WestJet CEO Alexis von Hoensbroech at the airline's headquarters in Calgary, on June 30, 2022. He says changes are needed to federal airport fees to boost competition, reduce airfares and provide greater transparency to travellers.Jeff McIntosh/The Canadian Press
WestJet Airlines’ top executive is calling for a freeze on the government fees imposed on passengers and a halt to airport rent collection by Ottawa.
Alexis von Hoensbroech, chief executive officer of the Calgary-based airline, urged the government to launch a review of Canada’s user-pay model of airport finance, which relies on passengers to fund operations and improvements.
Mr. von Hoensbroech said the changes are needed to boost competition, reduce airfares and provide greater transparency to travellers in a country where vast distances make air travel essential.
“There’s no other place in the world where it’s so expensive to operate an airline,” Mr. von Hoensbroech said in an interview, “and this is not just because of the distance, but also because of the high cost of infrastructure.”
WestJet says the fees passengers pay on a domestic flight have risen by 15 per cent since 2019, to $88 from $76. These charges include fees levied by the Canadian Air Transport Security Authority, NAV Canada and airport operators, in addition to provincial and federal taxes.
Meanwhile, WestJet said ticket prices have dropped by more than half, in real terms, since the airline’s launch in 1996. “Air travellers are paying too much in government fees and charges on their plane ticket compared to other nations and other modes of travel,” he said.
Mr. von Hoensbroech excluded the airport improvement fees from his call for a freeze. “The airports have no other option than to charge these type of improvement fees because they have to recover their investments and repay their loans,” he said.
He did not mention WestJet’s list of fees for everything from booking by phone to luggage and cancellations. WestJet spokeswoman Morgan Bell said those fees are optional for travellers and will not be frozen.
The country’s user-pay airport model, enacted in the 1990s, is different from much of the world’s. The government owns the airport land and collects rent from the operators, which are private non-profit companies that charge fees to airlines, passengers, and restaurants and other service providers. The airports also take on debt to fund operations and improvements.
By contrast, U.S. airports are mostly government-owned and funded by taxpayers. Some airports in Europe allow large investors to take stakes.
Air Canada and WestJet planes parked at Calgary International Airport, on Aug. 31, 2022.Jeff McIntosh/The Canadian Press
Mr. von Hoensbroech said it is too soon to say what airport funding model he supports. He noted Via Rail, Canada’s national passenger rail system, receives large subsidies from taxpayers.
Laurent de Casanove, a spokesperson for Transport Minister Pablo Rodriguez, noted the recent federal budget announced the plan to work with pension funds to seek domestic investment opportunities.
“We’ll continue to work with our partners to attract more investments in Canadian airports,” he said.
The Canadian Airports Council has called on the government to eliminate rent payments for smaller airports and cap the amounts paid by large hubs, allowing the airports to invest the money in infrastructure and services to benefit travellers.
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Monette Pasher, head of the airport lobby group, said the user-pay model works well for Canadians. But she said Canada’s airports pay $400-million a year to the federal government, an amount the travel industry and politicians have for years said should be reinvested in airports.
WestJet, founded as a regional, low-cost airline, controls about 33 per cent of the domestic market, according to aviation-data company Cirium. The airline employs 15,000 people. Montreal-based Air Canada AC-T accounts for 46 per cent, measured by available capacity.
Mr. von Hoensbroech’s comments come amid a fresh debate about the state of airline competition in Canada. The Competition Bureau recently said it would launch a review of the airline market, an investigation that follows the failure of discount airline Lynx Air and Flair Airlines’ $67-million tax-repayment bill.
“There’s a long history in Canada of ultralow-cost carriers failing,” Mr. von Hoensbroech said.
He said the world’s largest cut-rate airline, Ryanair of Ireland, is also the most profitable of all carriers. Ryanair flies mainly in Europe and charges an average fare of $75. That amount, he said, is less than the fees on a typical flight in Canada.
Barry Prentice, a transportation professor at University of Manitoba, welcomed the prospect of a review of the airport funding system, which he said has pros and cons.
One benefit is that the airports are controlled locally, and reflect the priorities of the community in which they run.
However, the federal government has saddled passengers with fees and forced the airports to pay for upkeep and improvements, something a typical landlord does not do, he said. He added that user fees to undergo security checks make no sense, given security is a public good. He likened it to paying security fees to drive over the border or call police.
“When the government handed over the airports, they got a bit greedy,” he said from Winnipeg. “I think the notion was that if you can afford to fly in an airplane, you can afford to pay anything.”