A bit of fresh air has been blowing through Canada's major airports. Aggressive competition is lowering or freezing some of the many fees and taxes that plague air travellers. The federal government ought to be paying attention.
Vancouver International Airport, for example, recently announced a freeze on landing and terminal fees until 2015. While levied on airlines, these fees nonetheless show up in ticket prices. The freeze is a deliberate move to staunch the flow of travellers to nearby Washington State airports such as Seattle. The provincial government is reducing its take as well, promising to eliminate a two-cent-a-litre tax on fuel for international flights.
Like all competition, Vancouver's move has sparked a response elsewhere. Last week, Toronto's Pearson International Airport announced it was cutting its Airport Improvement Fee from $8 a flight to $4. It's a welcome, and perhaps historic, event. The airport authority said, "This is believed to be the first decrease to an AIF in Canada." Pearson has also announced a variety of incentives to attract new carriers to its runways.
Travel by air has become burdened by a daunting and ever-increasing array of fees and taxes. A report to be released this week by the National Airlines Council of Canada shows these extra costs can comprise between 30 per cent and 70 per cent of total ticket prices. The moves in Vancouver and Toronto suggest airport managers have finally realized the best way to encourage more flights is to reduce their share of fees.
Unfortunately the same cannot be said for the Canadian Air Transport Security Authority and its Air Travellers Security Charge.
While the requirements of airport security have changed dramatically over the past nine years, the equally dramatic growth in this security fee represents a significant drag on air travel. The fee for a single international flight originating from Canada was $17 last year. It's now $25.91. The domestic flight fee has risen from $4.90 to $7.48. By contrast, American air travellers are required to pay just US$2.50 per boarding, up to a maximum of two boardings per trip. Hence Vancouver's difficulties in competing with Seattle.
The federal government is currently conducting a review of CATSA and its security fees. With the security charge scheduled to bring in $3.3-billion over the next five years, we should keep in mind the obvious benefits of lowering, rather than raising, fees on Canadian air travellers.