Canada air policy changes could stem traffic loss to U.S.: report

Wed Oct 3, 2012 1:46pm EDT
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By Susan Taylor

TORONTO (Reuters) - The Canadian government and its airlines could make a range of policy changes to slow the tide of 5 million travelers a year that head to the United States for cheaper flights, a think tank report said on Wednesday.

Slashing the fees and taxes that account for roughly 40 percent of the difference between Canadian and U.S. air fares would have a significant impact but doing so looks unlikely given tight government budgets, the Conference Board of Canada report said.

But there is a long list of more modest policy changes that could lead to lower prices, the report said.

Federal Finance Minister Jim Flaherty said the loss of travelers to the United States was troubling.

"Yes, we are concerned about that, and (Transport) Minister (Denis) Lebel has been working on a consultation project with the airlines, with the airport authorities in Canada, who are very important on this issue, to try to see what we can accomplish, and we'll hear more from him over time," he told reporters in Ottawa.

Flaherty did not provide details on the consultation project's goals or timetable.

"Cross-border air-fare shopping is being driven by a perfect storm of factors that also includes differences in wages, aircraft prices, and industry productivity as well as U.S. aviation policies," said the study's principal research associate, Vijay Gill, in a release.

"For air carriers flying from American airports, these add up to a 30 percent cost advantage."   Continued...