Canadian airports lose traffic to US rivals

Roughly five million Canadians cross the U.S. border by land every year to fly out of American airports for cost saving, according to a report released Wednesday. Conducted by the Conference Board of Canada, an independent and non-profit research organization, the report suggests that even small reductions in the air fare differential could lead to traffic gains for Canadian airports and carriers. The report, Driven Away: Why More Canadians Are Choosing Cross Border Airports, focuses its analysis on three Canadian airports: Vancouver International Airport, Toronto Pearson International Airport and Montreal-Trudeau International Airport, along with their cross-border competitors. It says the higher air fares in Canada are often blamed on fees and taxes, but these are only part of the reason for traffic losses. "Cross-border air fare shopping is being driven by a 'perfect storm' of factors that also includes differences in wages, aircraft prices and industry productivity as well as U.S. aviation policies," said Vijay Gill, principal research associate of transportation and infrastructure in the Conference Board of Canada. The report finds that Canadian fees and taxes contribute to roughly 40 percent of the total air fare difference in the markets that it examined. While other factors are beyond Canada's control, the report estimates changes to Canadian policies alone could bring more than two million passengers a year back to Canadian airports. While lower Canadian fees and taxes would reduce government receipts in the short term, much of this loss could be recaptured through direct and indirect tax revenues generated by the additional traffic originating in Canada, it says.