Good morning, Mr. Chair. Thank you.
My name is Anthony Norejko. On behalf of the Canadian Business Aviation Association, I am here to discuss key considerations for the upcoming 2024 pre-budget consultation. By way of a quick background, our association is the voice for business aviation in Canada. We represent almost 400 members and the 1,500 aircraft that operate across the country coast to coast to coast, and 300 of those aircraft are based right here in Alberta. Our recently completed and soon to be released economic impact study demonstrates that business aviation operations and manufacturing in Canada support directly 25,600 jobs across the country, earning $3 billion in wages. In fact, the average wage per direct job is just over $116,000.
In short, our industry moves both Canadians and our economy forward every day. My testimony today will focus on three pivotal themes: the impact of the luxury tax, the crucial role of sustainable aviation fuel and the imperative need for a comprehensive study of the aviation industry’s economic influence on Canadians.
Firstly, the implementation of the luxury tax needs careful scrutiny and continued review. Although the federal Department of Finance Canada estimates only minor economic losses to the aerospace sector from the tax—between $2 million to $4 million in GDP and 10 to 20 full-time job losses—a study conducted by the researchers at HEC Montréal and circulated by our colleagues at the Aerospace Industries Association of Canada anticipates far worse consequences to the industry and, by effect, the national economy at large.
In 2022, it is estimated that the tax resulted in the lost sales of no less than 18 business jet aircraft, equivalent to roughly $800 million in lost revenue. However, the potential full-year consequences to the sector include losses to manufacturers of not only business jets but other aircraft types, along with employment losses to the broader aerospace supply chain, business aviation operators, and maintenance, repair and overhaul businesses in Canada. Across all these subsectors combined, the anticipated losses include at least 2,000 direct jobs with a conservative estimate of $149 million in lost wages. These lost wages imply $29.9 million in forgone annual income tax revenue to the federal government, which would exceed the $9 million in annual revenue expected to be collected from the luxury tax itself. Additional consequences may include forgone foreign direct investment into the Canadian aerospace sector at risk as a result of a less industry-friendly government, along with environmental impacts associated with operators retaining older and used aircraft with lower fuel efficiencies instead of buying new technologies to improve both safety and environmental performance.
This brings me to the topic of support for sustainable aviation fuel. It is vital to address the support for SAF. SAF presents a transformative opportunity and is today the single largest lever we can pull for aviation emissions reductions. By investing in SAF, the government can position Canada at the forefront of aviation sustainability. This not only aligns with our environmental commitments but also stimulates green innovation and job creation. Therefore, allocating budgetary resources towards SAF development, infrastructure and incentives to use the fuel when available, is a strategic move for the long-term environmental and economic benefits.
Lastly, I want to emphasize the importance of this committee undertaking a detailed study of the entire aviation industry. I’ll start by sharing some quick statistics to help frame the story. Each business aircraft in Canada has a direct economic impact that results in 7.1 jobs per aircraft, $770,000 in wages to Canadians per aircraft, almost $1 million in GDP per aircraft and at least $305,000 in taxes per aircraft.
Business aviation operations and manufacturing result in $1.2 billion in taxes paid to the federal, provincial and municipal governments. While this is just one sector of Canada’s air transportation system, it is a substantial contributor to our economy, offering employment, facilitating trade and connecting our communities. Canada’s air industry competes globally and benefits us locally. Understanding the entire sector's dynamics, challenges and potential is critical for informed policy-making. This study should review no less than six critical areas of Canada’s air industry: the role of government, airports, airlines, air operators, air navigation, and lastly, manufacturing and maintenance. This in-depth study could pave the way for strategic decisions that bolster the industry while ensuring it aligns with our national economic goals.
In conclusion, the upcoming budget presents a unique opportunity to address these critical areas. By carefully evaluating the impact of the luxury tax, strongly supporting sustainable aviation fuel and undertaking a thorough study of the aviation industry, we can ensure balanced, forward-looking policies that benefit all Canadians.
Thank you for your attention and for the pivotal role you play in shaping our nation’s economic policy.
Thank you.