Major Canadian airports, such as Toronto's Pearson International Airport, have been lobbying for relief from paying ground rent to the federal government. But Ottawa is unmoved by their complaints.Fred Lum/The Globe and Mail
In Ottawa, Canadians are driving nearly four hours to catch cheap flights in Syracuse, N.Y. In Regina, residents are travelling five hours to the airport in Minot, N.D.
It's part of a growing exodus to U.S. border airports by Canadians going out of their way for big travel savings. Syracuse and Minot are just two examples of U.S. cities luring price-sensitive travellers in a cross-border shopping rush for airfare bargains.
Last year, there were a record 4.8 million one-way trips made by Canadians to U.S. airports, up 15 per cent from 2010, a new study shows. U.S. air terminals handled more Canadians in 2011 than the total number of passengers who went through Ottawa International Airport, the Canadian Airports Council said Tuesday in a report titled One of Our Airports is Missing.
Canada's airlines and airports complain they're being milked as cash cows by federal government policies that add layers of taxes and fees on top of base ticket prices. By contrast, Canada's aviation industry says, U.S. politicians view their air industry as an engine of economic growth, offering subsidies that help to keep airfares low.
"The reality is that Canada and the U.S. have divergent approaches to air transportation and its resulting economic benefits. One can endlessly debate the better approach, but the reality is that Canadian aviation and other businesses are at an unsustainable competitive disadvantage," the report's authors wrote.
The chief executive officers of major Canadian airports met Tuesday in Toronto to sound the alarm about the cross-border trend. In Toronto and Vancouver, an average of 22 per cent of U.S.-bound passengers chose to drive to an American airport for their trips last year instead of flying from their hometowns, the council's study shows. In other cities, a much larger percentage of traffic is being siphoned, including from Thunder Bay, where an estimated 55 per cent of U.S.-bound fliers opt for flights at Minnesota airports, including Canadians who drive six hours to Minneapolis.
Transport Canada argues that it's treating the aviation sector fairly, and it's up to airlines and airports to become more competitive.
There's plenty of finger-pointing about who's to blame for the higher airfares, but industry and government are doing little to bring down airfares in Canada, while customers feast on deals offered in the United States.
For consumers in Toronto and Vancouver, flying from the United States has become a no-brainer for leisure trips. The airfare savings are huge for trips to places such as Florida, Nevada, Arizona, California and even Hawaii, Mexico and the Caribbean. There isn't hesitation to book from U.S. terminals, even after factoring in gasoline for the drive across the border and, in some cases, a night's hotel stay near the American airport.
Major Canadian airports have been lobbying for relief from paying ground rent to the federal government. Besides rent, other revenue-generating sources for Ottawa include the air travellers security charge, aviation fuel taxes and GST, say critics, who note that the U.S. government subsidizes American air terminals.
Ottawa, however, is unmoved by the complaints.
"Airport rent represents a fair return to taxpayers for the economic opportunity provided to airport authorities to manage airport operations," Transport Canada spokeswoman Maryse Durette said in a statement Tuesday. "In 2005, total rent was reduced from $13-billion to $5-billion over the remaining 50 years or so of the leases. Under the revised formula, rent is determined by a progressive, revenue-based formula."
Ms. Durette also played down the effect of rent on airfares. "Every airport authority benefited from the revised formula. Airport rent represents less than 1 per cent of the cost of a ticket and is not likely to be a key factor in a traveller's decision to choose a U.S. airport over a Canadian airport," she said.
Daniel-Robert Gooch, president of the Canadian Airports Council, said he's hoping Ottawa will eventually change its tune, once it realizes the extent of the damage to the Canadian economy of air traffic heading south.
Canadian aviation executives acknowledge that every player, from airports to airlines to governments, must do their part to try to develop a strategy that will lead to lower ticket prices in Canada. While a traveller will be understandably enticed by saving $300 or more on each round-trip ticket, some consumers might choose to fly from a Canadian airport if the price difference were lowered to $50 or $75, they say.
Brent Jang