Berlin -- It’s cheaper than ever for airlines to fly into Canada and Toronto in particular. But whether those cost savings are being reflected in lower fares is an open question.
Toronto’s Pearson Airport, long criticized by the world’s airlines for its hefty charges has suddenly become the golden boy. The International Air Transport Association, whose members include most major air carriers, honoured Canada’s largest airport on Monday as the “most improved” in the world. Also receiving one of IATA’s Eagle Awards for cost-cutting was Nav Canada, Canada’s air navigation system.
Marilynne Day-Linton, chair of the board of the Greater Toronto Airports Authority, which operates Pearson, said she did not know if fares have dropped to reflect the lower airport fees.
Calin Rovinescu, Air Canada’s president and CEO, said fares are not calculated on a precise market by market basis. But airport and navigation cost reductions are reflected in Air Canada’s fares, which are lower “on an absolute basis” than they were a decade ago, he said.
Asked if airlines were passing on the saving son to passengers, Giovanni Bisignani, IATA's director general and CEO, replied cryptically, that “the money doesn't stay in the airlines’ pocket."
Jeff Poole IATA’s director of industry charges, fuel and taxation, said the big advantage of the reduced costs is that fewer airlines will pull out of Toronto and more new airlines will start flying there. That increased competition could lead indirectly to lower fares. The GTAA , however, can only cut costs so much because it has no control over very high crown rents it must pay to the federal government, said Poole.
John Crichton, Nav Canada’s president and CEO said its charges to airlines have decreased for each of the past seven years. And Day-Linton said the GTAA will lower its charges by 10 per cent this year. Over the past three years Pearson terminal charges have decreased 15 per cent and landing fees have gone down 13 per cent, she said.
IATA started a campaign a couple of years ago to get the GTAA to lower its fees, said Bisignani. “They built a monument with no notion of how to fund it,” he said. “We called it Versailles. We had to get rid of a [federal] minister and the [GTAA] CEO. Then we started to work closely together.”
Not everyone finds Pearson decreased fees affordable. During a recent luncheon speech in Toronto, Virgin America chief executive David Cush berated Pearson, saying the airline's ticket prices from Canada are not as low as he would like because of the high costs associated with flying out of Toronto.
The low-cost carrier begins flying from Toronto to San Francisco and Los Angeles later this month. It will be the carrier's first destination outside the U.S.
