Think-Tank Study Offers Solutions for Sky-High Canadian Airfares

A public policy think-tank says Canadian air travel is plagued by high ticket prices, poor service, and limited consumer choice due to ineffective and outdated federal policies.

This is not news to Canadian travel industry members, or to Canadian frequent flyers. But the “independent, non-partisan” Fraser Institute is proposing some solutions.

“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.

The report states that Canadian passengers face excessive fees, making air travel costlier than in many other countries. 

Four main charges — airport improvement fees, air traffic control fees, air travel security charges, and airport landing fees — significantly increase airfare costs, the Fraser Institute states. 

“When combined with excessive non-safety related regulations, and a restrictive and outdated airport ownership model, these factors limit consumer options and drive up prices,” the study suggests.

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.

Remove cabotage restrictions: Allowing foreign airlines to operate domestic routes could increase competition and lower fares.

Make taxes and fees competitive: Reducing airport-related fees would align Canada with international standards and lower costs for travellers.

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“Outdated policies are reducing competition and innovation in Canada’s airline industry and driving up airfares for travellers,” said Alex Whalen, director of Atlantic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.

“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.”