"Stop charging airport rent, Canadian lawmakers urge Ottawa"

Wednesday, June 6, 2012

Stop charging airport rent, Senate panel urges Ottawa
BY BRENT JANG 
Canada - The Toronto Globe and Mail


A Senate committee is urging Ottawa to phase out rent charged to large
Canadian airports to make them more competitive with U.S. border terminals
that have been luring passengers from north of the border.
 
“Flying in Canada is relatively expensive. A Canadian flight between major
cities may be twice as expensive or more than a comparable U.S. flight,”
said the 21-page Senate report titled, The Future of Canadian Air Travel:
Toll Booth or Spark Plug?

To help narrow the competitive gap, the Standing Senate Committee on
Transport recommends that the federal Conservative government reduce and
eventually eliminate federal rent collected from major airports across the
country.

“Ground rents are just one of many taxes and fees borne by Canadian air
travellers,” said the report issued Tuesday by the Senate committee, whose
chairman is Dennis Dawson, a Liberal, and deputy chairman is Stephen Greene,
a Conservative. “The high cost of flying in Canada is limiting potential
economic growth.”

Major Canadian airports have been lobbying for relief from paying ground
rent to the federal government for years. Besides rent, other
revenue-generating sources for Ottawa include the air travellers security
charge, aviation fuel taxes and HST, say critics, who note that the U.S.
government subsidizes air terminals in that country.

“The effects of this different model for airport funding are stark,” said
the Senate report. “With just over 75 per cent of the Canadian population
living within 90 minutes of the U.S. border, many Canadians are driving
south to take advantage of lower American fares rather than fly from their
local Canadian airports. The Canadian Airports Council estimates that in
2011, 4.8 million Canadians chose this option, an increase of 15 per cent
from 2010.”

Since 1992, when Ottawa began transferring responsibility for operating
large airports to local groups, Ottawa has become hooked on revenue from air
terminals, according to the committee. From 1992 through 2009, the 14
leading Canadian airports paid a total of $3.3-billion in rent to Ottawa,
plus those facilities have invested billions of dollars over the years in
new buildings, runways and other infrastructure.

The report cited testimony during Senate hearings from the president of the
Tourism Industry Association of Canada, David Goldstein, who commented: “In
the U.S. they see their airports as economic spark plugs, and we see them as
toll booths.”

The Senate committee said it’s time for Canada to develop a national air
travel strategy. “Government taxes and fees associated with air travel,
starting with ground rents, need to be reduced to help make air travel in
Canada more affordable and more competitive,” said the report. “The
committee recommends that, concurrent with the long-term plan of ending
airport ground rents, Transport Canada transfer federally owned airports in
the National Airports System to the airport authorities that operate them.”

In a statement on Tuesday, Mr. Goldstein welcomed the findings. “The
recommendations in this report provide smart policy fixes that would allow
our travel and tourism sector to thrive, providing economic growth and
creating jobs across the country,” he said.

Daniel-Robert Gooch, president of the Canadian Airports Council, said the
Senate’s study is important and sets the stage for talks with government and
industry partners.

Geneviève Sicard, a spokeswoman for Transport Minister Denis Lebel, said
rent is not a key factor in Canadian consumers flocking to U.S. border
airports.

Transport Canada is reviewing the Senate committee’s findings. “The
department continues to engage industry and stakeholders regarding the
future of the aviation industry on an ongoing basis. Our Conservative
government supports a strong and competitive Canadian air industry. Canada’s
air industry is based on the user-pay principle, which ensures that
taxpayers do not subsidize air travel,” Ms. Sicard said in a statement.

“In Canada, those who fly pay for the system. Our government will continue
to keep taxes and fees as low as possible, while ensuring the ongoing
sustainability of our airports.”

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