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The feds' Great Airline Gouge


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Air security fee nets government $234-million profit: New charge brought in $443M in year after terror attacks, just $209M spent

The Ottawa Citizen

The extra security charges on airline tickets netted the federal government $234 million more than it spent on air security in the year after the terrorist attacks on the U.S.

Audited data released by the Finance Department yesterday showed the Air Travellers Security Charge brought in $443 million in 2002-03, while the government spent just $209 million on enhanced air security in the same period. In the seven months between Sept. 11, 2001, and April 2002, when the fee was created, the government spent about $39 million on security.

Most of the funding from the fee went to the Canadian Air Transport Security Authority (CATSA), the agency set up after the terrorist attacks to run passenger and baggage screening, co-ordinate airport security, and place armed RCMP officers on selected flights.

To pay for the new agency, airline travellers were hit with the $24 security charge on every round-trip ticket, beginning in April 2002. The fee has since been reduced to $12 per round trip in Canada.

The audited data come a day after the government announced an $8.9-billion annual surplus, while posting additional surpluses of $2 billion annually at the Canada Mortgage and Housing Corporation, and a $46-billion cumulative surplus in the Employment Insurance fund.

Conservative transport critic Rob Nicholson accused the government of profiting from the terror attacks with the air security charge. "(It) was the excuse to collect more money off Canadians. This was just a tax grab right from the start. And it ties in with the surpluses that they've been announcing."

When the charge was introduced, the government claimed it would bring in no more than needed to keep the skies safer.

Then-finance minister John Manley promised regular reviews of the charge.

The government did reduce the charge, lowering it to $14 per domestic round trip beginning in April 2003, and then again this past April, when it dropped to $12. The charge for flights to the U.S. was also cut, to $10, and to $20 from $24 for international flights.

The Finance Department says the revenues in CATSA's first year were out of line with the spending because the exact cost of bolstering air security wasn't immediately known in the months after 9/11.

"We knew we were going to have to spend money on security measures," said John Embry, a spokesman for Finance Minister Ralph Goodale. "But at that time, nobody knew what was going to be involved, what kind of machines, how many."

Mr. Embry left open the possibility that the fee would be reduced again in the next budget.

But the airline and travel industry say the burden for anti-terrorism should never have been borne by travellers.

"They're making a profit off of the security of travellers," said Jennifer Demers, of the Tourism Industry Association of Canada. "They are consistently charging way too much for something they shouldn't be charging. Safety and security is something that should be paid out of general revenues."

The Air Transport Association of Canada, the airline industry lobby group, said the new data prove that its initial opposition to the charge was correct.

"This is exactly what we were worried about," said chief executive Cliff MacKay. He said the extra charge on tickets crippled the industry's recovery after 9/11 and hit short-haul carriers the hardest. He called on the government to reduce the charge again.

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