Calgary: The Frontier Centre for Public Policy today released Canada’s Not-So Friendly Skies:
Why Canadian Consumers Pay Sky-High Airfares. The study compares airline fares in Canada, the United States and Europe. It finds that airfares were lowest in Europe—despite higher taxes and fees; the U.S, placed second, while Canada was the most expensive market.
The study from research director Mark Milke compared similar-distance flights in Canada, the U.S. and Europe. The study includes both in-country flights (domestic), and then also cross-border flights (international).
On cost comparisons of in-country flights, Europe wins. A traveler could:
- Book all five Canadian flights, travel a total (return) distance of 3,336 miles, and pay $1,499.62, all taxes and fees included (which constitute 30 percent of the cost).
- Book all five U.S. flights, travel a total (return) distance of 3,334 miles, and pay $934.72, all taxes and fees included (which constitute 14 percent of the cost).
- Book all five European flights, travel a total (return) distance of 3,358 miles, and pay $525.72, all taxes and fees included (which constitute 52 percent of the cost).
- The difference is not explained by taxes and fees.Taxes and fees in Europe are the highest but fares are the lowest compared to either the U.S. or Canada.
On cost comparisons of cross-border flights, Europe wins:
- There was little difference in the total cost of five cross-border flights in North America, regardless of whether one’s flight originated in Canada or the United States.
- Flights from five Canadian cities to five U.S. destinations with a total return distance of 6,004 miles cost $2,034.21 if the return trips originated in Canada. The cost was $1,971.99 if those same flights originated in the United States.
- However, five European cross-border flights (Munich–Rome, Dublin–Berlin, Vienna–Athens, Prague–Barcelona, and London–Paris) would generate a total return distance of 6,212 miles and are significantly cheaper at $941.93.
- Again, taxes and fees in Europe are the highest but European fares on cross-border flights are the lowest compared to either the U.S. or Canada.
What explains the difference? Europe’s “open skies” policy on airline competition
In 1997, the EU enacted reforms to what is known as “cabotage”, which in simple terms, refers to regulations that control transportation within and between countries. When the EU instituted its “open skies” policy, it freed up “foreign” airlines to compete with “domestic” airlines on in-country routes.
“The European market is in distinct contrast to the airline business in North America,” noted study author Mark Milke. “Both U.S. and Canadian regulations prohibit “foreign-owned” airlines from offering domestic flights of their own. Presently, Air France can fly a passenger from Paris and drop him off in Toronto, but cannot pick up a Toronto passenger and fly him to Vancouver. As a result of this restrictive and anti-competitive policy, both the airline industry which might otherwise expand, and the Canadian consumer, suffer.”
“In the long run, the value that consumers get is a function of the number of providers servicing them. The entry of European airlines into the market for flights within the North American continent, and European and American airlines into the market for flights within Canada, would increase competition. It would significantly increase consumer choice for Canadians and lead to lower fares, just as the open skies policy has done in Europe since the 1990s.”
Download a copy of the Canada’s Not-So Friendly Skies: Why Canadian Consumers Pay Sky-High Airfares HERE.
For more information and to arrange an interview with the study’s author, media should contact:
Troy Media Corporation
Troy Media Corporation