Canadians could see “significantly more affordable flights” if Ottawa allowed foreign airlines to compete more in Canada, and if there were more for-profit airports, a new study says.
Changing long-standing cabotage rules which give domestic airlines the upper hand would not be welcome by legacy carriers.
“Canadian air travel is plagued by higher ticket prices,” finds a new study published by the Fraser Institute, an independent, non-partisan public policy think-tank.
"As Canadian travellers know all too well, airfares in Canada are higher than in other countries, but by aligning federal policies with international best practices, Canadians could see significantly more affordable flights," said Jake Fuss, director of Fiscal Studies at the Fraser Institute and co-author of Clearing the Runway: Reforms to Enhance Air Travel Competition.
“Canadian passengers face excessive fees that make air travel costlier than in many other countries,” Fuss said. “Four main charges—airport improvement fees, air traffic control fees, air travel security charges, and airport landing fees—significantly increase airfare costs. Combined with excessive non-safety related regulations, and a restrictive and outdated airport ownership model, these factors limit consumer options and drive up prices.
The study identifies four key policy solutions to improve competition, reduce costs, and enhance service quality:
- More flexible airport ownership: Allowing for-profit ownership of airports, as is done in other developed countries, would likely improve efficiency and innovation, and reduce costs for travellers. The Canadian government last week noted that 22 of the 26 airports in the National Airport System are run by private, not-for-profit airport authorities.
- Remove cabotage restrictions: Allowing foreign airlines to operate domestic routes could increase competition and lower fares. That would be a tremendous sticking point for Canadian airlines, who almost certainly don’t want foreign airlines competing on lucrative routes such as Vancouver-Toronto.
- Pursue deregulation: Streamlining non-safety related federal aviation regulations could reduce airline costs and promote a more competitive market without affecting safety.
"Outdated policies are reducing competition and innovation in Canada's airline industry and driving up airfares for travellers," said Alex Whalen, director of Atlantic Canada Prosperity at the Fraser Institute and co-author of the study.
"By aligning our airline policies with those of other developed countries, Ottawa could create a more consumer-friendly air travel market that benefits Canadian travellers."
