Mr. Speaker, the Government of Canada recognizes that Canadians rely on air transport more than many other countries to conduct business and connect with friends and family. Air transport also provides essential goods and services to regional and remote communities. Air transport in Canada is provided in the context of the country’s vastness and thinly distributed population, which make economies of scale more difficult to generate than other jurisdictions such as the United States, particularly with regard to many small, northern or otherwise remote communities.
Due to Canada's geography and the location of some of Canada's major airports, the catchment areas for the large airports sometimes overlap with those of the smaller U.S. airports located close to the border. Large Canadian airports often provide a wider range of services and attract passengers from small U.S. airports, which offer a limited range of services. Overall, some travellers may find it more convenient to cross the border to access certain services depending on the services being offered by the airlines at that airport.
Canada’s air carriers and airport authorities are private-sector companies, and, as such, make their own business decisions in order to remain viable and competitive. In Canada, the frequency of flights, the services offered and the prices charged by airlines are determined based on market forces. The government does not regulate air fares, and all airlines are free to set their prices in accordance with their business plans. Other factors contributing to air ticket prices include fluctuating currency rates, fuel prices and interest rates. Federal policy encourages competition between air carriers, which is ultimately the best way to establish a fair price for a service.
Similarly, airports are economically deregulated, and major airports are operated by private, not-for-profit airport authorities that are solely responsible for the operation, management and development of their airports, and that includes setting the fees that enable them to recover their costs. Like the rest of the industry, airport fees are economically deregulated. The federal government does not set or control the fees airports charge. The same applies to Nav Canada, the private corporation that provides air navigation services in Canada. It charges airlines for its services on a per flight basis, and Nav Canada's fees are also not subject to government controls.
Nevertheless, the government has introduced and will continue to introduce legislation and regulations that promote a healthy and competitive air sector. More specifically, the Transportation Modernization Act encouraged increased competition in the Canadian market by, among other things, allowing more foreign investment in Canadian air carriers. This measure should have positive impacts on competition and, ultimately, the prices paid by Canadian travellers. In addition, there are more ultra-low-cost carriers now than before the pandemic, which will provide Canadians with more low-cost options.
The government also supported the air carriers through the COVID-19 pandemic, to ensure that services remain available to Canadians. While some large air carriers availed themselves of financial assistance under the large employer emergency financing facility, the government also provided funding to ensure continuity of essential air access to remote communities through bilateral agreements with provinces and territories under the remote air service program, which supported the provision of essential levels of air services to remote communities and complemented existing funding mechanisms for air carriers. The regional air transportation initiative was also created as part of Canada's COVID-19 economic response plan to provide support over two years to eligible regional businesses, including air carriers that directly contribute to regional air transportation, and was designed to help ensure that regional air connectivity and services, which are critical to economic growth, are maintained and that regional routes are reconnected across the country. Finally, air carriers were also able to avail themselves of programs of general application such as the Canada emergency wage subsidy.
Please be reassured that Transport Canada continues to work with a range of air industry participants, the organizations that represent them and other government departments to assess appropriate options to support Canada’s air transport sector generally, thereby ensuring that Canadians have the services they need at a reasonable cost.
