Imposing a U.S. government fee on passengers flying from Canada to the U.S. would impede the ability of Canadian airports and Canada’s aviation sector to compete fairly, says an organization that represents more than 200 airports.
The proposed inspection fee of $5.50 per person outlined in the draft 2012 U.S. federal budget would add also to an array of U.S. and Canadian fees already burdening Canadian passengers, says the Canadian Airports Council (CAC).
“The problem is that it’s just one more of a thousand paper-cuts that are hurting the competitiveness of our Canadian air travel industry,” says CAC’s communications director Daniel-Robert Gooch.
“There are already about $40 in U.S.-imposed fees on transporter tickets alone. On top of that there are a host of Canadian-imposed fees and taxes that go on tickets, and they all add up.”
Canadians are already flocking to U.S. border airports where they can access cheaper fares and avoid Canadian fees, says Gooch.
A survey released last week by the Hotel Association of Canada revealed that 21 percent of Canadians said they travelled by car to a U.S. airport last year to take advantage of less expensive airline tickets for U.S. or foreign travel—up from 18 percent in 2009.
An additional 11 percent said they had not flown from a U.S. airport in the past, but that they might do so this year.
An additional tax on air travellers will decrease the ability of Canadian airlines to compete with low-cost operations at border airports.
— George Petsikas.
“We’re seeing traffic bleed south,” says Gooch.
“Every time a Canadian does that it indicates lost revenue for a Canadian air carrier, it represents a lost airfare for a Canadian airport, and it represents lost revenue for all the thousands of businesses that our airports support—everything from retail and restaurants to car rental agencies and what have you. It’s just not good for Canada.”
Canada’s user-pay approach to aviation infrastructure, the high Canadian dollar, and a lower cost structure for air travel in the U.S are some of the reasons flights south of the border are cheaper.
If adopted, the new fee, which is expected to generate US$110 million annually, would apply to those entering the U.S. by sea or air from Canada, Mexico, and the Caribbean countries that have been exempt from “passenger inspection fees” since 1997.
Several Canadian officials have criticized the proposed levy, including Prime Minister Stephen Harper who has said that although America may be struggling with a massive budget deficit, the flight fee is not a useful way to raise revenue.
News of the fee emerged just weeks after Harper visited Washington, D.C., where he and President Barack Obama signed a deal to enhance border security while keeping open the flow of travel and trade.
The National Airlines Council of Canada says it is opposed to any more fees that might boost the “alarming trend” of Canadians crossing the border to access cheaper fares.
“An additional tax on air travellers will decrease the ability of Canadian airlines to compete with low-cost operations at border airports,” says NACC president George Petsikas.
“Indeed, the announcement of an additional cost advantage for border facilities should make clear the need to reduce the commercial aviation cost structure in Canada.”
However, although the draft 2012 budget has been sent to Congress, it remains to be seen whether it will be passed.
The CAC hopes the fee proposal will be reviewed and in the end abandoned, says Gooch.
“We’re hopeful that in light of the spirit of cooperation that the president and the prime minister have committed to in the last couple weeks that the Obama administration will take another look at this, because it does fly against the spirit of what we’re trying to do as two countries that are the world’s greatest trading partners.”
Gooch says that rather than adding a new fee, both the U.S. and Canadian governments should move to claw back some of the fees and taxes that are already in place.