Consumers pay more for air travel in Canada than in the U.S. or Europe, says a new study that calls on Ottawa to open the market to more competition.
The Frontier Centre for Public Policy, a western Canadian think-tank, found Europe’s liberalized air policies resulted in the cheapest fares for travellers because they allow for more competition.
In his report "Canada’s not-so friendly skies," research director Mark Milke compared a basket of five Canadian flights using the cheapest airfares available against flights of similar distance in the U.S. and Europe.
On comparisons of both in-country and cross-border flights, Europe had the lowest average fare per mile.
For example, for a total distance of about 3,300 domestic miles, fares in Europe tallied about $525, compared to around $1,500 in Canada. For the U.S., the total was about $935. All figures are in Canadian dollars.
"There’s no question about which experience has been the better one and it’s been the European Union," Milke said.
"It’s been fully liberalized since 1997 and you see an increase in jobs, in cities served, the number of airlines and you see a decrease in prices.
"It’s been healthy for the industry, it’s been especially healthy for consumers."
Milke says Canada should adopt a true "open skies" policy, allowing foreign carriers to fly within the country.
Currently, international carriers can fly in or out of Canada, but only Canadian carriers can fly domestic routes. The federal government announced its open skies policy in 2006, seeking to increase flights between Canada and other countries.
Canada signed an agreement with the EU in 2008, but the agreement doesn’t extend to cabotage, as domestic route rules are known.
Even if Ottawa becomes more friendly to liberalizing regulations as it reviews ownership rules, one airline analyst said it does not mean European carriers would necessarily consider setting up shop in Canada.
Airline consultant Rick Erickson, of Calgary-based R.P. Erickson & Associates, said foreign carriers would still face the higher tax burdens of operating in Canada.
"I don’t see them showing up and all of a sudden revolutionizing the Canadian airfare game," he said.
"They are going to find the costs here are higher, and that Air Canada and WestJet are very competitive competition."
He noted that super-discounted European airfares are well advertised, but not always available or don’t have convenient flight times. Europe also has many smaller, lower-cost airports (often former military bases) that allow for cheaper fares.
"It’s a completely different animal," said Erickson.
"I don’t see Canada being overly attractive to the international players, " he said. "I’m not betting that we’re going to see anyone anytime soon."
