Article content continued

“They’re looking at the cost disadvantage between Canadian airports and U.S airports,” Mr. Eng said in an interview at Pearson earlier this week. “But it’s more than that. What I would like to see is [a focus] on the opportunities around the world. This is a global business.”

[np-related]

A Conference Board of Canada report earlier this month garnered a lot of attention by concluding if the federal government were to change its policies, including reducing or eliminating many of the fees and taxes it levies on the industry, it could potentially bring two million passengers back to Canadian airports a year.

But the board’s report didn’t rest the entire blame on federal fees and taxes. It also noted that Canadian carriers are less competitive than their U.S. counterparts. This is due to their higher labour, fuel and aircraft ownership costs as well as lower aircraft utilization contributing roughly 50% of the cost differential with their U.S. counterparts. Airport fees amounted to 25% of the difference, the board said. Combined this left Canadian carriers at a 30% cost disadvantage to their U.S. counterparts, leading to higher fares.

SUBSIDIZED U.S AIRPORTS

Yet there are also a lot of questions about whether the highly subsidized U.S. airport system is sustainable given the current economic situation there, said Vijay Gill, who authored the report.

“We have a viable system, and they don’t,” he said in an interview. “The U.S. does not have a fully-funded infrastructure. They’re subsidizing it … there’s also a huge gap that they’re going to have to make up somehow.” Mr. Gill said the U.S. will be likely be left with a choice between increasing its airport subsidies, or increasing their own airport fees.