure in Canada is onerous relative to what is in place in the United States."
She said lower U.S. airfares are, in part, the result of assistance for airports from all levels of U.S. governments, and added that cheaper American ticket prices hold benefits for Canadians as well. "One could argue that the discipline of knowing that there are options across the border is to some extent keeping airport costs somewhat competitive here in Canada, too," Ms. Burr said.
That viewpoint earns little sympathy from Fred Lazar, a business professor at York University's Schulich School of Business, who blames Canada's high airfares on the "ground rent" that Ottawa charges major airports, as well as layers of taxes and security fees imposed by government.
Mr. Lazar warns that Canada is at risk of becoming a backwater for international air travel, as high fares drive away travellers. Airports should be seen as spark plugs for economic growth, he said. With the United Arab Emirates, the United States and China investing heavily in their airports, he asks: "Where will Canada end up?"
Airports taking a hit
The impact of Canada's airport policy can be seen from west to east. In British Columbia's Lower Mainland, Canadians are driving to Bellingham, Wash., and Seattle in search of bargain flights. In southern Alberta, residents are taking a shine to Montana air terminals instead of driving to Calgary. In Manitoba, passengers are bypassing Winnipeg International Airport in favour of flying from Grand Forks, N.D., and Fargo, N.D.
With three-quarters of this country's population living within roughly 160 kilometres of the Canada-U.S. border, it has long been easy for Canadians to nip across to seek cheaper fares. But the extent of the current exodus is unprecedented. The number of one-way trips made by Canadians at 14 key U.S. airports hit a record 4.6 million in 2009.