High fees pose a barrier to new airlines touching down in N.L., says industry analyst

The Newfoundland and Labrador government and the airport authority in St. John's have been trying to attract new airlines and new routes, but an aviation industry analyst says higher airport fees might be holding some carriers back from entering the local market.

Compared with airports across Atlantic Canada, St. John's International Airport has the highest airport improvement fees — known in the industry as AIF — with a charge of $42. By contrast, Charlottetown charges $20 and Halifax charges $35.

When looking across the country, only Prince Rupert, B.C., charges more than St. John's in airport improvement fees.

John Gradek, an industry analyst and co-ordinator of the aviation management program at McGill University, said an airport improvement fee can account for a big difference in ticket prices.

"Flair has been flying $19 fares from Abbotsford to Kelowna and, you know, $29 fares to Calgary. Out of St. John's, you can't do that," Gradek told CBC News.

"Basically, before you even start charging the passengers for a flight you've already got high AIF already in place."

Low-cost carrier Flair recently introduced two new routes out of St. John's. It has been servicing places like Halifax, Charlottetown and Saint John for the past three years.

Chief commercial officer Garth Lund said one of the reasons it took so long for Flair to introduce flights from N.L. was due to high airport improvement fees charged in St. John's.

"It is absolutely a factor when we are making our route decisions. I think we probably would have served the St. John's market sooner, if those fees had been lower," said Lund.

"But we've got a good partnership going now with the St. John's airport and we're looking to continue growing here."

Gradek said low-cost carriers like Flair want to keep fares low, and any changes to fees, including airport improvement fees, can influence what markets they enter.

"They considered that to be kind of a barrier to entry."

If a round-trip Flair Airline ticket from St. John's to Kitchener-Waterloo, Ont., costs $134, the airline takes $41, while the St. John's airport collects $42 in airport improvement fees, the Waterloo airport gets $15 and the remaining $36 goes to taxes and security fees.

Airport defends higher fee

Lisa Bragg, the St. John's airport's director of business development and marketing, said those higher fees are in place because the authority has costs that need to be covered.

"We're an island and that kind of changes the game a little bit. And not only are we an island, we're an island with a winter season," she said.

"So in terms of operations we have some extra layers there. And that's the reason why we have a difference in fees than some other airports."

According to the airport authority's website, improvement fees can only be used for capital expenses and not to cover operational costs.

The airport says it has spent more than $300 million on upgrades, like a recent terminal building expansion as well as expanded rental car parking, in the last 25 years.

Gradek said airport improvement fees are generally going to go up.

"I think once you start down that path, down that AIF path, it's like a drug. You keep getting it because you can get it. And if you can raise the price, you can, and you will," he said.

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