Wide-ranging reforms are needed if Canada\u2019s aviation industry is to reach its full potential, according to a position paper co-authored by two former WestJet executives. <\/p>\n\n\n\n
In a sign of consumers voting with their wallets, millions of Canadians each year cross the border in their vehicles to take advantage of cheaper fares at U.S. airports. In the several years before the pandemic, for example, the number of such flights made by Canadians at U.S. airports averaged roughly five million annually. <\/p>\n\n\n\n
\u201cIt should be a source of great frustration for all Canadians that the aviation industry framework drives such a competitive disadvantage,\u201d said Richard Bartrem and Bob Cummings. <\/p>\n\n\n\n
Bartrem formerly worked as vice-president of communications, brand and community investment at Calgary-based WestJet. Cummings is a former executive vice-president at WestJet. In his latest role before he left the airline, he served as president of the company\u2019s Swoop operations, the ultra-low-cost carrier that was integrated into the mainline in October 2023. <\/p>\n\n\n\n
With three-quarters of Canada\u2019s population living within 160 kilometres of the Canada-U.S. border, the lure of cheaper U.S. fares lingers. <\/p>\n\n\n\n
Within Canada, the airline industry faces an array of challenges, including having to operate under a governance system for major airports that has resulted in ground rent charges by the Canadian government since 1992. Ground rent is paid by not-for-profit, community-based authorities and other groups. <\/p>\n\n\n\n
The Montreal Economic Institute noted that from 2013 to 2023, members of the National Airports System paid more than $3 billion in ground rent to the Canadian government. <\/p>\n\n\n\n
\u201cExcess airport rents, fee for service, and taxes are collected that are not reinvested into the struggling industry,\u201d said Bartrem and Cummings. <\/p>\n\n\n\n
Airport improvement fees in Canada contribute to higher ticket prices, along with security charges and sales taxes. In sharp contrast, the U.S. subsidizes the air transportation ecosystem, with airports viewed as economic engines, said the co-authors. <\/p>\n\n\n\n
\u201cTaxation policies also differ markedly, resulting in substantially higher total Canadian taxes into general federal and provincial revenues,\u201d they noted, adding that Canadian carriers are motivated to fly out of the country while foreign airlines do not have incentives to fly into Canada. <\/p>\n\n\n\n
\u201cThe impact is evident looking at Air Canada, WestJet, and Transat\u2019s trend to deploy more than half their capacity outside Canada.\u201d <\/p>\n\n\n\n
In 2018, the Canadian government loosened restrictions on foreign ownership of passenger and cargo airlines, allowing foreign investors to own a maximum of 49 percent of the equity, compared with the previous 25 percent. But Ottawa maintained a 25-percent cap on the voting interests by any single non-Canadian entity. <\/p>\n\n\n\n
\u201cRaising foreign ownership limits to 49 percent for a single investor, combined with other industry reform, will also help attract the necessary investment for technology modernization and global partnerships across the airline model,\u201d Bartrem and Cummings wrote. <\/p>\n\n\n\n
Canada\u2019s major airports have benefited from growth in domestic traffic, as well as new international routes, with a pattern of consumers returning to the skies during the post-pandemic travel recovery. <\/p>\n\n\n\n
\u201cAir travel demand in the coming months displays signs of increased travel appetite,\u201d the International Air Transport Association said in a statement. <\/p>\n\n\n\n
Within Canada, Bartrem and Cummings acknowledged that there are challenges that have tested the financial stability of carriers flying in and out of airports spread across the country. <\/p>\n\n\n\n
\u201cThere is not much to be done about the realities of Canada\u2019s geography,\u201d they said. \u201cThe impact of these uncontrollable factors limits the number of airlines and business models that the Canadian market can support.\u201d <\/p>\n\n\n\n
Allowing foreign carriers to run domestic flights in Canada, known as \u201ccabotage,\u201d could put competitive pressure on airlines to keep fares as low as possible. But restrictions remain that ban U.S. airlines from operating flights point-to-point within Canada, and bar Canadian carriers from flying passengers from one U.S. city to another U.S. city. <\/p>\n\n\n\n
Canada\u2019s airline industry is encountering myriad problems, including tackling the difficult task of regaining public confidence, said Bartrem and Cummings. <\/p>\n\n\n\n
\u201cNot only do passengers want better service and lower prices, but airlines themselves have voiced that they are faced with an arcane made-in-Canada operating environment that makes it difficult to be successful,\u201d they said. <\/p>\n\n\n\n
Air passenger rights advocate Gabor Lukacs said Canadian consumers should lobby federal MPs and candidates to beef up the country\u2019s protection regime for air travellers, to be in line with what he calls \u201cthe European Union\u2019s gold standard.\u201d <\/p>\n\n\n\n
In October, Canada\u2019s Competition Bureau said it obtained two court orders requiring Air Canada and WestJet to release information for the bureau\u2019s market study into the domestic airline industry. Bartrem and Cummings said that in addition to the Competition Bureau\u2019s current review, they recommend a federal examination of Canada\u2019s aviation industry in general. <\/p>\n\n\n\n
\u201cThrough regulatory reform, coupled with establishing and making progress toward a family of clear goals, Canada\u2019s air transportation ecosystem competitiveness will increase.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"
Wide-ranging reforms are needed if Canada\u2019s aviation industry is to reach its full potential, according to a position paper co-authored by two former WestJet executives.\u00a0<\/p>\n","protected":false},"author":75,"featured_media":321767,"comment_status":"open","ping_status":"closed","template":"","categories":[99320,99317],"tags":[],"class_list":["post-359420","news","type-news","status-publish","has-post-thumbnail","hentry","category-airlines","category-airports","entry"],"acf":[],"jetpack_sharing_enabled":true,"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/skiesmag.com\/wp-json\/wp\/v2\/news\/359420","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/skiesmag.com\/wp-json\/wp\/v2\/news"}],"about":[{"href":"https:\/\/skiesmag.com\/wp-json\/wp\/v2\/types\/news"}],"author":[{"embeddable":true,"href":"https:\/\/skiesmag.com\/wp-json\/wp\/v2\/users\/75"}],"replies":[{"embeddable":true,"href":"https:\/\/skiesmag.com\/wp-json\/wp\/v2\/comments?post=359420"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/skiesmag.com\/wp-json\/wp\/v2\/media\/321767"}],"wp:attachment":[{"href":"https:\/\/skiesmag.com\/wp-json\/wp\/v2\/media?parent=359420"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/skiesmag.com\/wp-json\/wp\/v2\/categories?post=359420"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/skiesmag.com\/wp-json\/wp\/v2\/tags?post=359420"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}