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Canada’s aviation policy needs to promote competition according to Bisignani and, he said, “Taxation, taxation and more taxation is not a recipe for competitiveness”.
Canada’s tax revenue from aviation rose nearly 20 % per year between 2001 and 2005, totalling $800 million annually or 20 % of the industry’s production value. If Canada is serious about the 80,000 jobs and $4.1 billion in economic activity that aviation generates for Canadians, this must change.” Said Bisignani.
Bisignani also didn’t pull any punches when it came to the government’s heavy taxation policies for security and airport rent. “Crown rents are a $300 million burden to the Canadian air transport sector - a burden that only has an equivalent in Ecuador and Peru. It’s a rip-off,” he said.
Many believe there is no credible public policy basis for the levels
of rent extracted from
Canada’s airports. The federal government provides little for its
revenue. The airlines pay exorbitant amounts and additionally fund all
infrastructure improvements.
As Bisignani made his remarks, The Air Transport Association of Canada (ATAC) welcomed the signing of the expanded Open Skies agreement between Canada and the United States, but also called upon the Government of Canada to maximize opportunities for Canada by improving the competitiveness of Canadian air carriers.
"Canadians can take great pride in the fact that their air carriers are world-wide industry leaders in delivering innovative fare and service options for travelers", said ATAC president and CEO, Sam Barone.
"From the beginning of Canada's Open Skies relationship with US in 1995, Canadian carriers have led the way in opening up new services between our two countries. Today's agreement has the potential of significantly expanding the global reach of Canada and its air carriers if the government of Canada commits itself to addressing some of the serious tax disadvantages we face, compared to American carriers”.
ATAC supports the principle of open markets and fair competition but emphasizes the urgency in addressing the international cost competitiveness of Canada’s air travel industry.
The organization also believes it is imperative to specifically address three areas of taxation which impact and undermine the competitiveness of Canadian carriers in relation to their US counterparts:
1. Airport rents are an excessive tax on aviation, with over $2 billion collected since their inception in 1994, for use of facilities which were valued at $1.5 billion when they were transferred. No services are provided in return for these payments. No other G8 nation charges its airport users rents and in the US the government funds airport improvements.
2. Canada's Fuel Excise Tax is set at $.04 per litre - almost 4 times the US rate of US$.04 per gallon.
3. Canada's passenger security charge is amongst the highest in the world. A one-way domestic ticket pays $4.67 - almost double the US rate of US$2.50 for a similar ticket.
Barone said ATAC was heartened by Minister of Transport, Lawrence Cannon's comments last November, when he acknowledged the legitimacy of Canadian air carriers concerns related to federal fees and costs.
Barone concluded, "The time has come to replace words with action if Canada is truly serious about being a gateway to the world and opening new markets and destinations for Canadian travelers and shippers.”