Study shows the main reason air travel is so darn expensive in Canada

Air travel in Canada is often considered a luxury due to how expensive a plane ticket is here compared to places like the U.S., and a new study is putting the blame not on airlines, but on the federal government.

Though we may be desensitized to the preposterously high price point of basically everything north of the border these days, the Montreal Economic Institute (MEI) asserts that flying could and should be cheaper than we've been forced to accept.

The main thing driving ticket prices up, the think tank says, is various levies that prohibit competition in the industry.

"Ottawa prefers to treat our airports as cash cows, rather than the essential transportation infrastructure that they are," the study's authors write. "These taxes have a direct effect on the high cost of domestic travel in this country."

Rents charged to non-profit airport operators — such as the Greater Toronto Airports Authority, which runs Pearson — are one factor, totalling hundreds of millions per year.

The study notes that in the last decade, airport rents paid to the government have increased by a whopping 42.5 per cent, and can be "passed on to consumers in the form of 'airport improvement fees,'" which were recently increased to $35 at Pearson, up $5 from pre-COVID.

These rents can also impact the extent of work invested to fix or expand a travel hub, with up to 12 per cent of airport revenues going toward rent with little investment in return from the Canadian government.

Rents paid by airport authorities to the federal government have reached an all-time high. Graph from Wing Heavy: The Fees That Undermine the Competitiveness of the Airline Sector.

Then there are things like the air traveller security charge, which is set to increase by 33 per cent next year, and fuel taxes of four cents per litre — a levy which, by comparison, is only 1.55 cents in the U.S., even after the dollar conversion.

"When you add up all of these fees charged by the federal government, you quickly realize that a substantial portion of the price of a plane ticket is taxes," MEI's experts write. "Whether a ticket is bought for a vacation or to reach our remote regions, these taxes have a negative effect on families' budgets."

This is especially true in the current economic landscape, and also as the travel sector continues to recover from the pandemic. The report notes the "heavy fiscal and regulatory burden" faced by airline stakeholders in Canada compared to in the U.S., where ticket prices are far more affordable for the average person.