Air Travellers Security Charge
The CAC believes that the cost of aviation security, like the cost of policing, should be borne by all Canadians, as they are the beneficiaries of the services provided. However, this is not the case today, as passengers are charged an Air Traveller’s Security Charge to pay for air travel security
Charging air travelers to recover security costs through the ATSC places an unreasonable burden on the air transport industry in Canada. Canadian airports must compete with other modes of transportation for travelers, but are put at a competitive price disadvantage since the ATSC charge is levied only on air passengers. The net result is a cost disincentive to trade and tourism with far greater economic costs than those associated with securing Canadian air travel.
Additionally, the ATSC is an impediment to the renewal of the air transport industry in Canada; being especially burdensome when applied to the low fares now available in Canada. The CAC is part of a broad coalition of organizations representing all facets of the tourism industry concerned with rising government imposed charges and fees. With one voice, these organizations have called for the removal of the ATSC.
Background
Canada imposes Air Travelers Security Charges (ATSCs) that are among the highest in the developed world, adding significantly to the cost of air travel. No other passenger transportation mode faces similar security requirements or charges. This situation places Canadian airports at a competitive disadvantage against both international airports for overseas travel and other transportation sources available to the Canadian traveling public.
Prior to the terrorist attacks of Sept. 11, 2001, Canadian airports and airlines were gradually improving the level of security at Canada’s airports. Post 9/11 the Canadian Air Transport Security Authority (CATSA) was created to undertake passenger screening and manage the equipment used for such screening. The ATSC was established to recover the massive costs associated with CATSA’s programs. Although many other nations such as the United States took similar action, only Canada sought to recover all of its security costs through a passenger fee.
Price elasticity models suggest that the ATSC results in a revenue loss to airlines (via reduced air travel demand) of almost $300 million annually. This has played a critical role in the weak financial performance of the airline industry and contributed to the bankruptcy of Air Canada and Jazz. Add to that the $400 million collected by the government annually through the ATSC and this charge has had a negative impact of more than 5% on the air transport industry’s total annual revenues.
