Good morning, Mr. Chair and members of the committee
My name is Massimo Bergamini and I am the president and chief executive officer of the National Airlines Council of Canada.
I would like to thank you for this opportunity to appear before the committee during your pre-budget consultations.
As you have our detailed submission, I will focus my remarks on the issues at the heart of the problem. Let me begin by sharing four snapshots of Canada's commercial aviation industry. Each tells a piece of the story that is relevant to your deliberations.
Here's the first snapshot. Our members alone employ over 50,000 Canadians directly and contribute more than 400,000 jobs in related sectors, such as aerospace and tourism.
Here's the second snapshot. Every day, some 300,000 passengers board one of our members' flights to travel for work, visit family or explore our country and the world. To put that in some context, that's almost the equivalent of the population of Toronto—every woman, man and child—boarding those flights every week.
Here's the third snapshot. Over the last decade, the cost of air transportation in Canada has grown more slowly than the rate of inflation. Again, for a bit of context, that's slower than many basic household goods such as coffee, fresh fruit and vegetables, public transit and electricity.
Whether you look at those snapshots individually or as a montage, you see a thriving industry aligned with the realities of modern Canada, moving Canadians efficiently and economically, and creating jobs and opportunities. However, something is not right with that picture. Indeed, for the first time in a decade there are signs of turbulence. Domestic capacity is being reduced. Why is that?
The fourth snapshot completes the picture and brings it into focus. Over the last 10 years, Canadian taxpayers have subsidized marine transportation by over $12 billion and rail transport by some $4 billion. Over the same period, the federal government generated a $2.9-billion windfall from commercial aviation. It would be disingenuous to suggest that federal policies alone are behind the loss of lift that we're seeing for the first time in a decade, but remember how the cost of air travel grew more slowly than the rate of inflation? The cost of a base domestic fare actually decreased.
Simply put, while governments fly first class on the gravy plane, Canadians have been paying the ticket. In general, user pay is a way for governments to allocate scarce public resources more efficiently, or to put a price on negative externalities.
In a country as sparsely populated and as vast as Canada, it would be hard for any government to make a public case that the supply of air transport should be limited. However, when it comes to aviation, what we have in Canada is not user pay but the imposition of sin taxes. Successive governments have literally banked on two myths to normalize this policy: air travel as the preserve of jet-setting elites, and an abundance of transportation options for all Canadians. We're beginning to see the results.
In our detailed submission, we identify some of the more egregious symptoms of this broken policy, whether it's CATSA funding, airport rents or fuel taxes. There's more, though. From the federal carbon tax backstop to passenger rights regulations, federal policies are being developed in silos with no consideration to their cascading impact on our industry, or on the people and communities who rely on air transportation.
Canadian carriers are recognized as among the best in the world. Their success should be recognized as Canada's success. Given the impact of Canada's aviation sin tax policy on individual Canadians, on families, on communities and on the industry that serves them, it is time to replace drag with lift. It's time to stop taxing air travel like a luxury. To put a fine point on it, it's time to stop the gravy plane.