Because a substantial portion of the price of a plane ticket is federal fees and taxes, according to a new study
Federal government fees imposed on airlines and airports are a significant factor contributing to the high cost of domestic air travel in Canada, according to a recent study from the Montreal Economic Institute.
“Ottawa prefers to treat our airports as cash cows, rather than the essential transportation infrastructure that they are,” explained Gabriel Giguère, public policy analyst and author of the study. “These taxes have a direct effect on the high cost of domestic travel in this country.”
Gabriel Giguère
The study zeroes in on three primary fees that drive up ticket prices: airport rents, security fees, and the fuel tax.
Canada’s major airports, managed by non-profit organizations, annually pay rent to the federal government. For the fiscal year 2022-2023, these rents exceeded pre-pandemic levels, totalling a staggering $419 billion. Over the past decade, rents have surged by 42.5 percent.
According to Giguere, these rents are passed on to consumers through “airport improvement fees.”
Starting May 1 of next year, the air traveller security charge will increase to $9.94 for domestic flights and $34.42 for international flights. In contrast, the equivalent fees in the United States do not exceed $15.30 Canadian.
The fuel tax is another contributing factor to rising ticket prices, set at four cents per litre in Canada. In contrast, the equivalent tax in the U.S. is a mere 1.55 cents Canadian per litre.
“When you add up all of these fees charged by the federal government, you quickly realize that a substantial portion of the price of a plane ticket is taxes. Whether a ticket is bought for a vacation or to reach our remote regions, these taxes have a negative effect on families’ budgets,” said Giguere.
The study highlights the pressing need to reevaluate federal fees within the aviation sector, Giguere writes, as they continue to burden Canadian travellers and drive up the cost of domestic air travel.
| Staff
To interview Gabriel Giguere, click here.
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