Good morning, ladies and gentlemen.
My name is Krista Prochazka, and I am the executive director of the Tourism Industry Association of the Yukon. Thank you for allowing me to appear before you today.
As you are aware, tourism is an important contributor to Canada's economy. Tourism is a pillar industry in the Yukon, accounting for up to 7.2% of our GDP and nearly $200 million in private sector revenues. It is one of the largest private sector employers in the territory, with more than 25% of Yukon businesses reporting revenue from tourism. It has been and continues to be an important industry in our territory.
International tourism is globally one of the fastest-growing industries in the world. Canada is blessed with breathtaking landscapes, world-class attractions, and an incredibly rich heritage and culture. The Canadian brand is number one internationally, but international air travel to Canada has been on the decline for a number of years and domestic overnight travel has been relatively stagnant. Between 2002 and 2010, Canada in fact dropped from sixth in international tourism arrivals to fifteenth, a drop of about four million visitors. We are only one of two countries to drop out of the top ten and the only one to lose in visitations.
A key impediment to reversing this trend is Canada's current aviation cost structure. This structure taxes us out of contention for international visitors and discourages Canadians from exploring their own country. As someone from the Windsor-Detroit border can attest, it drives Canadians south of the border for flights. Together this contributes to a $14 billion trade deficit.
Canada is a “fly-to” destination and price competitiveness is vital to attracting visitors. This is even truer in Canada's north. Yukon is the smallest jurisdiction and Whitehorse is the smallest community in North America to receive direct access from Europe. For all northern communities, our quality of life, economic competitiveness, and viability as a choice tourism destination are directly tied to the cost and accessibility of air access.
Under the current cost structure, the taxes and fees imposed on our airline tickets placed Canada 125th out of 138 countries ranked. When combined, airport ground rents, the air traveller security charge, navigation charges, payments to municipalities, and aviation fuel taxes can add upwards of $160 to the cost of an overseas ticket. Increasingly, airport improvement fees are also added.
Our airports are economic engines that spur growth not only in tourism but in virtually every industry. If Canada is going to regain its position as a top international destination and benefit from the fastest growing industry in the world, we must become competitive again. As such, our recommendation to the committee is for a prompt and comprehensive review of the aviation cost structure in Canada, with a view to achieving a fair and competitive tax and regulatory regime that will allow us to compete on a level playing field with the rest of the world.
We would as well like to recommend to the committee that the federal government revisit the funding model for the Canadian Tourism Commission, with the objective of providing a competitive and stable base for effectively marketing Canada internationally.
The CTC competes for an international tourism market worth $3 billion a day and yet their core funding has dropped year over year for most of the last decade. At $72 million, it's 27% less than they received in 2001. By comparison, the new marketing organization in the United States will operate with an estimated budget of over $200 million.
Like many Canadian jurisdictions, the Yukon relies on our partnership with the CTC to leverage our resources in international markets. The decline in core funding to the CTC not only erodes their capacity, it also inhibits our ability to enter into new and emerging markets and to remain active in crucial markets such as the United States.
Marketing dollars are an investment. Investing in tourism marketing creates a payback to the economy and the government many times over. The return on these dollars is exceptional. In the Yukon, for every marketing dollar spent, 27 new dollars enter the territory. Other countries recognize this and are making large investments, leaving Canada 20th in the world for national tourism organization funding. In this highly competitive marketplace, Canada cannot expect to succeed by relying on its natural endowments and cultural attractions.
While the Canadian brand is currently number one, this cannot continue without competitive and sustainable funding. By providing a competitive and stable base for the CTC, Canada and all of its regions can continue to build a successful tourism marketing commission and can benefit from the tremendous economic potential of international tourism.
Thank you.