A battle is brewing between B.C. and Ottawa over international travel access to the province.
B.C.’s plan announced last week to boost airport competitiveness by eliminating its jet-fuel tax for international flights by April 1, 2012, came in the wake of Ottawa’s continued unwillingness to liberalize air policy that would improve air access to Western Canada.
Following the jet-fuel tax announcement, Vancouver International Airport Authority (YVR) said it would offer a five-year incentive program allowing carriers to add capacity without incurring additional landing and terminal fees.
The announcements come as the province continues to lobby Ottawa to sign more open skies agreements with markets important to Western Canada and to allow carriers such as Emirates Airlines to provide daily service to destinations such as Vancouver and Calgary.
Transport Canada regulates international air access to Canadian airports. Without changes to national air policy, the effectiveness of such measures as B.C.’s jet-fuel tax initiative is greatly reduced.
The federal government became further embroiled in B.C. access issues last week after it was revealed it would not spend US$550,000 annually to pay for Canada Border Services Agency (CBSA) border-clearance services for a second daily Amtrak Cascades train running between Vancouver and Washington state.
The additional train was added as a pilot project last September. The province and the state both consider it a success. According to the Washington State Department of Transportation (WSDOT), it has thus far generated US$11.8 million in economic benefits for B.C.
B.C. Transportation and Infrastructure Minister Shirley Bond estimated the economic benefits of the additional train at $17 million for the year. The additional train service had already been extended to October 31.
Increasing friction between Ottawa and Victoria over access issues comes at a time of massive provincial and federal investment to make B.C. Canada’s Asia Pacific Gateway and increase the international investment opportunities that come with that infrastructure and designation.
YVR can change its fees as it wishes, according to Tae Oum, a professor in the Centre for Transportation Studies (CTS) at UBC’s Sauder School of Business. But he added that bilateral air services agreements (ASAs) signed by Ottawa still control who can use the airport.
“Of course, this move would increase pressure on Transport Canada to liberalize its protective approach to bilateral ASAs,” Oum said, adding that B.C. and other western provinces should step up pressure on Ottawa to consider making Western Canada an open- skies region.
Public pressure for bilateral agreements can also be effective, he said, pointing to the recent ASA between Canada and South Korea.
CTS chairman and professor David Gillen said YVR’s announcement challenges Ottawa.
“YVR has been pushing Ottawa to allow more airlines in. This heats it up a bit.”
But he added that, ultimately, Ottawa will do whatever it wants.
“It takes its directions from the carriers, mostly Air Canada. That said, I think [Transportation Minister] Chuck Strahl may have a more liberal view of opening up access to Western Canada than previous ministers.”
Transport Canada spokeswoman Maryse Durette said the federal government was “pleased” to hear British Columbia had removed its jet-fuel tax for international flights.
“All levels of government are doing their part to create opportunities under the Gateway framework.
She added that the government has been working to expand air transport agreements with countries in the Asia-Pacific region.
“Having said that, many of our partners are not prepared to liberalize at our pace.”
YVR president and CEO Larry Berg said the airport needs to be more competitive with its counterparts in cities such Toronto, Chicago, Los Angeles and San Francisco because new long-range aircraft will allow airlines to bypass traditional gateways.
He didn’t know how much revenue YVR would forgo as a result of the five-year incentive program, but estimated that it would generate eight to 10 new international flights over the next five years.
Berg said the elimination of the jet-fuel tax makes YVR competitive with airports in California, Washington and Alberta and will save airlines travelling to Asia between $2,000 and $3,000 per flight, depending on the destination.
Berg said the province collects about $17 million annually from the tax. B.C. claims the elimination of the tax will save airlines $20 million by 2012-13.
Meanwhile Bond said the provincial government is “disappointed” the federal government decided not to fund the customs-clearance services for a second Amtrak train, but is “not prepared to write off the train at this point.”
She is continuing discussions with her Washington state counterpart, Transportation Secretary Paula Hammond, and is considering various options for what to do next.
The CBSA said in an email “it has always been clear that this temporary pilot for a second train was introduced to fulfil a need posed by increased travel volume during the 2010 Olympic Winter Games.”
The CBSA is “fully prepared to continue providing service for the second Amtrak train on a cost-recovery basis should Amtrak wish to pursue this option.”
It said it requires adequate levels of funding to maintain appropriate levels of security, safety and service.
Bond said the federal government remains a “very good” partner when it comes B.C. access initiatives around both the train and the air access files.
But she said, “we need to be working toward a true open- skies policy.”
Bond added that the elimination of the jet-fuel tax is just one piece of the larger puzzle on access. “This is one of the really important opportunities for B.C. to take advantage of our geography. We are the only Pacific province.
“We have resources and connections with Asia that are much quicker than any other part of North America. This is one of our advantages and we need to keep moving aggressively to remove those barriers.”