Canada fares poorly on the global stage in terms of government-imposed ticket taxes and fees (both of which are outside the purview of airlines). A sign for Air Canada’s carry on luggage allowance at Montreal-Pierre Elliott Trudeau International Airport, on Sept. 13.Christinne Muschi/The Canadian Press
Ashley Nunes is a senior research associate at Harvard Law School and teaches economic policy at Harvard College.
Starting in the new year, Air Canada AC-T will bar customers paying the lowest fare from bringing carry-on bags. Fliers who can’t live with that can pony up some cash for the privilege or purchase a higher fare.
Predictably, fliers – faced with the prospect of forking out more cash – aren’t pleased. The federal government isn’t happy either. Posting on X, Transport Minister Anita Anand noted, “I was just made aware of a decision by Air Canada to introduce new carry-on baggage fees. I am extremely concerned. Canadians work hard and save up to travel. They rightly expect excellent service, not extra fees.”
Of course, listening to Ottawa talk about fee creep is hypocrisy at its finest. Canada fares poorly on the global stage in terms of government-imposed ticket taxes and fees (both of which are outside the purview of airlines).
A $150 flight from Toronto to St. John’s comes accompanied by an additional $70 hodge-podge of government taxes and fees. Some of those charges are both trivial and necessary. Passengers should be screened for dangerous goods before they board an airplane. That – in my view – justifies the roughly nine dollar air travellers’ security charge fliers incur for jet-setting across Canada. It costs money to train and place security personnel at airports. I get that. What I don’t get is why security charges, collected by Canada’s Revenue Agency, increase to $16 when flying to the United States. Or $34 when flying to London or Paris. Is there a special – and pricey – body scanner reserved only for travellers who aren’t Canada-bound? Does patting down passengers heading to the City of Light require particular attention from security personnel? Are domestic flights so much safer such that they require cheaper security?
Keen to fleece Canadians for even more cash, Ottawa ensures that government-imposed taxes (think GST and HST) are calculated on the airfare and security charges combined, rather than the airfare alone, as doing so increases how much cash fliers must pony up (something that would be akin – I would argue – to taxing restaurant-goers for both the cost of a meal and tip). It doesn’t stop there.
Since 1992, Ottawa has collected “ground rent” from Canadian airports, a charge levied when airports operate on federally owned land. Ottawa charges airports for the privilege of using this land and it’s a privilege that doesn’t come cheap. Over the past decade, Canadian airports have paid out more than $3-billion for this privilege in revenue, with Calgary’s airport alone shelling out some $50-million last year. Ottawa’s total haul from airport rental fees during the last fiscal year was nearly half a billion dollars.
These costs are passed along like a hot potato, from one intermediary to the next, from airport authorities to airlines, until they eventually make their way to passengers in the form of higher ticket prices. These prices soar farther because of excise taxes levied by the federal government on jet fuel. Airlines aren’t keen on paying those taxes so, once again, it’s consumers who do.
Other countries admittedly also levy taxes on the flying public. The United States, for example, also imposes fuel taxes on carriers. However, these taxes are far lower than those seen in Canada. Passenger facilities charges, which fund the upkeep and maintenance of airports, are also lower in the United States, owing to federal laws that cap how much fliers can be charged. No such laws exist in Canada. The result is a $46 add-on Canadian fliers can expect to pay should they depart out of Prince Rupert – which has the highest fees in the country – compared to $6 at an American airport.
Ottawa’s approach to aviation taxation should be singled out for what it is: A surefire way for the government to raise cash and a money-grubbing exercise that does nothing to improve the passenger experience while doing everything to fill government coffers. This needs to change. Canada’s Transport Minister says additional fees are “not acceptable at a time when Canadians’ pocketbooks are hurting.” She insists she is “extremely disappointed” with add-on fees Canadian fliers pay. Axing endless government taxes on fliers would be a good way to channel that disappointment.
