Canadian bargain hunters lured to cross the border by a stronger dollar could have yet another reason to make the trek after airports have begun to increase departure taxes to fund costly expansions.
|Airport Improvement Fees|
|Saint John, N.B.||$15|
|St. John's, N.L.||$15|
|Toronto Pearson (connecting flights)||$8|
|Toronto Pearson (originating flights)||$20|
|Vancouver (within province and Yukon)||$5|
|Vancouver (outside province)||$15|
Montreal's airport authority was the latest to say it will raise its improvement fee to $20 plus taxes totalling more than $3 in January. The Aeroports de Montreal said Thursday the additional $5 is essential to help finance the investments needed to upgrade the country's third-busiest airport.
"The services are improving, they are much better than they were, but nobody could ever accuse us of building any Taj Mahals here," CEO James Cherry said in an interview.
The airport operator has spent $1.1 billion since 2000, including $750 million to complete the Montreal-Trudeau modernization and expansion program. It is spending $190 million this year, in part for a new transborder departures area, and expects to invest another $600 million by 2012.
Cherry said the public will understand that more money is required to ensure that improved services come with a price to avoid adding long-term debt.
Montreal is just the latest airport to hike its departure tax. Toronto, Calgary and Winnipeg have also started or plan to increase their fees to $20. Canada's other airports typically charge $15, although some are at $10.
Canada's largest airline has consistently criticized these increased fees.
"We are disappointed as access to Montreal airport becomes more expensive for travellers, and it will make it that much difficult for us to grow our services at the airport," Air Canada spokeswoman Isabelle Arthur said.
The airline recently said the U.K. market has been negatively impacted by the doubling of the U.K. departure tax, along with security and baggage issues.
The $5 additional cost in Montreal may not in itself prompt locals to navigate through border lineups to fly from U.S. cities.
But critics say it adds to the growing disparity of airline costs between the two countries. Security charges, GST, provincial sales taxes, Nav Canada fees, along with embedded costs such as fuel surcharges and airport rents can total 30 to 40 per cent of the final airline bill.
A family of four travelling, for example, from Montreal to Fort Lauderdale would pay $2,774.20, including $530.20 in taxes and fees to fly on Air Canada. Flying JetBlue on the same dates out of Burlington, Vt., would cost $1,038.40 US, including $227.24 US in taxes.
'The cost of doing business in Canada is different. We have been treated as a cash cow by governments for years.' —James Cherry, Montreal airport authoritiy
Cherry acknowledges that some travellers will be lured by the lower costs, despite the potential for long border waits. But he added that improvement fees merely highlight a fundamental structural difference between the Canadian and American models.
'Disincentive' for consumer
A new airport, an hour's drive from Montreal in Plattsburgh, N.Y., has a terminal built by the government and pays no property taxes, federal rents or interest on debt. Meanwhile, Montreal's authority pays $60 million in government rents and taxes annually, including $34 million in municipal taxes and $70 million in interest to service debt.
"The cost of doing business in Canada is different. We have been treated as a cash cow by governments for years," Cherry said.
David Jeanes of Transport 2000 said the entire range of fees associated with air travel is a disincentive for consumers and complicates their understanding of the true costs.
Airports have raised fees to fund mammoth terminals that fail to accommodate other transportation modes for short-haul travel, he said. Jeanes specifically referred to Toronto's Pearson International Airport, which has been credited with the world's highest landing fees since engaging on a $4-billion construction program.
"We're seeing the air travellers financing huge expansions of airport capacity at a time when our passenger rail system has really been on a starvation diet," he said in an interview.
Vancouver International Airport is Canada's second-busiest airport, not Pierre Elliott Trudeau International Airport in Montreal as originally reported.Oct 09, 2007 12:01 PM ET