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WestJet CEO calls on Ottawa to freeze government-imposed ticket fees

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Airlines in Canada operate in an expensive environment that ‘significantly drives up ticket prices,’ Alexis von Hoensbroech says

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In a bid to help lower ticket prices for consumers the CEO of WestJet is calling on Ottawa to freeze government-imposed fees on flying and to stop collecting airport rents.

WestJet Group CEO Alexis von Hoensbroech says a comprehensive review of the country’s user-pay model for aviation infrastructure is needed, and it’s time to examine issues surrounding competitiveness, Canadians crossing the U.S. border to take flights, and equity between the different modes of travel.

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Airlines in the country operate in an expensive environment that significantly increases ticket prices for Canadians and hurts competition, while rental revenues from the largest airports flow to the federal government, he said Wednesday while speaking to the Calgary Chamber of Commerce.

“Right now, there are the fees that are being charged to the passengers — ultimately through the tickets — that are not just paying (for) infrastructure, but they are also funding the federal budget,” von Hoensbroech told reporters after the event.

“In a country that needs air travel as an essential mode of transportation, I actually think it’s wrong.”

His comments come as rising costs continue to hammer Canadians’ pocketbooks, and three months after Lynx Air, an ultra-low-cost carrier based out of Calgary, was permanently grounded.

At the time, Lynx cited higher fuel expenses, regulatory costs and rising airport charges in the country as part of the reason it sought creditor protection.

WestJet operated its own ultra-low-cost carrier, but folded its Swoop division into its main operations last year.

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At the chamber, von Hoensbroech noted that security fees went up by 33 per cent this month and additional mandatory costs on airline tickets in Canada are higher than in the United States.

“What we saw also on our own ultra-low-cost carrier Swoop is that if you want to gain share in the market by offering very affordable tickets … that’s just very, very difficult if you’re operating in an environment where the first $88 of your tickets are just gone for infrastructure,” he added.

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WestJet’s CEO has previously called on the federal government to restructure the fees imposed on air travellers in the country.

Last year, von Hoensbroech noted customers flying round-trip between Calgary and Toronto paid $140 in additional expenses on their tickets, such as airport improvement fees, security and NavCanada costs.

A report by the Montreal Economic Institute in December found the non-profit groups that manage Canada’s largest airports paid $419 million in rents to the federal government in 2022-23, a 43 per cent hike over the previous decade — with costs passed on to consumers through their ticket fees.

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The study also noted the Air Travellers Security Charge increased to $9.94 for a domestic flight — as of this month — and $34.42 for an overseas trip, while the same fees in the U.S. don’t exceed $15.30.

Calgary Airport Authority CEO Chris Dinsdale said the non-profit organization paid about $50 million in rent to the federal government last year and could find many uses for the revenue, if it were allowed to keep the money.

The authority’s total revenue last year reached $497 million. Dinsdale noted the airport has about $3.3 billion of debt, adding $300 million during the pandemic.

“We are working in a system that sees airports as a revenue source … That money could be used very, very much on sustainability, it could be used for investments (on) infrastructure, or debt repayment,” he said.

“We can spend it on a host of things.”

Chris Dinsdale
Calgary Airport Authority president and CEO Chris Dinsdale speaks during a Calgary Chamber of Commerce event at the Hyatt Regency in Calgary on Wednesday, May 22, 2024. Brent Calver/Postmedia

In its federal pre-budget submission this year, the National Airlines Council of Canada called for a comprehensive review of all third-party fees and charges placed on air travel in the country.

It also recommended the government re-invest rents paid to Transport Canada into airport infrastructure.

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The council, which represents the country’s largest passenger airlines — including Air Canada and WestJet — noted U.S. carriers had reduced the number of flights to non-hub Canadian markets by 52 per cent last year compared to 2019.

Council CEO Jeff Morrison said Wednesday the group hasn’t received a formal response to its recommendation, but pointed out the federal Competition Bureau indicated earlier this month it will conduct a market study on the airline industry.

He hopes it will delve into the issue of the additional fees facing consumers and said Ottawa should take note of the failure of Lynx Air in February.

“It should send an alarm bell,” Morrison said in an interview.

“A number of carriers have not succeeded … We are one of the most expensive countries in the world in which to operate.”

Lynx Air planes grounded Calgary International Airport
A fleet of grounded Lynx Air planes at the International Calgary Airport on Monday, February 26, 2024. Darren Makowichuk/Postmedia

Industry expert John Gradek, who teaches aviation management at McGill University, said the airline sector has raised concerns about Canada’s user-pay infrastructure model in the past without success.

However, there are signs that may be changing with the upcoming Competition Bureau study and recent discussion by Ottawa about potentially allowing investment by Canadian pension funds in airport facilities.

“The question is: Who pays the freight for the infrastructure? And right now, it’s the traveller who pays the bill. Should Canadian taxpayers do it? Well, that’s a question that we as Canadians have to answer,” said Gradek.

“It’s time to have a relook at that and make sure that we’ve got the right model in place.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

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