WestJet CEO urges Ottawa to end government-mandated fares

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To help keep ticket prices down for customers, WestJet's CEO is calling on Ottawa to freeze the government's flight fees and stop collecting airport rent.

WestJet Group CEO Alexis von Hoensbroch says the country's user-paying model for aviation infrastructure needs a comprehensive review and that it's time to look at issues related to competitiveness, Canadians crossing the U.S. border to fly and equity between different modes of travel.

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The country's airlines operate in a high-cost environment that significantly raises ticket prices for Canadians and hurts competition, while revenue from major airport leases goes to the federal government, he said in a speech to the Calgary Chamber of Commerce on Wednesday.

“Right now there are passenger fees – ultimately through tickets – that not only pay for infrastructure, but also fund the federal budget,” von Hoensbroch told reporters after the event.

“I don't think that's right in a country that needs air transport as an important form of transport.”

His comments come three months after price hikes continue to hurt Canadians' pocketbooks and the permanent shutdown of Calgary-based Lynx Air, an ultra-low-cost carrier.

At the time, Lynx cited higher fuel costs, regulatory costs and rising airport fees across the country as part of the reason for seeking to protect lenders.

WestJet operated its own ultra-low-cost carrier, but added its Swoop division to its core operations last year.

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In the chamber, von Hoensbroch pointed out that security fees have increased by 33 percent this month and that additional mandatory costs for airline tickets in Canada are higher than in the United States.

“What we've seen with our ultra-low-cost carrier Swoop is that if you want to gain market share by offering very affordable tickets … it's very difficult, if you're operating in an environment where the first $88 is very difficult. Your tickets only went for infrastructure,” he added.

WestJet's CEO has previously called on the federal government to restructure the country's air passenger fees.

Last year, von Hoensbroch noted that customers flying round-trip between Calgary and Toronto paid $140 extra to their tickets, including airport improvements, security and NavCanada costs.

A December report by the Montreal Institute of Economics found that the nonprofit groups that run Canada's biggest airports paid the federal government $419 million in rent in 2022-2023, a 43 percent increase over the previous decade — a cost passed on to consumers. through their fares.

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The study also found that the security fee for air travelers has risen to $9.94 for a domestic flight — as of this month — and $34.42 for an international trip, while the same fees in the U.S. cost no more than $15.30.

Calgary Airport Authority CEO Chris Dinsdale said the not-for-profit organization paid about $50 million in rent to the federal government last year and could find multiple revenue targets if allowed to keep the money.

The total income of the authorities last year reached 497 million dollars. Dinsdale noted that the airport has about $3.3 billion in debt, adding $300 million during the pandemic.

“We are working on a system that sees airports as a source of revenue… This money can be used for sustainability, infrastructure investments or debt repayment,” he said.

“We can spend it on a lot of things.”

The National Airlines Council of Canada called for a comprehensive review of all third-party fees and charges imposed on air travel in the country in its federal pre-budget proposal this year.

He also recommended that the government reinvest the rents Canada pays for transportation into airport infrastructure.

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The council, which represents the country's largest passenger airlines, including Air Canada and WestJet, noted that U.S. carriers cut the number of flights to Canada's non-hub markets by 52 percent last year compared to 2019.

Council CEO Jeff Morrison said Wednesday the group had not received a formal response to its proposal, but noted that the federal competition bureau will conduct a market study of the airline industry earlier this month.

He hopes to address the issue of surcharges facing consumers and said Ottawa should take note of the Lynx Air debacle in February.

“It should send a wake-up call,” Morrison said in an interview.

“A number of carriers have not succeeded… We are one of the most expensive countries in the world in which to operate.”

John Gradek, an industry expert who teaches aviation management at McGill University, said airlines have raised concerns about Canada's user-fee infrastructure model.

However, there are signs that could change with an upcoming Competition Bureau investigation and recent Ottawa discussions about allowing Canadian pension funds to invest in airport facilities.

“Question: Who will pay the freight for the infrastructure?” And right now, the traveler pays the bill. Should Canadian taxpayers do this? That's a question we have to answer as Canadians,” Gradek said.

“It's time to revisit it and make sure we set the right model.”

Chris Varco is a columnist for the Calgary Herald.

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