Ontario Government Seeks To "wing" Aviation Industry

[boestar]

I disagree there, We're not talking about the Olympics. The investment would not be made just for the Pan Am games. The project originally was a private sector initiative started long before the Pan Am Games were awarded to Toronto.

The schedule for completion was made to coincide with the Pan AM games. Check out the Metrolynx Website. It says as much. The private sector would never have jumped through all the hoops just for the airport link without the need for the traffic for the games.

[dagger]

The schedule for completion was made to coincide with the Pan AM games. Check out the Metrolynx Website. It says as much. The private sector would never have jumped through all the hoops just for the airport link without the need for the traffic for the games.

Again, I disagree. The private sector had a plan - Blue 22 - which was launched well before the Games were awarded to Toronto. The feds put our a Request for Proposals in 2000. When the Games were awarded, the private sector did not get all enthused, it got less enthused because of the concerted opposition to using refurbished Budd cars on the route.

[Guest longtimer]

Fuel tax hike will likely push airfares higher, officials say

Rate increase will cost airlines an estimated $100M, likely be passed onto customers

The Canadian Press Posted: Jul 20, 2014 10:50 PM ET| Last Updated: Jul 20, 2014 11:02 PM ET

Airline and airport officials say that the Ontario government's plan to hike aviation fuel taxes will likely lead to increased airfares. (Michelle Siu/Canadian Press)

At a time when other provinces are moving to encourage airline traffic by decreasing or eliminating aviation fuel taxes, Ontario's decision to hike them will likely boost air fares and put the province at a competitive disadvantage, airline and airport officials say.

■Airline fees surge to $31.5 billion

■Air Canada may hike fares, fees due to low dollar

In a budget tabled last week by Ontario's newly elected Liberal government, Premier Kathleen Wynne has proposed to phase in a four-cent-per-litre increase in the aviation fuel tax to 6.7 cents by 2017. The current tax of 2.7 cents per litre has been in place for more than two decades, but would rise by one cent per litre each year.

The increase, which the government has pledged as part of $29 billion it has dedicated to transit and transportation infrastructure uprgrades in the next decade, is expected to add an estimated $100 million in costs for airlines — cost that will likely be passed on to consumers through higher fares.

"It will cause the ticket prices to go up but you might not notice it because it's a small portion...of the fuel bill," said David Tyerman of Canaccord Genuity.

For Air Canada, the estimated $50 million in addition costs represents a fraction of the more than $11 billion it spends annually on fuel, salaries, currency fluctuations and other factors, said Tyerman.

Airlines constantly adjust prices for cost increases and declines, but unlike fuel prices and currency fluctuations that can change rapidly, this tax increase is predictable and will be easier to plan for in advance, the analyst added.

Other provinces 'more competitive'

However, the association that represents Canada's largest air carriers said the tax increase will put Ontario at a disadvantage.

"I suspect maybe other provinces feel they are more competitive now," said Marc-Andre O'Rourke, executive director of the National Airlines Council of Canada.

He said Ontario's rate would be "completely out of whack" with other provinces and would be one of the highest fuel taxes in North America. The association is calling for the increase to be put on hold while the implications are studied.

British Columbia became the latest province to eliminate its international fuel tax in 2012, joining New Brunswick, Alberta, Quebec and Saskatchewan. Newfoundland and Labrador has no fuel tax for international flights but charges tax for flights to the United States. Manitoba has the highest rate at 3.2 cents, but nothing for U.S. and international cargo flights.

B.C.'s move to eliminate the fuel tax to match nearby jurisdictions in Alberta, Washington state and California cost the government $12 million in annual revenue. But a report said it generated an estimated $20 million in new payroll and consumption tax revenue in the first year resulting from expanded international flights into the province, said Elizabeth Thomson, public affairs officer for the Ministry of Transportation and Infrastructure.

While some provinces have eliminated fuel taxes on international flights, they all charge for domestic flights, ranging from 0.7 to 3.2 cents per litre. At 6.7 cents, Ontario would be more than double its provincial neighbours. Most U.S. airports charge little or no fuel taxes.

A boost for business south of the border?

O'Rourke said the province may not receive the full benefit from the tax increase because airlines may decide to fuel at airports outside Ontario to save money.

Douglas Hartmayer, director of public affairs for the operator of airports in Buffalo and Niagara Falls, N.Y., sees the tax boosting business on his side of the border.

"I think that anything that widens the gap and makes it more expensive to fly from Canada vis-a-vis Buffalo is going to drive more people to airports in the United States," Hartmayer said.

More than 2.3 million Canadians a year are believed to use the Buffalo airport, a two-hour drive from Toronto's Pearson International Airport, Canada's busiest travel hub.

Most of the cost difference between Canadian and U.S. airfares is attributable to federal tax, fees and surcharges, said Susie Heath, press secretary for Ontario Finance Minister Charles Sousa. She said Ontario's fuel tax is significantly lower than what is charged at airports such as London Heathrow and Paris de Gaulle.

"We know that these changes affect different communities in different ways, which is why we're working with the Ministry of Transportation to ensure that we are providing relief to vulnerable communities, especially those in remote and northern areas."

A study led by Fred Lazar, associate economics professor at York University's Schulich School of Business, concluded the tax hike will hurt the provincial economy, cut jobs and drive away tourists.

He said the provincial GDP would fall between $67 and $97 million in 2017, resulting in a decrease in up to 2,907 full-time jobs and discourage at least 292,000 air travellers.

Lazar calculates the tax will increase air fares between $1.25 to $12 per ticket depending on airport and destination.

That would hamper Air Canada's efforts to make Toronto's Pearson Airport a North American gateway and hurt the smaller airline, Porter Airlines, which uses Billy Bishop Toronto Centre Airport as its network hub.

http://www.cbc.ca/news/canada/toronto/fuel-tax-hike-will-likely-push-airfares-higher-officials-say-1.2712843?cmp=rss

[Zan Vetter]

This makes me snap. The amount of effort put towards changes and improvements made by employee and management to save $50M is significant. I don't think I'd be exaggerating if I said much blood, sweat, and tears have been shed in an effort to deliver lower costs to the consumer. All wiped away in one fell swoop by this stupid new tax.

"For Air Canada $50 million represents a small portion of the $11 billion it spends annually on...." Are you freakin kidding me? Rovinescu would kill to save $50 million. $50 million is not a small portion of anything!

[Kasey]

TORONTO -- A new survey says nearly one quarter of Canadians won't be travelling this summer, with budget concerns keep them close to home.
The survey by digital offers website RetailMeNot.ca says the high price of gas and accommodations are the top reasons for keeping 23 per cent of Canadians at home, followed by high air fares.

No mention of TAXES!

Read more: http://www.ctvnews.ca/business/high-costs-of-holidays-keeping-canadians-at-home-survey-1.1923558#ixzz387WxK8YP

[boestar]

Well Ontario has the most expensive, everything else, why not the most expensive fuel tax? Did I mention I hate the Liberals.

[Jumpy]

Maybe the new ULCC will fly Ryanair style YVR to Toronto (Buffallo)....close enough?

[Fido]

Maybe the new ULCC will fly Ryanair style YVR to Toronto (Buffallo)....close enough?

With all of the US charges for transborder operations the flights would no longer be ULCC.

[Lakelad]

.

Air Canada CEO warns Ontario fuel tax hike will undo plan to turn Toronto into global aviation hub

Thu Aug 28, 2014 - Financial Post
Kristine Owram

Air Canada has a vision of turning Toronto’s Pearson International Airport into a global aviation hub to rival Chicago’s O’Hare — but the airline’s CEO says that it could all be undone by the Ontario Liberal government’s determination to dramatically increase jet fuel taxes and drive away air traffic.

“That policy is a really bad idea,” Air Canada CEO Calin Rovinescu said in an interview Thursday in the airline’s Toronto office.

“We’re trying to build a world-class business and we cannot do it competitively with these regressive forms of taxation.”

In its most recent budget, Ontario’s Liberal government said it will increase the aviation fuel tax to 6.7 cents per litre by April 1, 2017, a 148% hike from its current level of 2.7 cents. The revenue will go towards transit and other transportation infrastructure.

The aviation fuel tax hasn’t been raised since 1992 and the impact on an individual airline passenger “would be as little as a few dollars,” said Susie Heath, press secretary for Ontario Finance Minister Charles Sousa.

However, a study done for the National Airlines Council of Canada said the substantial tax increase will drive away as many as 407,800 air travellers per year from Ontario’s airports.

The result would slice as much as $97-million off the province’s 2017 GDP and would cost as many as 2,900 full-time jobs, according to the study, which was done by Fred Lazar, an economics professor at York University’s Schulich School of

Mr. Rovinescu said it already costs significantly more to land a plane in Toronto than the major U.S. hubs because of higher taxes and airport rents.

The Liberals’ jet fuel tax hike, pledged in this year’s Ontario budget, runs counter to the approach elsewhere in Canada. British Columbia eliminated its jet fuel tax for international flights in 2012, joining other jurisdictions including Quebec and Alberta. In the United States, the jet fuel used by commercial airlines is taxed at 4.4 cents per gallon, or about 1.2 cents per litre, making it less than one-fifth the promised Ontario rate.

The World Economic Forum ranked Canada a dismal 136th out of 140 countries for ticket taxes and airport charges in 2013. It’s estimated that five-million Canadians cross the border for cheaper flights every year.

“We’re dealing with a very high-cost jurisdiction to begin with,”

.

[boestar]

MAybe they will move the hub to QUEBEC

[DEFCON]

I'm with VZ above in post #29, the money the Liberals are going to take out of the shareholders pocket has to come from somewhere, meaning the employees will have to give again.

[boestar]

Airlines are big cash cows. Didn't you know that? They have heaps and heaps of cash and all the employees are allow to play in it. The sun is always shining. There are candycanes and rainbows everywhere. The Liberals just want a piece because their world is just the opposite.