International visitors are a critical component of the Western Canadian ski business, accounting for 24% of Total Skier Visits. Unfortunately, this business has experienced dramatic declines in recent years. In fact, International Skier Visits share of Total Canadian Skier Visits declined from 22% in 2007-08 to 15% in 2011-12 (source: CSC). This downward trend mirrors major declines experienced in other segments of the Canadian Tourism Industry. Indeed, International Tourist Arrivals to Canada declined 19% from 2002 to 2012, while the USA experienced 46% growth over the same period (source: CTC / Statistics Canada / US OTTI).
From our perspective, one of the primary factors driving declining International Tourist Arrivals to Canada is our lack of competitive air access. This is a direct result of our excessive taxation of air travel and a lack of fair and open competition. Therefore, we strongly support any and all efforts to reduce the tax burden on air travel and to increase competition within the airline industry.
Canadian aviation is plagued by regulatory impediments, high operating costs and excessive taxation when compared to the U.S. Taxes and fees include the CATSA Security Fee, AIF, HST, NAV CANADA fees, and various border fees. These costs manifest themselves in high airfares, which discourage inbound international tourism and result in significant passenger leakage to U.S. border airports:
- According to the Canadian Airports Council, more than 75 per cent of Canadians live within 90 minutes of the U.S. border. The council estimates that last year alone, 4.8 million passengers drove to a U.S. airport rather than fly from their local Canadian one. That's up 15 per cent from 2010, and costs $1 billion in lost revenue each year (source: Calgary Herald, ‘Drive-and-fly beats paying high airfares’, July 26, 2012).
- Bellingham International Airport will soon be three times the size it was three years ago, thanks to a boom in Canadian travellers. In 2001, about 125,000 people flew out of Bellingham airport. This year, the airport could see as many as 625,000. That rapid growth is thanks to travellers from the Lower Mainland who are willing to drive the 80 kilometres to save hundreds of dollars on plane tickets. (source: Vancouver Sun, ‘Canadian flyers boost Bellingham airport to $17-million expansion’, June 29, 2012).
In addition to excessive taxation, it is clear that a lack of competition in the Canadian Airline Industry is a key reason that our air fares are not competitive with those offered in the U.S.:
- But the lion’s share of the premium charged to Canadian air travellers is courtesy of the airlines. Not that Canadian airlines are hugely profitable nowadays, but neither are they terribly efficient. The Conference Board itemizes the differences in wages, productivity and aircraft leasing costs between Canadian and U.S. carriers, but the long and the short of it is competition. The U.S. has lots of it. Canada, not so much. (source: Financial Post Magazine, ‘The real reason Canadians flock to U.S. airports is our lack of competition’, November 6, 2012).
Canada’s ‘Blue Sky’ air policy, established in 2006, incorporates ‘Open Skies’ type agreements on a selective basis. Under this policy, the federal government, working closely with the major Canadian airlines, decides on the desired level of market competition. Most importantly, the tourism sector and other stakeholders are not afforded the opportunity to provide meaningful input. With $79 billion in annual revenues, the Canadian Tourism Industry is approximately four times larger than the Canadian Airline Industry (source: Statistics Canada, NACC). Therefore, from a policy perspective, it does not make sense to continue to protect the interests of the airline industry at the expense of the tourism industry. Accordingly, we urge the federal government to migrate from its protectionist ‘Blue Sky’ policy, to a true ‘Open Skies’ policy, in order to enhance the availability and affordability of air access to Canada.
Last Update: April 2, 2013