Business
Here’s why your plane ticket is so expensive
From the Fraser Institute
By Alex Whalen and Jake Fuss
While the strike by WestJet mechanics lasted only a few days, many Canadian air travellers faced long delays and cancelled flights. More broadly, according to the Canadian Transportation Agency, customer complaints have hit an all-time high.
Yet many dissatisfied travellers likely don’t realize that Ottawa heavily contributes to their frustrations. Let’s look at the various ways federal policies and laws make air travel worse in Canada.
First, federal laws insulate Canada’s airlines from competition. Foreign airlines are subject to highly restrictive “cabotage” laws which, for example, dictate that foreign airlines cannot operate routes between Canadian cities. At the same time, foreign investors are forbidden from owning more than 49 per cent of Canadian airlines. By restricting international participation in the Canadian air travel market, these laws both deprive Canadian consumers of choice and insulate incumbent airlines from competition. When consumers have more choice, incumbents have a greater incentive to improve performance to keep pace with their competitors.
Second, a wide array of taxes and fees heavily influence the cost of airline tickets in Canada. Airport improvement fees, for example, average $32.20 per departing passenger at airports in Canada’s 10 largest markets. In contrast, airport improvement fees in the United States cannot exceed $4.50. And last year the Trudeau government increased the “air travellers security charge” by 32.85 per cent—this fee, which now ranges from $9.94 to $34.82 per flight, is higher in Canada than the U.S. across all flight categories. On the tax front, in addition to fuel taxes including the federal carbon tax, the federal excise tax on unleaded aviation gasoline in Canada is 10 cents per litre compared to 6.9 cents per litre in the U.S. And the U.S., unlike Canada, does not apply sales taxes to aviation fuel.
Third, air travel is a heavily regulated sector. Federal legislation generates thousands of provisions airlines must follow to operate legally in Canada. Of course, some regulation is necessary to ensure passenger safety, but each regulation adds administrative and compliance costs, which ultimately affect ticket prices. To lower the cost of air travel, the federal government should reduce the regulatory burden while maintaining safety standards.
Lastly, the ownership model of Canada’s airports results in a yearly transfer of rent to the federal government. The federal government used to own Canada’s national system of airports until they were transferred to private not-for-profit corporations in the early 1990s. However, these airports must still pay rent to the federal government—nearly half a billion dollars annually, according to the Canada Airports Council. As with the other examples listed above, these costs are ultimately passed on to consumers in the form of higher ticket prices.
While a precise estimate is difficult to obtain, various government policies, taxes and fees comprise a large share of the cost of each airline ticket sold in Canada. With complaints from travellers at all-time highs, the federal government should reduce the regulatory burden, increase competition, and lower fees and taxes. Policy reform for air travel in Canada is long overdue.
Authors:
Business
Climate Climbdown: Sacrificing the Canadian Economy for Net-Zero Goals Others Are Abandoning
By Gwyn Morgan
Canada has spent the past decade pursuing climate policies that promised environmental transformation but delivered economic decline. Ottawa’s fixation on net-zero targets – first under Justin Trudeau and now under Prime Minister Mark Carney – has meant staggering public expenditures, resource project cancellations and rising energy costs, all while failing to
reduce the country’s dependence on fossil fuels. Now, as key international actors reassess the net-zero doctrine, Canada stands increasingly alone in imposing heavy burdens for negligible gains.
The Trudeau government launched its agenda in 2015 by signing the Paris Climate Agreement aimed at limiting the forecast increase in global average temperature to 1.5°C by the end of the century. It followed the next year with the Pan-Canadian Framework on Clean Growth and Climate Change that imposed more than 50 measures on the economy, key among them a
carbon “pricing” regime – Liberal-speak for taxes on every Canadian citizen and industry. Then came the 2030 Emissions Reduction Plan, committing Canada to cut greenhouse gas emissions to 40 percent below 2005 levels by 2030, and to achieve net-zero by 2050. And then the “On-Farm Climate Action Fund,” the “Green and Inclusive Community Buildings Program” and the “Green Municipal Fund.”
It’s a staggering list of nation-impoverishing subsidies, taxes and restrictions, made worse by regulatory measures that hammered the energy industry. The Trudeau government cancelled the fully-permitted Northern Gateway pipeline, killing more than $1 billion in private investment and stranding hundreds of billions of dollars’ worth of crude oil in the ground. The
Energy East project collapsed after Ottawa declined to challenge Quebec’s political obstruction, cutting off a route that could have supplied Atlantic refineries and European markets. Natural gas developers fared no better: 11 of 12 proposed liquefied natural gas export terminals were abandoned amid federal regulatory delays and policy uncertainty. Only a single LNG project in Kitimat, B.C., survived.
None of this has had the desired effect. Between Trudeau’s election in 2015 and 2023, fossil fuels’ share of Canada’s energy supply actually increased from 75 to 77 percent. As for saving the world, or even making some contribution towards doing so, Canada contributes just 1.5 percent of global GHG emissions. If our emissions went to zero tomorrow, the emissions
growth from China and India would make that up in just a few weeks.
And this green fixation has been massively expensive. Two newly released studies by the Fraser Institute found that Ottawa and the four biggest provinces have either spent or foregone a mind-numbing $158 billion to create just 68,000 “clean” jobs – an eye-watering cost of over $2.3 million per job “created”. At that, the green economy’s share of GDP crept up only 0.3
percentage points.
The rest of the world is waking up to this folly. A decade after the Paris Agreement, over 81 percent of the world’s energy still comes from fossil fuels. Environmental statistician and author Bjorn Lomborg points out that achieving global net-zero by 2050 would require removing the equivalent of the combined emissions of China and the United States in each of the next five
years. “This puts us in the realm of science fiction,” he wrote recently.
In July, the U.S. Department of Energy released a major assessment assembled by a team of highly credible climate scientists which asserted that “CO 2 -induced warming appears to be less damaging economically than commonly believed,” and that aggressive mitigation policies might be “more detrimental than beneficial.” The report found no evidence of rising frequency or severity of hurricanes, floods, droughts or tornadoes in U.S. historical data, while noting that U.S. emissions reductions would have “undetectably small impacts” on global temperatures in any case.
U.S. Energy Secretary Chris Wright welcomed the findings, noting that improving living standards depends on reliable, affordable energy. The same day, the Environmental Protection Agency proposed rescinding the 2009 “endangerment finding” that had designated CO₂ and other GHGs as “pollutants.” It had led to sweeping restrictions on oil and gas development and fuelled policies that the current administration estimates cost the U.S. economy at least US$1 trillion in lost growth.
Even long-time climate alarmists are backtracking. Ted Nordhaus, a prominent American critic, recently acknowledged that the dire global warming scenarios used by the Intergovernmental Panel on Climate Change rely on implausible combinations of rapid population growth, strong economic expansion and stagnant technology. Economic growth typically reduces population increases and accelerates technological improvement, he pointed out, meaning emissions trends will likely be lower than predicted. Even Bill Gates has tempered his outlook, writing that climate change will not be “cataclysmic,” and that although it will hurt the poor, “it will not be the only or even the biggest threat to their lives and welfare.” Poverty and disease pose far greater threats and resources, he wrote, should be focused where they can do the most good now.
Yet Ottawa remains unmoved. Prime Minister Carney’s latest budget raises industrial carbon taxes to as much as $170 per tonne by 2030, increasing the competitive disadvantage of Canadian industries in a time of weak productivity and declining investment. These taxes will not measurably alter global emissions, but they will deepen Canada’s economic malaise and
push production – and emissions – toward jurisdictions with more lax standards. As others retreat from net-zero delusions, Canada moves further offside global energy policy trends – extending our country’s sad decline.
The original, full-length version of this article was recently published in C2C Journal.
Gwyn Morgan is a retired business leader who has been a director of five global corporations.
Business
Cost of bureaucracy balloons 80 per cent in 10 years: Public Accounts
The cost of the bureaucracy increased by $6 billion last year, according to newly released numbers in Public Accounts disclosures. The Canadian Taxpayers Federation is calling on Prime Minister Mark Carney to immediately shrink the bureaucracy.
“The Public Accounts show the cost of the federal bureaucracy is out of control,” said Franco Terrazzano, CTF Federal Director. “Tinkering around the edges won’t cut it, Carney needs to take urgent action to shrink the bloated federal bureaucracy.”
The federal bureaucracy cost taxpayers $71.4 billion in 2024-25, according to the Public Accounts. The cost of the federal bureaucracy increased by $6 billion, or more than nine per cent, over the last year.
The federal bureaucracy cost taxpayers $39.6 billion in 2015-16, according to the Public Accounts. That means the cost of the federal bureaucracy increased 80 per cent over the last 10 years. The government added 99,000 extra bureaucrats between 2015-16 and 2024-25.
Half of Canadians say federal services have gotten worse since 2016, despite the massive increase in the federal bureaucracy, according to a Leger poll.
Not only has the size of the bureaucracy increased, the cost of consultants, contractors and outsourcing has increased as well. The government spent $23.1 billion on “professional and special services” last year, according to the Public Accounts. That’s an 11 per cent increase over the previous year. The government’s spending on professional and special services more than doubled since 2015-16.
“Taxpayers should not be paying way more for in-house government bureaucrats and way more for outside help,” Terrazzano said. “Mere promises to find minor savings in the federal bureaucracy won’t fix Canada’s finances.
“Taxpayers need Carney to take urgent action and significantly cut the number of bureaucrats now.”
Table: Cost of bureaucracy and professional and special services, Public Accounts
| Year | Bureaucracy | Professional and special services |
|
$71,369,677,000 |
$23,145,218,000 |
|
|
$65,326,643,000 |
$20,771,477,000 |
|
|
$56,467,851,000 |
$18,591,373,000 |
|
|
$60,676,243,000 |
$17,511,078,000 |
|
|
$52,984,272,000 |
$14,720,455,000 |
|
|
$46,349,166,000 |
$13,334,341,000 |
|
|
$46,131,628,000 |
$12,940,395,000 |
|
|
$45,262,821,000 |
$12,950,619,000 |
|
|
$38,909,594,000 |
$11,910,257,000 |
|
|
$39,616,656,000 |
$11,082,974,000 |
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