Canadians do less flying because of higher airline prices, expert says

If you are one of the thousands of Canadians who has decided you can save money by flying out of U.S. airports, prepared to be joined by an influx of new savings-hungry travellers.

Industry experts and seasoned travellers alike are suggesting cross-border shopping is the best way to save money on your flights. Whether you are living in southern Ontario and slip down to Buffalo, or a Vancouverite planning to fly out of Washington State.

Writer Kevin Bracken recently mused about the topic on his blog, What's Different in Canada, laying out several Canadian flight options and some U.S. alternatives.

He suggests a $344.28 flight from Toronto to Vancouver could be replaced by a $133.80 flight from Buffalo to Seattle, for those willing to account for extra travel time and expenses.

A flight from Montreal to Denver could cost $312, while a flight from nearby Burlington, VT, to the same city would cost $155. Similar savings were available for those in British Columbia who were willing to cross the border to catch their flight.

Ambarish Chandra, an aviation industry expert and professor at the University of Toronto's Joseph L. Rotman School of Management, told Yahoo Canada News these revelations were not an anomaly, but rather the norm.

"It will almost always be the case that flying from any Canadian airport to a certain destination, either in the U.S. or actually internationally, it is more expensive than driving to a U.S. city and flying from there," Chandra said in a telephone interview.

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Indeed, separate searches of Canadian and American air flights found similar results. In most cases, money could be saved by flying from U.S. airports. A report released by the Conference Board of Canada in 2012 suggested a ticket to a U.S. destination that cost $200 from Canada would be $140 from a U.S. airport, and the amount of taxes and fees imposed on the purchase would be less than half as much.

This isn't a new revelation. According to the Conference Board of Canada, as many as five million Canadians cross the border to fly out of U.S. airports each year. The savings available to Canadians who are willing to cross the border for a flight have been noted in the Wall Street Journal, New York Times and by CBC News.

The New York Times reported last year that several U.S. border airports were going through significant expansions in order to benefit from the boom in Canadian travellers. At Buffalo Niagara International Airport, Canadians make up about half of all passengers.

The Plattsburgh International Airport is located in a small New York town about an hour's drive south of Montreal. It promotes itself as "Montreal's U.S. airport" and estimates that about 70 per cent of its some 160,000 annual customers are from Quebec.

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According to the Canadian Airports Council, air transportation in Canada is funded entirely by users. The federal government sold out of the industry two decades ago, but still charges airports rent. On top of that, there are other costs, such as security, which are covered by user fees.

But Chandra says the difference in base price is also significant, and cites a lack of competition in Canada for the disparity.

"We don't have enough competition in the Canadian sector. If you want to fly from Toronto to Florida or California or New York or Chicago, you don't have that many options," he said. "The U.S. market is more competitive so prices are lower."

Chandra has long followed the price disparity between flying out of the U.S. and flying out of Canada.

In 2012, he published an editorial in the Toronto Star, in which he says the high cost of flying in Canada is actually limiting the amount Canadians fly inside the country.

"Canadian cities are generally further apart than are U.S. cities; if anything, we should be flying more than Americans, for whom driving is often a feasible alternative," he wrote at the time.

The solution, he says, is to open the market up to more competition, allowing U.S. carriers or even more Canadian carriers access Canadian routes.

"We get absolutely nothing from these higher prices," he now says, adding that it simply means we fly less.

"We fly less domestically, we fly less internationally. We fly less for business and for pleasure. It means we see our families less, our loved ones less. It is a drain on our economy. It is unfortunate we put up with this."

According to the Canadian Airports Council, the air transportation industry employs 141,000 people, creates $34.9 billion in GDP and supports almost 405,000 more jobs in other sectors. The industry contributes more than $12 billion per year to federal and provincial governments through taxes and tariffs.

As for Chandra's desire to open the market to more competitors, the Canadian Airports Council appears to see the value. A 2013 report spoke in favour of air liberalization, stating that "others have called for the government to consider increasing the rate of air liberalization to maximize competition," and adding it would be a good first step should the government choose to go in that direction.

The result could be an expanding air industry, which would in turn provide better service. The alternative is continuing to watch Canadians fly out of American border airports.