OTTAWA — A prominent free-market think tank is urging the Canadian government to reconsider its rental policies for major airports. The Montreal Economic Institute (MEI) claims that high land rental fees imposed by Ottawa are significantly increasing the cost of domestic air travel.

Samantha Dagres, communications manager at MEI, stated, “Using airports as cash cows instead of treating them as critical infrastructure hurts families, workers, and patients who depend on reliable air service for treatment access.”

In Canada, airports are managed by private, non-profit organizations known as airport authorities. However, the federal government owns the land on which these airports are built and collects rent from them. Last year, airports paid a record $494.8 million in rental fees to the government, with the largest amounts coming from Toronto Pearson, Montreal-Trudeau, and Vancouver International airports. This figure represents a 68 percent increase since 2014. The rental fees are based on each airport's gross revenue, capped at 12 percent.

These rental costs are ultimately passed on to travelers, contributing to as much as one-third of the airport improvement fee included in ticket prices. According to WestJet, the average airport improvement fee for a domestic flight in Canada is $38, which is double the fee in Australia and four times higher than what travelers in the United States pay.

In addition to airport improvement fees, Canadian travelers face higher airport security charges and aviation fuel excise taxes compared to their counterparts in Australia and the U.S. MEI's analysis indicates that government-imposed taxes, fees, and rental charges can account for up to 43 percent of ticket prices on major domestic routes.

Dagres emphasized that the government has the power to reduce air travel costs, stating, “Reducing the cost of air travel is entirely within Ottawa’s control, because it is Ottawa that is driving prices up in the first place.”

The report highlights that the fees levied on a flight from Toronto to Montreal, which can reach $68, are comparable to the cost of a budget flight from Los Angeles to Las Vegas. This issue of high ticket prices linked to government ownership of airport land is not new.

In 2013, a Senate committee recommended that Transport Canada develop a plan to phase out rental fees and transfer airport ownership to the authorities that operate them. The committee noted that many stakeholders expressed concerns that the rental fees did not reflect the varying conditions and values of the airport facilities when they were initially transferred. Since airport authorities are required to operate as non-profit entities, these costs are ultimately borne by users.

Despite the committee's recommendations, no action has been taken to address the rising rental costs. A spokesperson for Transport Minister Chrystia Freeland did not comment on whether the government plans to divest its ownership of major airports.

Public sentiment reflects dissatisfaction with domestic air travel in Canada. A recent study found that half of Canadians are open to the idea of allowing U.S.-owned airlines to operate domestic passenger routes.