Sunday, January 3

Hidden airline taxes

A couple of months ago I blogged about hidden taxes. I encountered another example of hidden taxes when I went to book a flight from Toronto's island airport to Quebec City to attend the city's winter carnival.

Porter Airlines was having a 30% off sale, so at $66.50 the fare was too good to pass up. Of course, once I clicked through to book the flight, I found that there's an additional $53.38 in taxes. For those keeping track at home, that's an abhorrently massive 80% tax rate.

I sympathize with Porter, however. They provide a list of the taxes and it sounds like all they get to keep is the base fare. There's a $28 fee for NAV Canada and surcharges, $15 for an airport improvement fee, $5.71 in GST and a $4.67 air traveller security charge. So presumably none of that goes to Porter, and they're left to cover their costs (staffing, fuel, landing fees, buying and maintaining airplanes) through the $66.50 I give them.

This seems to be a totally different situation than taking the seaplane between Vancouver and Victoria, something I did in the summer. There, you are just charged the fare and GST (plus a 50-cent carbon offset if you fly with Harbour Air). I wonder if they don't have to pay security and NAV Canada charges because they are running smaller planes, or if it's because they include these taxes in the fare prices they report.

At any rate, I'm surprised a business such as Porter can survive when their product faces an 80% tax rate. A big chunk of that is the $28 NAV Canada fee. Strangely, my girlfriend booked a trip from Victoria to Quebec City (4,300 kilometres farther than my flight) and was only charged $24 by NAV Canada. Curious as to why such a shorter trip would cost less than a longer trip, I looked into how NAV Canada calculates fees. It's outlined in an extremely complicated 52-page guide that I was unable to decipher.

I'd be curious to learn more about what NAV Canada actually does and how it calculates its pricing, given that it makes up a significant component of the hidden airline fees and has monopoly power.