Montreal - The International Air Transport Association (IATA) called upon Canada’s policy makers to take actions to improve the competitiveness of the country’s aviation sector including reducing the heavy tax burden.

“Canada is home to leading global aviation organizations including IATA, the International Civil Aviation Organization (ICAO) and Airports Council International (ACI), and has one of the world’s most important aerospace sectors. Yet government policies including a high tax burden hamper aviation’s ability to serve as an even greater catalyst for economic growth and jobs creation,” said IATA’s Director General and CEO Tony Tyler in an address to the Montreal Council on Foreign Relations.

Tyler compared Canada’s aviation sector with Australia’s, a country with which Canada shares some characteristics in terms of geography, resources, demographics and other areas. According to country studies conducted on behalf of IATA by Oxford Economics:

  • Aviation directly contributes 2.2% of GDP for Canada but 2.6% for Australia.
  • If catalytic benefits through tourism are included, GDP contribution rises to 2.8% for Canada—and to 6.1% for Australia.
  • Canada’s population is around 50% larger, but Australia has more air travel: 78 million passengers travel to, from and within Australia, compared to 71 million for Canada.

“There is one statistic, however, where Canada wins hands down over Australia: aviation’s contribution to taxes. It is about 19% higher in Canada, excluding the impact of domestic taxes on fuel. Were fuel to be included, the difference would be even greater, since Canadian fuel taxes are about double the amount for Australia,” said Tyler.

“The Crown rent charged for Canada’s airport infrastructure is a CAD 250 million annual competitive disadvantage. The pain is not only felt by the Canadian air transport sector which suffers from passengers opting to start their journeys from US airports. Every business that relies on connectivity shares the burden. That is not all. The burden also includes Property in Lieu of Taxes and some of the highest security fees in the world—which can be up to ten times those charged in the US,” said Tyler.

Despite these competitive disadvantages, recent developments provide reason to be optimistic that Canadian policy makers are starting to view aviation as a strategic asset. “The announcement by the government of British Columbia that it is proposing to do away with the provincial tax on international jet fuel from next month is excellent news. In another positive development, Transport Canada has initiated a stakeholder consultation on key policies affecting the competitiveness of the aviation industry. I urge the Minister of Transport, Infrastructure and Communities Denis Lebel to include a look at the impact of aviation taxes in this review. It is important that this consultation process develops consensus on a coherent national aviation policy that supports improved competitiveness in recognition of the catalytic impact of air connectivity on economic growth and development,” said Tyler.

Taking a global context, Tyler made special mention of the important role that Montreal plays in the key areas of safety, security and environment.

Safety: “Aviation safety is built on global standards. And these standards are built in Montreal. Today IATA announced that in 2011, the global accident rate for Western-built jets was the lowest in history. Last year 2.8 billion people flew safely on 38 million flights. This amazing performance is a testament to the strength and commitment to aviation safety by the stakeholder community through global standards,” said Tyler. The accident rate for Western-built jets was 0.37 hull losses per million flights or one accident for every 2.7 million flights which represents a 61% improvement over the last decade.

Security: “A Declaration on Aviation Security was unanimously agreed upon at the last ICAO Assembly in 2010. Building on that commitment to cooperate to improve global security, IATA has been working closely with ICAO, Interpol and states to improve the airport checkpoint and eliminate the long lines, unpacking, disrobing and intrusive searches that too often characterize today’s checkpoint experience,” said Tyler.

IATA has proposed a Checkpoint of the Future that combines differentiated screening powered by passenger information that is already being collected for immigration purposes with technology solutions that allow passengers to walk through checkpoints without stopping or unpacking. The Checkpoint of the Future already has support from major stakeholders such as the European Commission, the Chinese Government, the US Department of Homeland Security and Interpol.

Environment: “Through ICAO, the Montreal aviation nexus played a central role in achieving a balanced approach to aviation noise a decade ago. Now Montreal needs to play the leading role in resolving the global dispute over the European Union’s Emissions Trading Scheme. Through the leadership of ICAO, a set of principles for market based measures is already agreed. And there is a commitment to deliver proposals for a global scheme by the next ICAO Assembly, which is only a year-and-a-half away. I believe that Europe is coming to the understanding that a global solution is what is needed. Indeed, I repeat my call for Europe to be a sincere participant in making the ICAO process successful,” said Tyler.

IATA has made its global headquarters in Montreal since it was incorporated by a special act of the Canadian Parliament in 1945.

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Notes for Editors:

  • IATA (International Air Transport Association) represents some 240 airlines comprising 84% of global air traffic.