Canadians the victims of poor government policy
CALGARY – OPINION – “Nothing so liberalizes a man and expands the kindly instincts that nature put in him as travel and contact with many kinds of people,” wrote Mark Twain in an 1867 letter to a San Francisco newspaper.
Twain, a fan of travel, naturally hated to see it end. In another letter, this time to a friend, he remarked that “There is no unhappiness like the misery of sighting land (and work) again after a cheerful, careless voyage.”
Twain’s love of travel begged the question of how to do it in an affordable manner. In Twain’s age, venturing far from home was mostly the preserve of the rich given the relative expense. It was also painfully slow with journeys often measured in days and weeks, not hours.
In the 21st century, travel is speedier and relatively cheaper. But for Canadians, our vacation (and business) bills could be reduced if we were not the victims of poor government policy.
For example, compare Canadian airfares to what Europeans pay.
Booking three weeks in advance, using the travel website Kayak.com (and others to calculate fees and taxes, travel distances, and currency conversions to the Canadian dollar), the results are as follows:
For five return flights in Canada this summer (Calgary-Victoria, Toronto-Ottawa, Halifax-Montreal, Vancouver-Kelowna and Winnipeg-Regina) totalling 5,367 kilometres, your total bill is $1,357.73 or 25 cents per kilometre.
In contrast, five in-country flights in Europe (London-Edinburgh, Paris-Nice, Milan-Rome, Dusseldorf-Munich, Barcelona-Madrid) totalling 5,358 kilometres would cost you a palatable $723.79, or 14 cents per kilometre, almost half the cost of the Canadian flights.
One might theorize that taxes and fees explain the difference between Canada’s higher five-city airfare bill and Europe. Except taxes and fees in Canada account for 32 per cent of the $1,357 five-fare bill; in Europe, taxes and fees account for 49 per cent of the $723 cost.
Let’s now compare cross-border flights between Canada and the United States and then across Europe.
If you fly Toronto-Chicago, Vancouver-San Francisco, Calgary-Denver, Winnipeg-Minneapolis and Montreal-New York, the total bill for 9,660 kilometres is $2,004.82, or 21 cents per kilometre (with taxes and fees at 32 per cent).
Five cross-border flights in Europe with a total return distance of 9,995 kilometres (Munich-Rome, Dublin-Berlin, Vienna-Athens, Prague-Barcelona, London-Paris) comes to $1,348.68 or 13 cents per kilometre. In this case, taxes and fees comprise 35 per cent of the bill.
A caveat. This is only a case study as tracking every airline fare is obviously impossible. Still, I perform the comparison year after year and the results are consistent. Europe has cheaper fares relative to Canada.
There’s no mystery as to why. Europe has the world’s most open airline markets. That means robust competition which puts downward pressure on fares, facts also noted by the European Union and the OECD, both of which praise liberalization of the world’s airline markets.
Back in the early 1990s, the European Union made a move to full cabotage, allowing any airline in any European Union country to fly into any other nation, to schedule flights in-country, and to pick up and drop off passengers in that same country. The policy was fully effective as of 1997, when the skies became more consumer-friendly than anywhere in the world. It meant an Irish airline company could pick up and drop off passengers in Germany, a German carrier could shuttle passengers around France, and so forth.
The European Union and others have noted the benefits of such liberalized travel and the resulting effects. They include a plethora of new, low-cost carriers, a 34 per cent reduction in real terms in ticket prices, a 220 per cent increase in cross-border routes between 1992 and 2009, a 310 per cent increase in the number of cities served by more than two carriers during the same period, a doubling of air travel within the EU, an economic boost, and increased employment in the airline business and related sectors.
Alas, in Canada (and also in the United States), the federal government prevents such same country pick-ups and drop offs by “foreign” airlines. That prevents extra competition, more efficiencies and lower prices. Thus, it is little surprise that flights in North America are pricier.
The Economist magazine once called such North American restrictions “bonkers.” My guess is Mark Twain would agree.
Mark Milke is a Senior Fellow with the Fraser Institute. Twitter: @Milke.Mark.
Source: Troy Media