THUNDER BAY – Increases to the provincial jet fuel tax don’t sit well with the president and CEO of the Thunder Bay International Airport Authority
“It’s hugely disappointing, especially given the industry has tried very hard to make the case that air transportation is an economic generator,” Scott McFadden said Tuesday.
“The Thunder Bay airport and associated air transport business in Thunder Bay is worth over $500 million to the local economy and this kind of de-stimulating tax is a step in the wrong direction.”
The Liberal’s budget, which was unveiled at Queen’s Park on Monday, includes hiking the aviation fuel tax from the current rate of 2.7 cents per litre up to 6.7 cents per litre over the next four years.
McFadden said it would be difficult to predict exactly how much of the tax increase will be passed down to passengers and how sizeable the impact would be on fares.
What he can predict is that the spin-off effects will extend beyond just passengers on commercial flights.
“There is no question fuel is the biggest single cost line item on any air operator,” he said, adding the trickle down of costs could include higher shipping rates.
“This will increase the costs for everybody.”
Instead, McFadden would rather Ontario follow the lead of British Columbia, after that province removed all taxes on jet fuel.
Last week the airport celebrated its 20th anniversary and highlighted attracting a new American carrier to replace United Airlines as a significant target for growth.
The increased taxes is just one other obstacle to overcome to try to appeal to outside airlines while competing against markets, such as Duluth, with much favourable conditions.
A trend is developing across the industry where Canadian passengers are driving south to fly out of American airports.
“It’s just one more reason why it would make more economic sense for air operators to operate out of U.S. border airports rather than crossing the border into Canada,” McFadden said.
“Canada is the only significant nation in the world that uses the air transportation sector as a cash cow. Every other significant country recognizes the economic value of a vibrant air transportation system.”
Once direct flights from Canadian airports to international destinations might begin to include stops in American airports to circumvent the extra costs, he added.