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ATAC warns air industry could go down in flames

Rising security costs and the possibility of war threatens industry

The Air Transport Association of Canada warns that the rising cost of airline travel could lead to a reduction in flight services.

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(PHOTO BY KIRSTEN MURPHY)

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CHARLOTTE PETRIE

Predictions about the dire consequences of the rising cost of air travel made by the Air Transport Association of Canada in its November report Crisis in Costs — The Canadian Government and Airline Passengers seem to be coming true.

The first sign that ATAC’s fears were being realized came this week when Air Canada announced it was cutting its summer flight schedule to the Yukon during peak tourist season.

That is precisely the kind of news ATAC feared after the federal government imposed extra costs on air travel because of the Sept. 11 terrorist attacks, and the possible war with Iraq. Warren Everson, ATAC’s vice-president of policy and strategic planning, said he expects to see a lot more of the same throughout the summer, especially at smaller, northern airports.

The report shows how an overlaod of extra costs including aviation fuel taxes, airport improvement fees, rising federal airport rents and aviation security charges, are making air travel more expensive in Canada than in the U.S. or elsewhere.

Excessive taxes and charges are also eliminating the benefits of the lower ticket prices offered by discount carriers, the report indicates.

ATAC believes the government is taking the cash, passengers are paying the bills, and the airlines are left holding the bag.

"We have a number of carriers which are in financial distress, and with the conflict in the Middle East costs will rise and traffic will fall. That could be enough to put carriers in a situation where they have to suspend service in markets, lay off people and reduce frequencies in airports — we’re already seeing it," Everson said.

But Iqaluit airport manager John Graham told Nunatsiaq News that there hasn’t been any talk of reducing flights in and out of the city.

"For us up in these parts, the airports are highways in the sky. That’s the only way in and out of here. And [airport] rent that Transport Canada reaps from places like the Ottawa airport authority, Vancouver, Toronto and Halifax doesn’t apply to any airport in the NWT, Yukon or Nunavut," Graham said.

The federal government receives a quarter of a billion dollars each year in airport rental fees.

Included in the latest federal budget was a $30 million break on the domestic fair security charge, Everson noted, but that was a far cry from what ATAC anticipated.

"We were hopeful that the federal budget would show us some relief and we didn’t get very much," Everson remarked, before adding that $30 million amounts to about a day’s revenue for the industry.

"Since 9-11 we’ve seen a gigantic increase in the cost to the industry and consumers — mostly caused by things like insurance which has risen by 300 per cent, and through security costs. A lot of those costs are government-imposed costs, so we’ve said to government a number of times that they have to make some changes."

Aviation is an entirely user-pay system. It was once subsidized by Ottawa but not for at least a decade, Everson said. Passengers finance all the airports, all the air navigations and all the airlines.

"We also fund all the government’s aviation security because they’ve refused to make any taxpayer contribution to security," Everson added.

"We’ve made the point over and over again [to government] that if you’re being greedy now, taking every last dime you can screw out of the system, you’re going to end up having to pay far more when the unemployment insurance bill comes in and the small airports have no traffic and are demanding a subsidy to stay open.

"It’s already happening in Atlantic Canada and parts of Quebec," he warned.

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