(Reuters) - The Canadian government should stop treating the country’s airports as revenue sources and instead cut industry costs to stop millions of travelers heading to the United States for cheaper air travel, a Parliamentary committee report said.
High costs and inefficiencies throughout Canada’s airline industry are deterring demand for air travel and discouraging competition among carriers, according to the report by the standing Senate committee on transport and communications.
One way to reduce costs is for the federal government to stop charging airports ground rent and to transfer Canada’s main airports to the authorities that already operate them, the 15-page report said.
“The government of Canada should stop treating airports as a source of public revenue, such as toll booths, and start treating them as economic spark plugs,” said Senator Dennis Dawson, chairman of the Senate committee.
The Canadian Airports Council estimates that in 2011, 4.8 million Canadians drove south into the United States to take advantage of lower American fares, an increase of 15 percent from 2010.
A spokeswoman for Transport Canada said the government department was reviewing the report’s findings. She said the Canada’s air industry is based on a user-pay system, not a taxpayer-subsidized one.
“Airport rent accounts for less than 1 percent of the total ticket price for air travel, and is not likely to be a key factor in a traveler’s decision to choose a U.S. airport over a Canadian airport,” spokeswoman Genevieve Sicard said in an email.
The Senate report said passengers departing from Canadian airports often pay 60-75 percent above the airline’s base fare to cover airport and other taxes and charges, compared with between 10 and 18 percent in the United States.
Airports have generated C$2.5 billion ($2.41 billion) in revenues for the federal government in the form of ground rents since the mid-1990s, the report said.
The report also calls for a “single and cohesive” national air travel strategy to make the industry more competitive.
The Senate is the unelected chamber in Canada’s Parliament, and while it therefore does not direct government policy, it can have an influence in delving deeper into topics that the House of Commons might not have time for. ($1 = 1.0395 Canadian dollars)
Additional reporting by Randall Palmer in Ottawa; Editing by Marguerita Choy