Air Travellers' Security Charge (ATSC) and Low Cost and Regional Air Carriers : 4
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E.  Issues Raised by Air Carriers

A number of issues were raised by the Low Cost and Regional carriers during telephone discussions and in letters included with the survey responses. The general perception amongst these carriers is that "our voice has mostly been ignored with the harried implementation of the ATSC." Letters received from several carriers are included in Appendix E.

There are a number of reasons that the Low Cost and Regional carrier segments of the industry feels this way. These are summarized below.

Example: Short-haul charter of $1821 (for entire aircraft excl. ATSC)

Assuming the aircraft is fully loaded with 12 passengers, there would be an additional $288 charged for the ATSC (12 x $24). This represents 16% of the base charter price

Example: Round trip from Terrace to Victoria, connecting through Vancouver South Terminal on an independent airline with no code-sharing arrangements with any other carrier.

Connecting passengers pay the $12 for each leg of their flight; therefore the passenger will pay a total of $48 in ATSC. Security is neither required nor provided for these passengers at any of their stops.

One air taxi firm which has been in operation for over 15 years, has seen operating costs more than double due to increased insurance premiums and escalating airport improvement fees (AIF), airport terminal fees, NAV Canada fees, etc. With the onset of the $24 ATSC, the owner questions the viability of his firm. "Because of this security tax, I have been forced to lower my fares to compete with a competitor who just happens to fly out of airports not on the designated list. I also had to cancel all my weekend flights indefinitely as well as cancel my mid-afternoon flight until further notice. Sadly, in addition I have had to contact an aircraft broker to place my backup aircraft for sale. This is directly due to the decrease in passenger loads because of the seemingly never-ending fee increase."

Another carrier indicated that loads are down 50% on their short-haul flights, and that they "might as well go out of business because all of the extra surcharges are killing us". This particular carrier recognized the need for the ATSC but thought that it should not exceed $5.

One charter operator conducted an on-board survey asking passengers their opinion of the $12 per leg tax. The largest group stressed the inequities of a flat tax imposed on low fares and short-haul operators, including at smaller airports where no enhanced security was likely to be seen; while another group said they would not mind paying a fee for service, as long as security improved.

The Regional and Low Cost carriers responding to the survey brought up a number of issues with the ATSC which should be addressed. Suggestions made by some of these carriers for addressing these issues include:

"ATSC is excessive and should not be charged at airports or to carriers where no services are rendered or that services are not utilized by carrier decision."

"I strongly encourage the Government to adjust this security tax fairly and proportionately so that the taxpayers get some value for what they pay and that the costs are spread fairy according to the costs of the tickets."

"Small carriers not requiring the same screening and security procedures as is the case in many parts of this country, that they be exempted from the fee all together."

"Create a level playing field for all carriers."


V.  Summary of Observations

The major findings relating to the application of the ATSC for Low Cost and Regional carriers and from the analysis of traffic levels since the application of the fee are summarized below.

A.  Low Cost Carriers

B.  Regional Carriers

C.  Experience Subsequent to Introduction of the ATSC

A review of trends in air traffic was conducted for Low Cost carriers, for selected short haul city pair markets, and for other regional markets.

For Low Cost carriers, data limitations related to changes in the air transportation industry required that the examination of time trends be broadened to include most mainline air transportation services in Canada. RPKs were used as an aggregate measure of air travel demand and showed for the first eight months of 2002, overall passenger traffic for Low Cost and Mainline carriers trailed 2001 traffic levels by about 7%. Also, for Low Cost and Mainline carriers, seasonal growth in aggregate RPKs over the months following the introduction of the ATSC was slower in 2002, compared to 2001.

Information concerning selected short haul markets was available from carriers providing passenger information by route. This information was used to compare the change in traffic over the 5-month period from April through to August 2002 with the change over the same period in 2001. This comparison removes the direct effect of the events of September 11, 2001, but could be influenced by any "bounce-back" from the large drop in traffic that occurred immediately following those events, or to other external factors such as economic activity.

A selection was made of the larger short haul markets subject to strong competition from highway transportation. The expectation is that these markets have lower fares and as a result, would be subject to greater price elasticity. The selected city pairs include city pairs of less than 500 km, with a volume of more than 5,000 seats per week and subject to strong highway competition.

The review of traffic trends indicates that passenger volumes on selected short haul routes are down 10.9% in Western Canada and down 3.8% in Eastern Canada. The larger drop in Western Canada may be associated with lower airfares and shorter driving times on the selected routes in Western Canada. Traffic on particular short haul routes has dropped by even greater amounts.

For both the selected short haul markets and the Low Cost carriers, the observed traffic patterns are consistent with the expected influence of the ATSC. However, the magnitude of the changes in traffic cannot be attributed solely to the ATSC as many other factors have been at play:

Further qualifications to the analysis of time trends for Mainline and Low Cost carriers concerns the significant change in the mix of markets and services between 2001 and 2002. It would appear that an examination of aggregate trends in RPKs provides little in the way of insight as to the effect of the ATSC on the markets served by Low Cost carriers.

Finally, as concerns other regional markets, a comparison of the trend in passengers and ASKS (2002 compared to 2001, over the four month period April through July) was conducted for city pairs in the north, and for city pairs in the south served by Jazz, other than those included in the selected short haul routes, and smaller carriers.

Northern city pairs have benefitted from competition among carriers, with ASKs continuing to show modest growth. For Southern city pairs, the trend was not as strong, with ASKS over most carriers experiencing reduced growth and a modest reduction in passengers on short haul routes.


Appendix A
Information on Air Carriers in Study


Code Air carrier City of Head office Prov. Aircraft Fleet Points Served ATSC Airports

GGN (AC) AIR ALLIANCE / AIR GEORGIAN LTD. Mississauga, ON Beech 1900,
Beech 90, C550
Kingston, Sarnia, Toronto, Rochester,
Albany, Dayton, Fort Wayne,
Grand Rapids, Louisville, Manchester,
Syracuse, Kalamazoo, Montreal
4 + 9 US
YN AIR CREEBEC INC. Val d'Or QC Beech 100,
Beech 1900,
DHC8-100/200/300/400,
Embraer 100, HS748
Attawapiskat, Chibougamau,
Chisasibi, Eastmain, Fort Albany,
Kashechewan, Kuujuarapik,
La Grande, Montreal, Moosonee,
Nemiscau, Pewanuk, Timmins,
Val d'Or, Waskaganish, Wemindji,
Roberval
5
3H AIR INUIT Dorval QC Beech 100, DHC6, DHC8-100/200/300/400, HS748, Kuujjuaq, Kangiqsuallujjuaq, Puvirnituq, Akulivik, Kuujjuaraapik, LaGrande, Sanikiluaq.  
  AIR MIKISEW LTD. Fort McMurray AB Beech 100, Beech 99, BN-2 C185, C206, C206, C207, C207, C208, DHC2, Jetstream31, PA31 Edmonton Muni., Fort Chipewyan, Fort McMurray, La Loche (SK) 2
4N AIR NORTH Whitehorse YT B737 100/200, Beech 99, HS748 Dawson, Fairbanks, Inuvik, Juneau, Old Crow, Whitehorse 1 + 3 US
  AIR SATELLITE INC. Baie Comeau QC Beech 100, C152,
C172, C310, C335,
C337, C402
Baie-Comeau, Havre-St-Pierre, Port Menier, Quebec City, Montreal, Rimouski, Sept-Iles 4
8T AIR TINDI Yellowknife NT Beech 200, Beech 90, C185, C208, CHRIS-A-1, DHC2, DHC3T, DHC6 Fort Simpson, Lutsel'ke, Rae Lakes, Snare Lake, Whati, Yellowknife, 3
  AIRSPEED AVIATION INC. Abbotsford BC C402, C414 Abbotsford, Victoria 2
  ALTAIR AVIATION LTD. Pitt Meadows BC C172, C172 Nanaimo, Pitt Meadows, Victoria 2
QC AVIATION QUEBEC LABRADOR LTEE Sept-Iles QC DHC6, Embraer 110, PA31 Blanc Sablon, Chevery, Gethsemani, Kegaska, Natashquan, Pakuashipi, Schefferville, Sept-Iles, Tete-a-La Baleine, Wabush. 2
  BAXTER AVIATION Nanaimo BC C185; DHC2 Vancouver, Nanaimo 2
JV BEARSKIN AIRLINES Sioux Lookout ON Beech 100, Beech 99, SW4, SW5, PC12 Angling Lake, Bearskin Lake, Big Trout Lake, Buttonville, Cat Lake, Deer Lake, Dryden, Flin Flon, Fort Frances, Fort Hope, Fort Severn, Getaldton, Kasabonika Lake, Keewaywin, Kapuskasing, Kenora, Kingfisher Lake, Lansdowne House, Muskrat Dam, North Bay, North Spirit Lake, Ottawa, Pickle Lake, Pikangikum, Red Lake, Round Lake, Sachigo Lake, Sandy Lake, Sioux Lookout, Sault Ste. Marie, Sudbury, Summer Beaver, The Pas, Thunder Bay, Timmins, Webequie, Winnipeg, Wunnumin Lake, Buttonville/Toronto. 8
MO CALM AIR INTERNATIONAL LTD. Thompson MB C208, HS748, PA31, SF340 Arivat, Baker Lake, Chesterfield Inlet, Churchill Dryden, Flin Flon, Gillam, Leaf Rapids, Lynn Lake, Pukatawagan, Rankin Inlet, Shamattawa, South Indian Lake, The Pas, Thompson, Thunder Bay, Whale Cove, Winnipeg 3
5T CANADIAN NORTH AIRLINES Yellowknife NT B737-100/200, F28 Cambridge Bay, Calgary, Edmonton, Ekati, Fort Smith, Hay River, Inuvik, Iqaluit, Norman Wells, Ottawa, Rankin Inlet, Yellowknife 5
W2 CANADIAN WESTERN AIRLINES Richmond BC C401 Vancouver, Nanaimo, Tofino 2
C6 CANJET Enfield NS B737-100/200, F28 Toronto, Halifax, St John's, Montreal, Ottawa 5
9M (AC) CENTRAL MOUNTAIN AIR LTD Smithers BC Beech 1900 Prince George, Dawson Creek, Calgary, Kamloops, Lloydminster, Terrace, Kelowna, Smithers, (plus code share with AC: Vancouver, Cranbrook, Edmonton Intnl, High Level, Lethbridge, Medicine Hat, Peace River, Penticton, Rainbow Lake) 8
  CORPORATE EXPRESS AIRLINES Calgary AB Jetstream 31, Saab SF 340 Calgary, Fort McMurray, Edmonton Municipal 2
7F FIRST AIR Carp ON ATR 42, B727, B737-100/200, Beech 99, DHC2, DHC6, DHC7, HS748, L382 Cambridge Bay, Cape Dorset, Clyde River, Coral Harbour, Edmonton, Fort Simpson, Port Smith, Gjoa Haven, Hall Beach, Hay River, Holman, Igloolik, Iqaluit, Kimmirut, Kugluktuk, Kuujjuaq, Montreal, Nanisivik, Ottawa, Pangnirtung, Pevy Bay, Pond Inlet, Rankin Inlet, Resolute Bay, Taloyoak, Vancouver, Whitehorse, Winnipeg, Yellowknife 9
H3 HARBOUR AIR LTD. Richmond BC C180, C185, DHC2, DHC3, DHCT Prince Rupert, Sandspit, Vancouver, Vancouver Harbour, Victoria Harbour, Masset, Nanaimo 2+
BH HAWKAIR AVIATION SERVICES LTD Terrace BC Atl 98 Carvair, Bristol BR70, DHC8-100/200/300/400 Prince Rupert, Smithers, Vancouver, Terrace 4
JB HELIJET INTERNATIONAL Richmond BC AS350, AS355, B206, R22, S-76 Seattle (WA), Vancouver, Victoria 2 + 1 US
  INTEGRA AIR Lethbridge AB Beech King Air 100 Edmonton City Centre, Lethbridge  
QK (AC) JAZZ AIR INC. Enfield NS BAE 146, Beech 1900, CRJ (CL65), DHC8-100/200/300 59 cities in Canada 59 + US
SG JETSGO Saint-Laurent QC MD-83 Halifax, Montreal, Toronto, Vancouver, Winnipeg, Stephenville 6
WJ LABRADOR AIRWAYS LTD. St. Johns NF Beech 1900, C208, DHC3T, DHC6 Black Tickle, Cartwright, Charlottetown, Davis Inlet, Fox Harbour, Goose Bay, Hopedale, Makkovik, Mary's Harbour, Nain, Port Hope Simpson, Postville, Rigolet, St. Anthony, St. Johns, Stephenville 4
  NORTHERN THUNDERBIRD AIR INC. Prince George BC Beech 1900, Beech 200, C172, C172, C185, C195, C206, C206, C208 Dease Lake, Smithers, Terrace, (also on demand services Finbow, Fort Ware, Mackenzie, OstinaTofino, Tsay-ush, Swannell, Watson Lake) 1
J3 NORTHWESTERN AIR LEASE LTD. Fort Smith NT Beech 90, Beech 99, C401, Jetstream 31 Fort Smith, Fort McMurray, Grande Prairie, Yellowknife 3
8P PACIFIC COASTAL AIRLINES Richmond BC Beech 1900, Beech 200, DHC2, DHC3T, Embraer110, Goose, Shorts360 Anahim, Lake, Bella Bella, Bella Coola, Campbell River, Comox, Port Hardy, Powell River, Vancouver (also on demand to Hakai Pass, Klemtu, Nanaimo, Rivers Inlet) 4
  PASCAN AVIATION INC. Ste-Foy QC PC12, PC12 Baie-Comeau, Blanc-Sablon, Bonadventure, Chevery, Iles-dela-Madeleine, Montreal (Dorval), Quebec, Rouyn, Sept-Iles, St.Augustin, Val D'Or 5
  PEACE AIR LTD. Peace River AB C172, C210, PC12, PA31, PA34 Calgary, Edmonton, Fort St. John, Fort Nelson, Grande Prairie, Jasper, Peace River, Prince George, Cold Lake, High Level, Lloyminster, Terrace 5
PB PROVINCIAL AIRLINES/ INTERPROVINCIAL AIRLINES St. Johns NF Beech 200, BN-2, C550, DHC6, SW3, SW4, PA31, SF340 Blanc Sablon, Churchill Falls, Davis Inlet, Deer Lake NF, Goose Bay, Halifax International Apt, Hopedale, Makkovik, Nain, Postville, St Anthony, St Johns, Stephenville, Wabush. 6
K9 SKYWARD AVIATION LTD. Thompson MB Beech 100, Beech 1900, Beech 200, BN-2, C172, C172, C207, C208, C310, C402, C414, C421, C441, Embraer 110 Arviat, BakerLake, Brochet, Chesterfield Inlet, Churchill, Garden Hill, Gods Lake Narrows, Gods River, Lac Brochet, Norway House, Oxford House, Rankin Inlet, Shamattawa, South Indian Lake, St. Theresa Point, Tadoule Lake, Thompson, Whale Cove, Winnipeg, York Landing 2
AC TANGO BY AIR CANADA Dorval QC Airbus 330, Airbus 340, Airbus 319/320/321, B737-100/200, B747, B747-400, B767, CL65, DC9 Toronto, Abbotsford, Calgary, Charlottetown, Deer Lake, Edmonton, Fredericton, Gander, Halifax, Kelowna, London, Montreal, Ottawa, Quebec City, Regina, Saint John, Saskatoon, Saint John's, Thunder Bay, Vancouver, Victoria, Windsor, Winnipeg 21
  TRANS CAPITAL AIR Toronto ON DHC7 Montreal, Red Lake, Sudbury,Thunder Bay, Timmins,Toronto, Val D'Or 6
9T TRANSWEST AIR Prince Albert SK Beech 100, Beech 1900, Beech 55, Beech 58/58TC, Beech 99, B206, C172, C185, C310, C402, C441, DHC2, DHC2T Fond du Lac, La Rage, Points North, Prince Albert, Regina, Saskatoon, Stony Rapids, Uranium City, Wollaston 3
WS WESTJET AIRLINES LTD. Calgary AB B737 - 100/200, B737 - 600/700/800/900 Abbotsford, Calgary, Comox, Edmonton, Grande Prairie, Hamilton, Kelowna, Moncton, Ottawa, Prince George, Regina, Saskatoon, Sudbury, Thunder Bay, Vancouver, Victoria, Winnipeg 17
Air Carriers Surveyed but Do Not Operate Scheduled Passenger Flights
  VOYAGEUR AIRWAYS North Bay ON Beech 100, Beech 200, DHC7, North Bay, Montreal 2
  WESTERN EXPRESS AIRLINES INC. Richmond BC Beech 200, F27, SW3, SW4, Falcon 20, PA31 Calgary, Edmonton, Nanaimo, Terrace, Vancouver, Victoria, Whitehorse 7
  NORTHERN SKY AVIATION High Level AB PC-12 (3) Abbotsford, Calgary, Edmonton City Centre, High Level, Rainbow Lake 2
Air Carriers Not Surveyed
6L AKLAK AIR Inuvik NT DHC 6-300, Beech 99 Fort McPherson, Paulatuk, Sachs Harbour, Tuktoyaktuk 0
J4 BUFFALO AIRWAYS Yellowknife NWT DC-3, DC-4, C-46, Beech 95, C185, NO6, A-90, B55 Northwest Territories and Yukon 1
FK KEEWATIN AIR LIMITED Winnipeg MB Beech 200, SW2, Learjet 35, PC12   1
4K KENN BOREK AIR LTD. Calgary AB Beech 100, Beech 200,Beech 55, Beech 90, Beech 99, C185, DC3, DHC6, Embraer 110 Arctic Bay, Cape Dorset, Grise Fiord, Iqaluit, Nanisivik, Pang nirtung, Pond Inlet, Qikiqtarjuaq, Resolute Bay 1
BZ KEYSTONE AIR SERVICE Swan River MB PA-34-200, PA-31-310, PA-31-350, PA-28-140,Beech 99, Beech 200 Swan River, Winnipeg, Red Deer and other locations 1
XC KD AIR Vancouver BC Cessna Skyhawk C172,Piper Navajo PA31-310, Piper Chieftain PA31-350 Vancouver Intern'l Airport, Vancouver Island & Texada Island 1
UJ MONTAIR AVIATION Delta BC PC-12, PA-34-200T, C172 Boundary Bay and other locations 0
U7 NORCANAIR (operated by Northern Dene Airways Ltd) Prince Albert SK Metroliner III Saskatoon, Prince Albert, La Ronge, Wollaston, Stony Rapids, Fond-du-lac and Uranium City 2*
  NORTH CARIBOO AIR Fort St. John BC Beech 100, Beech 1900, Beech 200, Beech 58/58TC, Beech 90, C206, DHC6, PA31   1
  PERIMETER AIRLINES (INLAND) LTD. Winnipeg MB Ceech 55, SW3, HS125, Learjet 35 Berens River, Brandon, Brochet, Cross Lake, Dauphin, Fort Severn, Garden Hill, Gods Lake Narrows, God's River, Lac Brochet, Norway House, Oxford House, St. Theresa Point/Wasagamack, Red Sucker Lake, Shamattawa, Tadoule Lake,Thompson 1
  WASAYA AIRWAYS LP Thunder Bay ON HS-748, C208, Beech 1900, PC-12 Northeast Manitoba, Northwest Ontario 1
8O WEST COAST AIR Vancouver BC DHC-6 (Floats), DHC-2 (floats) Vancouver, Victoria, Whistler, Tofino, Campbell River 0

* Operated to only one ATSC airport in September 2002

Summary of Aircraft Types Used by Air Carriers Surveyed


Aircraft Type Passenger Seats # Flights
  Min Max Avg per Week

Aerospatiale Ecureuil AS350 /AS355 2 5 5 5 42
Airbus A320 117 117 117 222
ATR 42 46 46 46 96
BAe (HS) 748 33 44 37 193
BAe 146-200 (Passenger) 85 85 85 414
BAe Jetstream 31 18 19 19 167
BAe Jetstream 32 19 19 19 15
Beechcraft (Light Aircraft) 4 14 14 532
BE 1900/BE King Air 200 15 15 15 22
Beech King Air 100 10 14 11 93
Beechcraft 1900 C or D 19 19 19 1436
Beechcraft C99 Airliner 12 12 12 40
Boeing 727 (Mixed Configuration) 70 70 70 20
Boeing 737 any Series Passenger 120 125 125 1141
Boeing 737-200 (Mixed Configuration) 60 117 81 538
Boeing 737-700 140 140 140 248
Boeing 737-800 150 150 150 47
Canadair Regional Jet 50 50 50 188
Cessna (Light Aircraft) 6 8 8 223
   Cessna 172 4 4    
   Cessna 180 4 6    
   Cessna 185 4 6    
   Cessna 206 6 6    
   Cessna 207 6 7    
   Cessna 208 9 14    
   Cessna 210 4 6    
   Cessna 310 5 6    
   Cessna 335, 337 4 6    
   Cessna 401 6 8    
   Cessna 402 9 9    
   Cessna 414 6 8    
   Cessna 421 6 7    
   Cessna 441 8 11    
   Cessna 550 (jet) 7 12    
De Havilland DHC-2 Beaver 6 6 6 262
De Havilland DHC-3 Otter 14 14 14 96
De Havilland DHC-6 Twin Otter 9 37 17 671
De Havilland DHC-8 Dash 8 100 37 37 37 2884
De Havilland DHC-8 Dash 8 Series 300 50 50 50 1193
De Havilland DHC8 Dash-8 Series any 37 37 37 252
Embraer EMB-110 Bandeirante 14 18 17 475
Fairchild Metroliner (SW3, SW4) 15 19 19 514
Fokker F28 Fellowship all Series 75 75 75 62
McD-Douglas MD-80 all Series 150 150 150 83
Pilatus PC-12 9 9 9 632
Piper (Light Aircraft) 8 8 8 16
   Piper PA31 6 9    
   Piper PA34 6 6    
Saab SF 340 33 34 34 333
Shorts 360 33 33 33 257
Sikorsky S-76 12 12 12 250

Grand Total 0 150 49 13659

Appendix B
Assumptions for Estimating Travel Times


Airport Distance to Airport (km) Access Time (min) Time Prior to Departure (min) Egress from Airport (min)

YOW Ottawa 14.6 20 45 20
YYC Calgary 19.3 24 45 20
YEG Edmonton 30.5 28 45 20
YWG Winnipeg 12.1 18 45 20
YUL Montreal 21.4 28 45 20
YHZ Halifax 35.5 29 45 20
YTZ Toronto Island 5.3 10 30 10
CXH Vancouver Harbour 2.6 4 20 5
YWH Victoria Harbour 4.0 8 20 5
YXD Edmonton City Centre 4.0 8 30 10
YBQ Quebec 17.1 15 38 15
YYJ Victoria 26.1 23 38 15
YYT St John's 13.2 16 38 15
YSJ Saint John 16.7 23 38 15
YQM Moncton 9.2 10 38 15
YHM Hamilton 16.7 21 38 15
YXU London 10.7 12 30 10
YQG Windsor 9.4 13 30 10
YQR Regina 4.7 7 38 15
YXE Saskatoon 4.9 7 38 15
YYZ LBP Int'l 28.1 31 50 20
YVR Vancouver 14.5 19 50 20
YXS Prince George   15 30 10
YFC Fredericton 15 30 10
YQU Grande Prairie 15 30 10
YKA Kamloops 15 30 10
YLW Kelowna 15 30 10
YXX Abbotsford 15 30 10
Other Minor Airports 15 20 5

Note: travel and airport times were calculated for both the outgoing and return segments of the trip and averaged to give a representative time for the OD city pair.

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