High taxes and fees charged by feds make airlines like Lynx fail

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Last Monday I was on a Lynx Air flight and spent the next few days raving about the discount airline.

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This coming Monday, Lynx will cease operations, the latest in a long line of low-cost carriers to go extinct in Canada.

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Once again, the culprit is the same: Sky high fees and regulations imposed by the federal government.

A study released by the Montreal Economic Institute last December detailed the high fees that are passed on to Canadian air travellers in ways that other countries do not. In the 2022-23 fiscal year, Canada’s 26 airports that are part of the National Airports System paid $419 million in rent to the federal government.

A decade earlier, those same airports were paying $294 million to the federal government, meaning we’ve seen a 43% increase over that time. Most of that increase has occurred since the Trudeau Liberals came to power in 2015.

Our major airports are supposed to be operated on a not-for-profit basis by local airport authorities, but the federal government treats them like cash cows. Every extra dollar charged to the airports or the organizations that run them is a dollar that gets added to the cost of your flight.

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In some ways, the cost recovery model of the Canadian airport system is commendable in that it’s travellers and not taxpayers who pay for the airports. In other countries, including the United States and much of Europe, airport operations are paid for by the government and seen as being part of the basic infrastructure.

The problem with the Canadian model is the way the federal government bilks the airports, and those flying through them, for ever more money.

There is no need for these airport authorities, supposed not-for-profits, to be paying more than $419 million in rent. Treat them like not-for-profits delivering a basic good and get rid of the rents.

To show how this impacts you, someone in the airline industry recently explained that the excess taxes and fees charged to Canadian airlines and airports add $160 in costs to a flight from Toronto to Calgary.

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“Before we’ve paid for a drop of fuel, an hour of labour, an ounce of steel to fly you there, the federal government is adding on $160,” they said.

Is it any wonder that we can’t seem to keep discount airlines in Canada?

Ryan Air, Southwest, EasyJet, Frontier and the kinds of discount airlines that exist across the United States and Europe can’t operate here because our government policy makes flying too expensive.

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Security fees, which are set to rise on May 1, are another area where Canada charges more.

The current fees range from $7.48 for a one-way domestic flight and $25.91 for an international flight but are set to increase by almost 33% to $9.94 for a one-way domestic flight and $34.42 for an international flight. There is no way that service levels for airport screening will increase by 33%, the people screening your bags won’t be one-third faster and they won’t be one-third nicer as they yell at you to put your laptops in a separate bin and take your shoes off.

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The move will bring in an additional $1.2 billion in new revenue for the government over the next four years.

By comparison, the American security fee sits at $5.60 and is capped at $11.20 per round-trip fare. The Americans also only charge 1.5 cents per litre in excise tax on jet fuel while in Canada the tax is 4 cents per litre plus the carbon tax and then the GST/HST on top of both of them.

This all adds up and eventually leads to higher costs, higher ticket prices and the inability of Canadians to sustain discount airlines.

Lynx is the latest victim of this system, they won’t be the last.

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