CBC Investigates

Why are airlines getting millions from a fee to upgrade airports?

CBC News has confirmed that a portion of money earmarked for airport upgrades across the country is going to airlines.

All major airports pay airlines a 'processing fee' for handling the airport improvement fee

Proceeds from the airport improvement fee go toward infrastructure projects, including runway extensions, terminal upgrades and other renovations. (Ekaterina Pokrovsky/Shutterstock)

A passenger rights advocate wants Canadian airlines to stop benefiting from fees intended for airport upgrades.

Airport improvement fees are charged at every major airport, in the range of $23 to $30. The fee is included in the taxes on each departing ticket. 

CBC News has learned airports give between four and seven per cent of the money collected to the airline carrying the passenger. The airline's portion is not disclosed on passenger tickets, or in most cases, on airport websites.

"The question about whether airlines should be dipping into money that is earmarked for the airports — that's a no brainer. That's beyond debate. That's something that the public should be concerned [about] and should be challenging," said Gabor Lukacs, an airline passenger rights advocate.

Passenger advocate Gabor Lukacs doesn't understand why airlines are making money from airport improvement fees across the country. (Patrick Callaghan/CBC News)

Proceeds from the airport improvement fee go toward infrastructure projects, including runway extensions, terminal upgrades and other renovations within the airport.

Processing fee

Peter Spurway, a spokesperson for the Halifax Stanfield International Airport, says the airline's cut is considered a processing fee.

"It's fair in the sense that they're dealing with millions of passengers, and in some cases the credit card element does come into it, so there are those fees that they have to manage as well," said Spurway.

Peter Spurway of the Halifax Stanfield International Airport says airlines are given six per cent of the airport improvement fee at his location as a processing fee.

A spokesperson for the National Airlines Council of Canada added "the small percentage that remains with the airlines covers the administrative costs."

"The fee is broken out on the ticket and does not form part of the ticket cost — meaning that it does not show as airline revenue," said Grant Dingwall.

"The percentage varies depending on the amount of passenger traffic at a given airport."

  • Halifax: Airlines get six per cent of $25, or $1.50 per ticket.
  • Calgary: Airlines get four per cent of $30, or $1.20 per ticket.
  • Toronto: Airlines get four per cent of $25, or $1 per ticket.
  • Ottawa: Airlines get six per cent of $23, or $1.38 per ticket.

Update, March 3: In an emailed statement Thursday, Air Canada said the processing fee is revenue neutral.  It said the amount retained by airlines covers a number of costs including credit card charges, sums lost due to card defaults, foreign exchange fluctuations and international clearing mechanism charges when dealing with customers from foreign carriers. As well, the fee covers the cost of a reporting and auditing process and reconciliation costs incurred by the airlines.

Allowing the airlines to collect and remit the fee also eliminates "the time consuming and bothersome necessity for travellers to make an extra stop and pay the AIF directly to the airport before they travel as they used to before this system became more automated," said Air Canada. 

That adds up, said Lukacs. 

"In the case of Air Canada, which according to its data carries about 36 million passengers per year, we're talking about over $36 million."

Exemptions

There are a few exemptions where the fee doesn't apply, according to the national airlines council.

Airline employees travelling on business (but not on personal travel), domestic connecting passengers with less than four hours' connection time, children under two years old, and travellers on special industry discounts are not required to pay the fee.

However, anyone travelling on points must pay up.

Passengers react

Passengers at the Halifax Stanfield International Airport were surprised to hear a portion of the fee goes directly to airlines.

"I'm already paying for a ticket to an airline, now including an extra fee inside the tax? I don't think that sounds fair," said Konstantinos Manos.

Some passengers at the Halifax Stanfield International Airport were not aware that airlines take a four to seven per cent cut of the airport improvement fee.

Howard Connolly said it sounds similar to a hotel tax.

"When you check into a hotel, there is always some type of fee," he said. "It's like an additional tax." 

'Airline's pocket'

Lukacs isn't as forgiving. He doesn't understand why airlines are making any money from airports.

"We can argue of course whether the airport improvement fees should be borne by the users or by the budget — that's a philosophical debate," said Lukacs. 

"But one thing is sure: when I am charged an airport improvement fee, I would like to be sure that money goes in its entirety to the airport, not to the airline's pocket."

About the Author

Angela MacIvor

Reporter

Angela MacIvor is CBC Nova Scotia's investigative reporter. She has been with CBC since 2006 as a reporter and producer in all three Maritime provinces. All news tips welcome. Send an email to cbcnsinvestigates@cbc.ca

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