VICTORIA—One of the goodies in B.C.’s recent budget was the elimination of the provincial aviation fuel tax on international flights, effective April 1.
The move has been welcomed both by airline carriers and the Canadian Airport Council (CAC), which said it will stimulate international air capacity and give travellers more choice.
“B.C.’s move recognizes the importance of Canada’s tourism sector to the Canadian economy, the role of aviation for Canada’s inbound tourism, and the stimulatory effect of reducing the fiscal burden on our interconnected sectors,” said CAC vice chair Tom Ruth.
According to a B.C. government press release, the elimination of the tax will save airlines $12 million in 2012/2013 and increase flights, giving the province greater trade access to foreign markets and increasing its competitiveness.
The CAC, which represents more than 200 airports, said Canada’s ranking as a destination for international tourists has fallen from 8th place in 2000 to 15th place in 2009.
In that time, the tax burden on aviation in Canada has gradually increased and the World Economic Forum now ranks Canada’s travel sector 106th in terms of price competitiveness.
In addition to federal airport rent, the federal burden includes the Air Travellers Security Charge, and the Goods and Services Tax/Harmonized Services Tax. There is a provincial fuel tax still in place in Ontario and many airports also pay municipal payments in lieu of tax.
In order to bolster the tourism industry and help position Canada to take advantage of tourism growth opportunities, the federal government launched the Federal Tourism Strategy in October 2011.
“B.C.’s initiative follows the welcome move by the federal Minister of Small Business and Tourism to finalize and unveil a Federal Tourism Strategy—a multi-departmental and intergovernmental commitment to tackle the obstacles to Canada’s world competitiveness as a tourism destination,” said CAC president Daniel-Robert Gooch.
“Cost is an important element in that equation.”
The B.C. government said eliminating the tax brings the province in line with the neighbouring jurisdictions of Alberta, Washington, and California, which do not have a comparable fuel tax.
Air Canada also praised the move, along with a decision by the Vancouver Airport Authority to freeze landing and terminal fees until 2015.
“These types of initiatives help contribute to the competitiveness of the Canadian aviation landscape in the global marketplace,” said Ben Smith, Air Canada’s executive vice president and CEO.
“Following the progressive example now set by the Province of B.C. and in 2004 by the Province of Alberta, we urge all governments and authorities to work with the industry as partners in the development of sustainable air services with the economic spin-offs that result.”
Gregg Saretsky, president and CEO of WestJet, said eliminating the tax “represents a clear commitment to support the growth and job creation that aviation brings to the economy of British Columbia,” and urged other provincial governments to follow suit.
“At a time when fees and taxes associated with air travel continue to impact the industry’s competitiveness, we encourage other governments in Canada who have yet to act on this important issue to introduce similar measures to reduce or eliminate fees and taxes.”
China Eastern Airlines said in a release that the change will assist the airline in its “serious consideration” of expanding its services at Vancouver International Airport. China Eastern currently operates non-stop daily services between Vancouver and Shanghai.