Each year, roughly five million Canadians cross the United States border on land in order to fly from U.S. airports. In many cases, Canadians are switching to American flights at the expense of Canadian carriers and airports. Cross-border air fare shopping is being driven by a “perfect storm” of many different factors. Canadian fees and taxes account for a significant share of the higher cost of travelling from Canadian airports, but a wide range of other factors, including fuel and labour costs, U.S. fees that apply only to transborder flights, air carrier productivity, and the rise in the value of the Canadian dollar, also play significant roles.
Driven Away: Why More Canadians are Choosing Cross Border Airports examines these issues and suggests a number of policy responses that could reduce the cross-border leakage. Lost traffic means both higher travel costs and reduced connectivity for all Canadians.