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Why is Canadian flying so expensive?

Written by Braedyn Deamer on July 09, 2020 at 6:44 AM UTC

This article should take 2 minutes to read.

If you have flown in either Europe or the US, you might notice that Canada is considerably more expensive than very similar products and services. One of the main reasons in the monopolistic competition in Canada is that there is another hidden cost not many people know about. It is the rent that the airports need to pay and then those trickles down the chain from airlines to passengers.

The reason behind this is the way that Canadian airports can help provide a significant amount of quality infrastructure at their airports. Think of it as a user-pay model, all costs from security to air traffic control are passed down to travellers who ultimately have to foot the bill.

“The Canadian Model”

“This model, in which the government of Canada retains ownership, is unique in the world. The model currently dominant globally is full or partial privatization, either via an outright sale or via corporatization followed by the sale of the share capital immediately or in phases.” -Aeroports de Montreal

This quote explains how different airports worldwide are either completely privatized or partially, for example, Sydney Kingsford Smith International Airport in Australia. But in Canada, it is very different. You see the Government of Canada set up a bunch of Non-Profit Organizations to help “manage, operate and develop designated infrastructures under long-term leases.” which means the government retains ownership. Still, when the leases are up, they take control of them and don’t accrue any debt, smart.

This model generates some excellent revenue for the government, which is sucked out of the airlines, airport businesses and passengers. With the amount, they collected in 2019 exceeding $1.1 billion. Many have called for the end of this model and for good reason, but will they do it when it makes them so much money? At the beginning of the pandemic, they waived these rent fees which has helped save $233.4 million. Maybe this is a change that should remain.