reprinted from the Toronto Star
Security tax called world's highest
By Andrew Chung, Toronto Star Canada's air security tax is by far the highest in the world and is one stark reason why companies are stripping service from smaller centres with no end in sight, the airline industry says. It's one of a number of "extra" charges heaped on to passengers by the federal government and airports that amount to about $1 billion a year, according to a study by the Air Transport Association of Canada. "We have seen a dramatic drop-off in traffic particularly in short haul and discount markets since the security tax came in," said Cliff Mackay, president of the association, which represents Canada's air carriers. "This is a problem of an accumulation of costs, and the security tax we think is the straw that broke the camel's back." The air travellers security charge amounts to $24 on a round-trip ticket, which includes the goods and services tax. That's about three times more than what the United States charges, and about double what Israel makes passengers pay, according to data from the International Air Transport Association. Between April, when the tax was introduced, and September, consumers paid more than $160 million. The charge is outlined in a study released yesterday entitled, "A Crisis in Costs," assembled by economist Fred Lazar of York University for the Canadian transport group. Mackay warned that if the costs continue to rise, Canadians will see more reductions in services in smaller markets, a trend that will creep up into larger cities. He predicted more layoffs. "Service," Mackay concluded, "will continue to diminish." He added that everyone, not just air travellers, should pay the costs for better security. By last August passenger traffic at Canada's top 25 airports fell 10.2 per cent compared with the previous year, equivalent to four million customers, the report states. That's more than the U.S. drop of 9.9 per cent, even though that market was harder hit by the Sept. 11 terrorist attacks. At the very least, Canadian carriers want the security charge reduced to at least that of the United States, which amounts to about $7.65. They also want federal rents to airports frozen, a moratorium on the federal excises tax on aviation fuel, and an overhaul of how the government taxes them. Service to smaller centres is taking the hardest hit: Calgary-based Westjet has cancelled 14 flight offerings and has withdrawn from one community. Transwest, a Prairie regional carrier, has cut in half service between Regina and Saskatoon. Air Canada's short-haul, regional carrier Jazz, particularly hard hit by the effects of the security surcharge and other fees, reports a 30 per cent drop in traffic and a $28 million drop in revenue in the third quarter ended Sept. 30. The airline has already moved to cut some unprofitable routes and announced it's cutting almost 400 jobs, or 9 per cent of its 4,400-strong workforce to help cope with the slump. Yesterday, Transport Minister David Collenette said the airlines had "some justifications" which are being reviewed by Finance Minister John Manley. But he cautioned outside the House of
Commons: "Everybody would like a free ride in life, but somebody has to pay
for the security. It's either the general taxpayer or it has to be the
person using the service. The government has decided it has to be a
user-charge." |