ENHANCED AVIATION POLICY WOULD BENEFIT CANADA'S ECONOMY AND GLOBAL
COMPETITIVENESS, STUDY SHOWS

OTTAWA, Oct 5 /CNW/ - Canada's four largest airlines generate as much as $50 billion a year in direct and indirect benefits for the Canadian economy but they could contribute significantly more if the federal government modified its aviation policies, according to a new study.

The independent report, commissioned by the National Airlines Council of Canada (NACC), examines the impact of the association's members on the Canadian economy, the cost of government policy to airlines and their customers, and policy options to enhance the industry's competitiveness. It concludes that eliminating certain taxes and other charges specific to the industry alone could result in an additional economic output of between $869 million and $3.3 billion from NACC members.

"The air transport industry, led by the members of the NACC, is a key sector in spurring productivity growth," wrote the study's author, Fred Lazar of the Schulich School of Business at York University. "Consequently, there are sound economic and policy reasons for ensuring that the air transport industry thrives in Canada and that Canadian carriers succeed in the North American and international markets. Changing the policy course from the current one where the air transport industry is viewed strictly from a fiscal position, to one where it is recognized as a key contributor to productivity growth requires cutting the costs faced by this industry."

"At a time when the government is looking to stimulate the economy, create jobs and spur growth, boosting the aviation sector is a way to achieve all three while also making it easier for Canadians to travel," said NACC President George Petsikas. "Airlines and airports in Canada must be treated by government policy as strategic partners in our country's long term economic development and global competitiveness."

The study recommends the federal government eliminate ground rents for Canadian airports, the Air Transport Security Charge and the federal excise tax on jet fuel - measures that alone could increase traffic by more than 2 million passengers annually. The report, called The Economic Impacts of the Member Carriers of the National Airlines Council of Canada, also found:

• NACC members carried more than 48 million passengers and directly employed almost 40,000 people in 2009. Total revenues of the four airlines exceeded $14 billion, with expenditures of just under $11 billion. Their estimated total economic output impact was $19.6 billion, and the total number of jobs created by the NACC members was at least 84,800.
• Taking into account important secondary impacts, the potential tourism-induced effects of the NACC members might have contributed an additional total economic output of $29 billion in 2009.
• The air transport sector plays an important role in facilitating trade, a key driver of the Canadian economy. In 2009, the total value of exports and imports shipped by air between Canada and the rest of the world was $94 billion.
• During the past 10 years, the federal government has collected directly and indirectly almost $6.9 billion from the air transport industry in Canada.
• It is estimated that NACC members might experience an increase of 2.1 million to 2.7 million passengers each year if ground rents, the Air Travellers' Security Charge (ATSC) and the excise tax on jet fuel are eliminated, and NAV CANADA is reimbursed for its annual costs for servicing the $1.5 billion debt it took on when it was privatized in 1996. Eliminating these taxes might lead to an additional economic output generated by the NACC members of between $869 million and $3.3 billion.

"Without the continued success and growth of these airlines, no Canadian airport is likely to join the ranks of international gateways or regional hubs, with their significant economic benefits for Canada," Lazar concluded. "Furthermore, productivity growth in Canada will be negatively impacted, creating a host of other problems for the government and the country."

The National Airlines Council of Canada is a trade association founded by Canada's largest commercial airlines in order to ensure safe, sustainable and competitive air travel for Canadian consumers.

A link to the report is posted on the NACC Website at www.airlinecouncil.ca

For further information:

Brigitte Hébert
Director, National Airlines Council of Canada
Tel.: [phone]
[email protected]