The Cost of Air Travel in Canada
As in any competitive business, airlines set the price of their product – airline tickets – by balancing the intricacies of supply and demand for air travel with the costs they must incur to do business. Affordability and service ensure that Canada’s airlines can attract travellers in a global marketplace in order to thrive. While Canada’s airlines have some choices regarding the costs they incur, in some key areas, especially in the rent and terminal and landing fees, charged by airport authorities, the airlines have no choice at all, and often very little power to prevent cost increases.
There are also direct added costs for Canadian travellers. Unlike any other transportation sector, the price an airline sets for its ticket is often significantly less than the amount it must ultimately collect from a customer. That is because a number of governments and government agencies in Canada and abroad have found air travel to be a convenient way to collect a number of fees and taxes and to recover costs of public services.
By the time the final bill is calculated, an airline will typically have collected the following from each Canadian traveller:
- An Airport Improvement Fee (AIF) for the airport authority
- Security Charge for the federal government
- Federal sales tax (GST) for the Government of Canada
- Provincial sales tax (PST or the Harmonized Sales Tax – HST) for the provincial government
- Fuel Excise Tax(es) for the federal and sometimes the provincial government
- NAV CANADA surcharge for air traffic control services
International travellers may have further additional taxes and fees depending on their destination.
Not only is it important to be competitive from a cost perspective, our passenger facilitation must be also word-class. This means that improvements in the areas of security screening, customs and immigration and visa processing are required to make it easier to fly, visit and do business in Canada.