Air Canada targets 'sin taxes'

The federal government treats air travel like a "sin," allowing travellers to be hit with a slate of fees costing Canada a place as a global air hub, a senior Air Canada executive says.

"Air travel is considered a sin. It's like a sin tax, much like cigarette smoking and alcohol," Duncan Dee, Air Canada's executive vice-president and chief operating officer, said Tuesday. "There are a lot of these glaring fees which are simply collected for the purpose of collecting fees with no benefit to Canadian travellers."

Appearing before the Senate transport committee, Dee said policymakers too often have a "Pan Am" vision of air travel, referring to the new television show that portrays the early jet-set days when going by air was reserved for the rich and famous.

But the hodgepodge of fees that drive up ticket prices highlight the fact that Canada has lacked a long-term vision for its commercial aviation sector for "decades," Dee said.

"As a result, aviation infrastructure in Canada is disjointed, poorly understood, full of divergent interests working at cross purpose," Dee said.

On top of that, add high infrastructure and service costs that have actively discouraged growth in the industry, he said.

Travellers on a Canadian domestic flight pay an average of $65.56 in fees, compared to $28.71 for a U.S. domestic flight, according to an Air Canada analysis. The differences are less pronounced on international and trans-border flights, but Canadian travellers still get stuck with a higher tab.

Those costs include fees to pay for airport improvements, air traffic control, airport security, landing fees and terminal charges. In all cases, comparable U.S. charges come out cheaper.

As well, the federal government also forces Canada's major airports to pay ground rent, even though they are locally run. In the case of Toronto's Pearson airport, that added up to $120 million in 2010.

As a result, price-sensitive passengers are flocking to New York state airports in Buffalo, Niagara Falls and Plattsburgh, as well as in Bellingham, Wash., where fees on a per-passenger basis are 229 per cent lower than at competing Canadian airports, the airline says.

By 2015, Dee estimated that as many 3.4 million Canadians a year will be flying out of these four facilities alone, costing the Canadian economy an estimated $2.3 billion.

Canada should learn from places like the United Arab Emirates, Germany and the United States, which have fostered their aviation markets and today have airlines with a broad global network and airports that serve as mega-hubs, he said.