Airport security fee should tick you off

Airport security fee should tick you off

By John McLeod
Copyright 2002 CanWest Global Communications Corp.
Article date: April 3, 2002

This morning Air Canada will have e-mailed its weekly Websaver Specials to customers thinking about travelling this weekend, and if we were hoping to head off to Trawna to visit granddaughter Sophia, there is probably a seat sale in the $149-one-way range.

But now that we have to pay the security fee that was slapped on all travel as of April 1 on top of all the other extra charges -- sales taxes, fuel surcharges, airport improvement fees, etc. -- the total cost of a round-trip ticket to spend three days with The Munchkin will probably be a touch over $400. It's getting to be a pretty big hit, and airline industry analysts are starting to warn that all of the extra charges are close to proving devastating for shorter-haul carriers.

For example, a $100 round-trip seat sale on discount airline WestJet between Edmonton and Calgary is now almost double -- increased by $84 when the security fee is added on to all the others.

The regional airline says it will shift some planes away from routes of less than 400 kilometres because the fee's flat structure punishes the cheapest flights.

"On short-haul flights, those are the most price-sensitive," says Ottawa-based independent analyst Sam Barone. "When you do the math, driving may be a more viable option."

But there's more here to burn business travellers' buns.

Consider:

- The $24 round-trip fee you started paying this week will not immediately increase security at airports or on airplanes, and for the time being won't reduce the lineups triggered when pre-Sept. 11 technology started trying to cope with post-Sept. 11 security rules.

That's because the skilled personnel and equipment, such as bomb detection machines, won't be in place until the fall.

- Federal officials admitted last month before the Commons finance committee that they had not done an impact study to see whether or not the new security fee would discourage passengers, nor the impact of the fee on short-haul airlines.

Given the precarious financial position of most of Canada's airlines, there's a chance the new fee could reduce business enough to push one or more of them from having a small profit into a money-losing situation.

- The $2.2 billion in revenue expected to be raised over the next five years through this fee was based on the depressed travel levels after last fall's terrorist attacks.

With the improvement in travel levels since then, analysts are now saying the federal government's total take could well be $3 billion or more.

- Only about half the revenue taken in by this fee will be applied directly to providing new security equipment and personnel.

The rest goes to general federal revenues, with only a vague promise that it will be spent on airport security.

- The regulations covering application of the $12 fee are so complicated that it's possible some travellers will be charged $12 per flight segment -- meaning that on a six-leg trip the fee could be $72 rather than $12 or $24.

- Finally, this is another situation where you're going to pay a tax on a tax, because the provincial sales tax will be applied to the $24 round-trip fee, adding another $3.60 -- $1.56 of which will go straight to federal general revenues as a GST levy.

We assume that's enough to get you thoroughly ticked off about this new fee.

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