Cheaper U.S. flights lure cross-border fliers
Flights out of U.S. airports like Bellingham are about 30 per cent cheaper than in Canada due to a combination of higher costs, taxes and fees north of the border.
That's one of the findings in a new report by the Conference Board of Canada that analyzes the reasons behind the price gap.
Report author Vijay Gill estimates five million Canadians cross the U.S. border each year to catch cheaper flights and many are customers that airports like Vancouver International are losing to American rivals.
There's no single reason behind the price gap, but Gill concluded some of the biggest factors are lower leasing and depreciation costs for U.S. carriers, much lower airport landing and terminal fees, and generally lower fuel costs.
Navigational fees account for another chunk, because Nav Canada is fully funded by fees, while U.S. authorities partly subsidize those costs.
There are also more discount carriers in the U.S. that pay lower wages than Canadian carriers and compete aggressively on price.
Canadian fees and taxes add up to roughly 40 per cent of the total air fare difference between the U.S. and Canadian airports Gill examined.
The report suggests a cut to fees charged in Canada could win back some of the cross-border fliers.
Transport Canada said in a statement the user-pay model here is designed to ensure other taxpayers don't subsidize air flights, as happens in the U.S.
Vancouver International Airport this year jacked its Airport Improvement Fee from $15 to $20 for flights out of B.C. to fund a planned $1.8 billion in upgrades over the next decade.