In the context of current discussions around affordability for Canadian citizens and stimulating the Canadian economy, the National Airlines Council of Canada (NACC) asked Oxera to assess the impact on the Canadian economy of taxes, fees, charges and regulations applied to the aviation sector. The study models reductions to aviation-specific fees such as the Airport Improvement Fee (through lower airport rents paid by airports to the Federal Government), the security and air navigation charges, as well as the impact of lower regulatory costs related to the Air Passenger Protection Regulations on the aviation sector and the Canadian economy. We estimate the impact of lower fees on airfares, traffic, the economic footprint of the sector, and productivity and government revenues. The results of the study illustrate what could be achieved through adjustments to aviation-specific fees: more affordable fares, greater demand for air travel and significant economic benefits across Canada, including more efficient supply chains and greater movement of people and goods.

The key findings from our report conclude:

• Generally, there is an opportunity to explore how different policy levers could stimulate economic growth and improve accessibility of air travel for passengers in Canada.
• Aligning taxes, charges and fees with levels in Sweden means a family of four travelling on a return trip from Toronto to Vancouver would pay around $251 less for their plane tickets. A family of four travelling from Edmonton to Montreal on a return trip would save $282.
• This would result in up to $9 billion in additional GDP and create 86,000 jobs from increased air travel. Reducing fees to this level could also increase the value of trade (imports + exports) by $106 billion and increase GDP by $17 billion through enhanced productivity.
• More affordable air travel, through the additional economic activity generated, could result in an increase in total tax revenue between $2 and $10 billion.

Full report also available in French (translated by NACC) here.