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Press Release No.: 11

Date: 12 March 2007

Taxation is Not a Recipe for Competitiveness-IATA Urges Change in Canada’s Aviation Policy-

(Vancouver) 12 March 2007 -- The International Air Transport Association (IATA) called for Canada’s aviation policy to promote competitiveness. IATA Director General and CEO, Giovanni Bisignani, made the appeal in an address to the Vancouver Board of Trade as the Canadian Government signed an agreement with the United States to further liberalise air services between the two countries.

“Taxation, taxation and more taxation is not a recipe for competitiveness,” said Bisignani. “Canada’s tax revenue from aviation rose nearly 20% per year between 2001 and 2005, totalling C$800 million annually or 20% of the industry’s production value. If Canada is serious about the 80,000 jobs and C$4.1 billion in economic activity that aviation generates for Canadians, this must change,” said Bisignani.

Bisignani singled out Canada’s taxation policies with respect to security and airport Crown rent.

Crown Rent: “Crown rents are a C$300 million burden to the Canadian air transport sector—a burden that only has an equivalent in Ecuador and Peru. It’s a rip-off. The airlines have already paid C$2 billion in rents for airports that were only valued at C$1.5 billion when they were transferred to local authorities. And the Federal Government does nothing for its money. All infrastructure improvements have been funded independently by airlines and their passengers. It’s time for Ottawa to eliminate Crown rent and give Canada’s aviation sector a fair chance to compete globally,” said Bisignani.

Security: “The industry is much more secure now than it was in 2001. But the costs—in terms of inconvenience and dollars—are still too high. Governments must harmonise procedures across borders—taking advantage of technology to improve both effectiveness and convenience. And the Canadian Government must stop looking at airport security as a profit centre. Between 2002 and 2005 nearly C$1.25 billion has been collected with the Air Travellers Security charge. But the government only spent C$820 million. Meanwhile C$115 million a year is being invested by Ottawa in marine security and another C$110 million is being earmarked for rail security. Why should air travellers be singled out to pay for their own security?” questioned Bisignani.

“The air transport industry is turning the corner on profitability. We expect a small airline industry profit of US$2.5 billion in 2007—the first since 2000. Major cost centres—except for fuel—at North American carriers have reduced in the range of 30%. Difficult decisions and a willingness to change allowed airlines to absorb US$70 billion in added fuel costs and still improve the bottom line each year since 2001. Now it’s time for governments to help lead the change. In Canada, that task starts by reducing the excessive tax burden,” said Bisignani.

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