‘Open Skies’ Policy Unlikely To Take Off In Canada, U.S.;: Europeans enjoy cheapest rates, study says

Frontier Centre, Media Appearances, Transportation, Uncategorized

 

As tourism season gets into high gear, Canadians may want to ask why they’re being fleeced on airfares compared to Europeans and Americans.
 
A study from the Winnipeg-based Frontier Centre For Public Policy surveyed five cheapest-fare 3,300-mile flights and found: Canadian passengers pay an average fare per mile of 45 cents, Americans pay 28 cents, Europeans pay 16 cents.
 
Personally, I’ve noticed the relatively cheaper fares both south of the border and across the pond, and have wondered what I’ve been receiving in exchange for the decidedly higher fares in Canada.
 
Certainly, I do not find customer service to be one jot better when flying domestically.
 
Lately, both Air Canada and WestJet have instituted a fee for seat selection. On occasion, I’ve been hit with onerous fuel surcharges on Air Canada. And the only thing complementary on most flights are the airsickness bags.
 
The lower European airfares found in the just-released Frontier Centre survey showed up despite the fact that airline fees and taxes in Europe are higher than in North America.
 
The report — titled Canada’s Not-So Friendly Skies, Why Canadian Consumers Pay Sky-High Airfares — asserts that the fare differences between North America and Europe are due entirely to a more competitive European environment.
 
All European airlines, since 1997, have been able to freely pick up and drop off passengers anywhere on the continent.
 
By contrast, in Canada non-Canadian airlines either can pick up or drop off but aren’t permitted to operate on domestic routes.
 
Air France, for example, can collect passengers in Toronto or drop them off in Montreal. But the airline cannot operate a flight between Montreal and Toronto.
 
The European carriers face the same restriction in the U.S.
 
As to why the American airfares are cheaper than Canadian fares, the report points to "a significantly larger domestic market and thus more domestic airlines that must compete for consumers" in the U.S.
 
The report urges Ottawa to adopt an "open skies" policy that would allow foreign airlines to operate unfettered in Canada — in exchange for similar rights for Canadian airlines abroad.
 
Report author Mark Milke, research director for the Frontier Centre, argues the same philosophy that supports free trade under NAFTA should apply to the airline industry.
 
Freer trade leads to more economic activity, more growth and additional jobs.
 
In that vein, the fact European consumers enjoy better deals on airfare than either Canadian or American consumers, has resulted in more Europeans opting to travel by plane.
 
And that has meant that Europe’s airline sector has grown, recording a six per cent increase in employment between 1997 and 2004.
 
Yet, in 2006, the Harper government decreed its policy approach would not include cabotage rights — the right of a foreign airline to carry domestic traffic between points in Canada.
 
The problem in a vast country like Canada is the existence of relatively remote routes, which are served by domestic carriers but that foreign carriers would never voluntarily choose to service.
 
Those remote routes tend to be a drag on Air Canada’s bottom line.
 
Milke believes Air Canada would be able to take on the foreign competition, having been declared in a worldwide survey last month "Best Airline, North America."
 
He believes more people would fly in Canada and new routes would open up, even to more remote locations.
 
But theory is one thing; reality another. Milke warns: "Prospects for airline liberalization seem slim," both in Canada and the U.S. where a protectionist-minded president and Congress are presiding.
 
The outlook appears to be for cloudy skies and continued high airfares.