Reducing the money taken out of the system

In the interest of preserving a healthy and competitive aviation system in Canada, the aviation policy and regulatory environment must be reviewed, with a focus on reducing the money removed from the system.

In May 2005 the federal government announced a new airport rent policy which revised the formula for calculating the rent received from National Airport System (NAS) airports. The new formula has provided NAS airports across the country with impressive reductions. However, the issue of airport rent is still a significant one for stakeholders nationwide and further negotiations must be undertaken to address residual concerns.

New aviation regulations which impose costs on airports, and consequently, air carriers and other users, are also issues for many airports. While much regulation is viewed as necessary and desirable, this is not always the case. It is incumbent upon the federal government to take a cautious and considered approach to regulation, while considering the merits of providing financial assistance to airports for new regulatory requirements.

Despite some reductions, the Air Travelers Security Charge (ATSC) continues to have an impact on air travel demand, which in turn affects the viability of both air carriers and airport operators. The security of airports is a nationally significant issue that has an impact on all citizens and should be funded from general revenues.

Small Airport Viability

The viability of Canada's small airports is an issue of importance across all jurisdictions. As an integral part of the nation's air transportation system, small airports often require access to long-term and stable capital funding.

In September 2004, the Council of Ministers Responsible for Transportation and Highway Safety agreed that the viability of small airports needs action. Each province and territory and the federal government agreed to participate in a national exercise to develop objective criteria and evaluation grids that will assist in determining the mission of small airports, and to identify opportunities for future action.

Further, Ministers agreed that continuation and funding enhancement of the federal Airports Capital Assistance Program (ACAP) is essential to support the viability of regional and local airports. However, Ministers asserted that a broader, more flexible approach to eligibility be instituted so that the airports which need funding the most may access it.

International/trans-border air policy liberalization

While many countries, and in particular the United States, are avidly pursuing "open skies" type agreements, Canada is operating based on an antiquated air bilateral regime that is neither flexible nor responsive to market demands. International air policy liberalization will foster an innovative and competitive air transportation environment that will benefit a variety of interests. This includes not only Canadian air carriers and airports, but also Canadian communities, trade and tourism interests, consumers and travelers and myriad others.

With its recent commitment to negotiations aimed at further liberalizing the 1995 Canada/United States agreement, the federal government is moving in the right direction. Further liberalization of Canada's air bilateral agreements must follow. Negotiations must take into consideration an overall "value-for-value" exchange of benefits, as opposed to the narrow concept of "carrier benefits," and must also consider regional needs and perspectives within the nation. Opportunities to expand air bilateral agreements as they relate to air cargo must also be considered.

The federal government must also, over the longer term, explore the development of an open North American aviation market and eventually a multilateral approach to "open skies." It is also important for Canada to become a partner in the European Union/ United States negotiations regarding an "open" Europe/North America aviation market.

Raise foreign ownership limits on Canadian carriers

Stakeholders have suggested the federal government examine the possible benefits of an increase in the current 25% foreign ownership restriction on Canadian carriers. Greater investment by non-residents has the potential to strengthen the domestic air industry. In September 2005 Minister Lapierre announced he would soon be making a proposal to federal cabinet to raise the foreign ownership limits on Canadian carriers from 25% to 49%. Provincial and territorial governments support this change in policy as a key to enhancing the domestic air industry in Canada.