After years of delays, Canada’s airline industry has agreed with Ottawa to make it mandatory for domestic carriers to advertise all-in ticket prices that include taxes and fees.
The Canadian Transportation Agency will draft regulations over the next year to require the airlines to market full fares to consumers, scrapping the current practice of promoting one-way ticket prices before factoring in taxes, security levies, fuel surcharges, airport improvement fees and airline charges for air navigation services.
Consumer advocates welcomed the long-awaited announcement Friday by Transport Canada.
“The good part is that consumers will be able to compare apples with apples, and they won’t be misled by the thrill of the deal. That $129 one-way special is really $475 round-trip,” said Michael Janigan, executive director of the Public Interest Advocacy Centre.
The move by Ottawa comes more than four years after approval of Bill C-11 seemingly paved the way for airlines to switch to all-in advertising instead of marketing base fares. As far back as 2003, the federal government has sought to force airlines to list the full price of their tickets.
But the airline industry resisted change for years, saying that carriers are federally regulated but travel agencies in most provinces would be able to continue advertising base fares.
On Friday, Canada’s major carriers said they are on board this time because many foreign carriers are finally moving to all-in airfares and travel agencies will be part of new regulatory discussions. The United States is slated to strengthen regulations on full ticket pricing for advertising in January.
“Our government is committed to enhancing consumer protection while promoting fair competition by ensuring greater transparency of advertised airfares for Canadian travellers,” Steven Fletcher, Canada’s Minister of State for Transport, said at an Ottawa news conference Friday. “This will allow consumers to easily determine the full cost of airfares in order to make informed choices.”
George Petsikas, president of the National Airlines Council of Canada, said a harmonized approach will improve transparency for travellers.
“The consumer wants to know ‘What’s my bottom line, please?’ never mind having to do Calculus 101 to understand what the advertisement says. Major jurisdictions like the U.S. have come to the party, so things have evolved and Canada is joining in 2012,” said Mr. Petsikas, whose council represents Air Canada, WestJet Airlines Ltd., Air Transat and Jazz Aviation LP.
Hidden charges increase base fares promoted by airlines by one-third to as much as 70 per cent, depending on the route flown and province of departure, according to a study prepared by York University’s Schulich School of Business for the council last year.
Mr. Petsikas said Canada’s major carriers remain concerned about Ottawa’s layers of aviation taxes. “It’s important to understand that the final price isn’t all our doing. We also have to collect on behalf of others,” he said. “But we will work with Ottawa on this regulatory process, as long as this applies to everybody who is marketing air services in Canada, whether it’s ourselves or Emirates or American Airlines.”
The goal is for the Canadian Transportation Agency to complete consultations and draft regulations by the end of 2012.
Mr. Janigan said he expects the agency to develop rules to make the new system work, complementing foreign provisions affecting carriers from the European Union and United States. “The all-in price can’t be in fine print so that you need a magnifying glass to see it,” he added.