Westjet increases passenger surcharge as NAV Canada fee increase kicks in.
Winnipeg’s Airport Improvement Fee rises from $25 to $38 while Toronto’s Billy Bishop Airport prepares to restart commercial operations.
Flying in Canada started to get a little more expensive Tuesday as new fees kicked in, raising concerns that budget-conscious passengers will put off new bookings as a result.
NAV Canada raised its rates an average 29.5% on September 1, blaming a pandemic-related drop-off in flights. The non-profit company runs Canada’s air traffic control system. The impact was felt almost immediately. Westjet said it would raise passenger surcharges between $4 and $7, depending on the length of the journey. The airline said the fee increases start September 5.
“We are deeply concerned the NAV CANADA rate increase will lead to a further reduction in the number of travellers,” said Ed Sims, WestJet President and Chief Executive Officer in a statement. “We are sympathetic to their situation, like ours, where a lack of sector-specific federal support has hindered their ability to recover. Burdening travellers who have been severely impacted by this pandemic with incremental costs will only serve to undermine Canada’s economic recovery.”
NAV Canada defended the increase, saying it is necessary to weather the pandemic.
“The Company explored all options, including Federal Government assistance, with the objective of eliminating the need for the increase,” NAV Canada said in a news release August 12. “Despite these efforts no alternative was found.”
NAV Canada makes its money through fees charged to aircraft flying within Canadian airspace. Traffic in July 2020 fell by two-thirds compared to the previous year, the company said.
Not the only increase
NAV Canada is not the only one making flying more expensive. Winnipeg International Airport raised its airport improvement fee from $25 to $38 starting Tuesday.
With few exceptions, airports in Canada earn the majority of their revenues from passengers and the fees they generate. Passengers pay AIFs every time they buy a ticket to fund airport capital projects. That’s why the pandemic is hitting airports so hard. Montreal Airports reported last week that it expects to lose $500 million in revenues this year.
“The postponement of Canadian border opening dates and the maintenance of a mandatory quarantine lead us to believe that there will not be a recovery in air traffic until the second quarter of 2021,” said Philippe Rainville, the chief executive of Aéroports de Montréal. ADM operates both Montreal-Trudeau and Montreal-Mirabel. It cut staff 30% to cope with the drop-off.
“Obviously, this situation represents the worst-case scenario and is putting enormous financial pressure on our organization,” said Rainville. “Our almost non-existent revenues are forcing us to make heart-wrenching choices that we have tried to put off for as long as possible.”
Calling for government support
The federal government is facing a rising chorus of pleas for help from the aviation industry.
Airlines and airports generally qualify for federal wage subsidies that cover up to 75% of an employee’s wages. And Ottawa has waived land lease payments for the country’s largest airports through the rest of the year. But with some targeted exceptions, there has been no direct federal aid to the aviation industry.
“Countries around the world have taken action to limit or defer costs to the aviation industry, yet our situation remains exacerbated by double-digit increases that are beyond our control,” said Sims. “Some airports have indicated they are increasing their Airport Improvement Fees by as much as 52 per cent which doesn’t help this challenging situation.”
Airlines and airports have announced increased cleaning and other health measures to restore passenger confidence. Westjet and Air Canada have both been working with airports to develop rapid COVID testing pilot programmes, for example. There’s been no indication who will pay for the services. That uncertainty could also make flying more expensive.
Billy Bishop getting ready to restart
Toronto’s Billy Bishop Airport said this week it has used the pandemic to rethink how people pass through the terminal. Airlines have cancelled all service to the airport since March, leaving the terminal largely deserted.
“It is also unique in that this crisis and the resulting temporary suspension of commercial airline service at Billy Bishop Airport has afforded our team the time to step back, observe and get this right,” said Gene Cabral, Executive Vice-President, PortsToronto and Billy Bishop Airport. “We look forward to welcoming our passengers back to an enhanced version of the Billy Bishop Airport experience they already know and love.”
Porter is the airport’s main commercial airline. It hopes to restart service on October 7.
When it does, Billy Bishop officials say passengers will see temperature checks, masks, movement restrictions, and touchless processes meant to reassure nervous travellers.
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