Federal fees on airfare hitting passengers in the pocket, report finds

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Canada’s federal regulations are behind the high cost of domestic air fares, a new report says.

Excessive fees and taxes on airlines and airports are being passed down to travellers and making ticket prices less competitive, according to a Montreal Economic Institute study.

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“Ottawa prefers to treat our airports as cash cows, rather than the essential transportation infrastructure that they are,” said Gabriel Giguère, the author of the new study. “These taxes have a direct effect on the high cost of domestic travel in this country.”

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Using a roundtrip flight from Montreal to Vancouver during Spring Break 2024 as an example, Giguère estimated taxes and fees would make up more than a third of the final ticket price. While Porter Airlines charges $332 for the flight if booked today, the airport improvement fee of $102 plus $14.24 security fee and subsequent sales tax would equal to $180, bringing the final price up to $512.

According to the report, rental fees imposed on airports are a major reason ticket prices are so high.

“For the 2022-2023 fiscal year, the rents paid to the federal government amounted to $419 million, an increase of 42.5 per cent in just 10 years,” the report says.

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Toronto Pearson and Montréal-Trudeau, two of Canada’s busiest airports, accounted for more than half of the rent collected in 2022. This amounts to about 12 per cent of the two airports’ total revenue, according to MEI.

“Compared to the billions of dollars it collects in rent, the federal government invests little, if anything, in maintaining airport infrastructure,” the report says.

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Lack of government funding for maintenance is another cost passed down to consumers, the report says. Travellers at Montreal-Trudeau will see the airport improvement fee increase to $40 by March 2024. Pearson airport increased the fee to $35 from $5 following the pandemic, according to La Presse.

Fuel charges in Canada are also 158 per cent higher than in the U.S. — four cents per litre compared to 1.5 cents, the report notes.

Similarly, Post 9/11 security fees are more expensive in Canada than in the states. And they, too, are on the rise. As of May 1, 2024, travellers in Canada will pay $9.94 for a domestic flight and $34.42 for an international flight. The same fee in the United States is less than $15.30, the report says.

“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,” Giguère said. “Whether a ticket is bought for a vacation or to reach our remote regions, these taxes have a negative effect on families’ budgets.”

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