As Canadians increasingly opt for local travel amid tensions with the United States, many are shocked to discover that flying within Canada often costs more than international trips to sunny destinations like the Caribbean or Europe.
A recent wave of frustration has swept through social media platforms like Reddit, where travelers lament that a five-hour domestic flight can burn a bigger hole in their wallets than a transatlantic journey.
A groundbreaking report from the Montreal Economic Institute (MEI), a respected public policy think tank, points the finger squarely at the federal government, revealing how its hefty taxes and fees are inflating airfare prices to jaw-dropping levels.
Here’s a deep dive into why domestic flights in Canada are so expensive, how government policies are to blame, and what can be done to make air travel affordable again.
Table of Contents
The Shocking Cost of Flying in Canada
Imagine planning a trip from Toronto to Vancouver, only to find that the ticket price rivals or exceeds the cost of flying to Paris or Cancun.
For many Canadians, this is a frustrating reality.
Social media discussions, particularly on Reddit, have highlighted the absurdity of domestic airfares, with travelers noting that a round-trip flight across Canada can cost upwards of $500, while international destinations are often available for less.
This disparity has sparked a growing movement to boycott U.S. travel in favor of exploring Canada’s vast landscapes, but high domestic flight costs are making it difficult for Canadians to embrace local adventures.
The MEI’s report, released in August 2025, sheds light on the root cause of these exorbitant prices: government-imposed taxes and fees that account for a significant portion of every plane ticket.
According to Samantha Dagres, MEI’s communications manager, “Reducing the cost of air travel is entirely within Ottawa’s control, because it is Ottawa that has driven prices up in the first place.”
The report argues that the federal government’s approach treats airports as revenue-generating “cash cows” rather than critical infrastructure essential for connecting Canada’s sprawling communities.
Breaking Down the Fees That Inflate Your Ticket
When you purchase a plane ticket in Canada, you’re not just paying for your seat—you’re covering a slew of government-imposed costs that can make up 30–40% of the total price.
The MEI report highlights several key fees contributing to the high cost of domestic air travel:
Airport Improvement Fees (AIF): These fees, charged by airports to fund maintenance, expansions, and infrastructure upgrades, are a major culprit.
For example, passengers departing from Toronto Pearson International Airport pay $35 per ticket, while Vancouver International Airport (YVR) charges $25, up from $20 in 2020.
Calgary International Airport (YYC) levies a $35 fee. According to the MEI, a significant portion of these fees—up to one-third in some cases—goes directly to covering rent payments that airports make to the federal government.
In 2024, Canadian airports paid a staggering $494.8 million in rent to Ottawa, a 68% increase from $294.4 million in 2014.
Air Travellers Security Charge (ATSC): This fee, implemented by the federal government to fund airport security screening, adds $9.94 per domestic flight, with a maximum of $19.87 for round-trips within Canada.
For international flights, the charge can reach $34.42.
By comparison, the equivalent security fee in the U.S. is capped at $11.20 USD (approximately $15.46 CAD), making Canada’s security charges significantly higher.
Fuel Taxes and Other Levies: Canada imposes a fuel tax of 4 cents per liter on aviation fuel, compared to just 1.55 cents per liter in the U.S.
These additional costs are passed on to airlines, which in turn increase ticket prices to cover their expenses.
To illustrate, the MEI report provides examples of popular Canadian routes:
- A $190.04 round-trip flight between Montreal and Toronto includes $68.04 in taxes and fees, or 35.8% of the ticket price.
- A $266.46 round-trip between Vancouver and Montreal carries $72.54 in taxes and fees, accounting for 27% of the cost.
- A $118.36 round-trip between Toronto and Calgary includes $51.03 in taxes and fees, a whopping 43% of the ticket price.
- A $183.06 round-trip between Vancouver and Toronto has $51.52 in taxes, or 28% of the total cost.
These figures reveal a stark reality: nearly a third to half of what you pay for a domestic flight in Canada goes toward government fees and taxes, not the actual cost of operating the flight.
Why Are Canadian Airports Paying Rent to Ottawa?
Unlike many countries where airports are treated as public infrastructure, Canada’s major airports operate under a unique model.
The federal government owns the land on which airports like Toronto Pearson, Vancouver, Calgary, and Montreal-Trudeau are built, leasing it back to non-profit airport authorities.
These authorities, such as the Greater Toronto Airports Authority (GTAA), must pay substantial rent to Ottawa—up to 12% of their revenue.
In 2022, the GTAA alone paid $163.7 million in ground rent, while airports collectively sent nearly $500 million to the federal government in 2024.
These rent payments are not reinvested into airport infrastructure, which forces airports to impose high Airport Improvement Fees on passengers to cover maintenance and expansion costs.
For instance, YVR’s website explains that it receives “zero funding from the government” and relies on AIFs to maintain its facilities.
Similarly, YYC emphasizes that its AIFs are used for capital projects and not sent to the government, yet a portion of these fees indirectly covers the rent owed to Ottawa.
This “user-pay” system, as described in a 2024 Queen’s Business Review article, contrasts sharply with the U.S., where airports receive public subsidies to keep fees low.
In the U.S., the equivalent of Canada’s AIF is just $4.50 USD, compared to $35–$38 in Canada.
This discrepancy makes Canadian air travel significantly more expensive, discouraging domestic tourism and pushing travelers to seek cheaper flights from U.S. airports like Buffalo or Plattsburgh.
The Ripple Effect: Less Competition, Higher Prices
Beyond taxes and fees, the MEI and other industry experts point to a lack of competition in Canada’s airline industry as another factor driving up costs.
The federal government prohibits foreign airlines, such as Lufthansa or Delta, from operating domestic routes within Canada, limiting competition to a handful of domestic carriers like Air Canada and WestJet.
This near-duopoly allows airlines to charge premium prices without the pressure to lower fares.
In contrast, the European Union liberalized its aviation market in the 1990s, allowing foreign carriers to operate domestic routes across member states.
This led to a 34% drop in ticket prices, the rise of low-cost carriers like Ryanair, and increased flight options.
Canada’s restrictive policies, however, stifle innovation and affordability, leaving travelers with fewer choices and higher costs.
The Impact on Canadians and the Economy
High domestic airfares don’t just affect vacation plans—they have broader implications for Canada’s economy and connectivity.
Many Canadians, particularly those in remote or northern regions, rely on air travel as a lifeline to access essential services, visit family, or conduct business.
The MEI report emphasizes that treating airports as “cash cows” rather than critical infrastructure hurts these communities the most, making travel prohibitively expensive.
Moreover, the high cost of domestic flights discourages tourism within Canada, especially at a time when many are choosing to “Buy Canadian” amid trade tensions with the U.S. Cities like Edmonton, which could benefit from increased domestic tourism, struggle to attract visitors due to unaffordable airfares.
Industry leaders, including Air Canada’s vice-president David Rheault, have called for a review of Canada’s user-pay system and reinvestment of airport rents into infrastructure to improve affordability and competitiveness.
What Can Be Done to Lower Airfares?
The MEI and other stakeholders, including Air Canada and WestJet, have proposed several solutions to make air travel more affordable in Canada:
Reduce or Eliminate Airport Rent: By lowering the rent charged to airport authorities, Ottawa could reduce the need for high AIFs, directly lowering ticket prices.
Cap Security Fees: Aligning Canada’s Air Travellers Security Charge with U.S. levels would ease the financial burden on passengers.
Increase Competition: Allowing foreign airlines to operate domestic routes could drive down prices through market competition, as seen in Europe.
Privatize Airports: Following the lead of countries like Australia and New Zealand, Canada could sell airport leases to for-profit organizations, potentially improving efficiency and reducing costs.
Review the User-Pay System: A comprehensive overhaul of Canada’s aviation funding model, as suggested by WestJet CEO Alexis von Hoensbroech, could prioritize affordability and competitiveness.
The Path Forward
As Canadians grapple with the high cost of living, affordable air travel is more important than ever.
The federal government’s policies, while generating significant revenue, are stifling an industry that connects communities and drives economic growth.
With nearly $500 million in airport rent collected annually and fees that far exceed those in peer countries, Ottawa has the power to make air travel accessible again.
Transport Canada has yet to respond to requests for comment on the MEI report, but the growing public outcry—evident in Reddit discussions and media coverage—signals a demand for change.
By treating airports as essential infrastructure rather than revenue streams, Ottawa can lower airfares, boost domestic tourism, and make exploring Canada’s beauty more accessible to all.
Until then, Canadians will continue to face the frustrating reality that flying to Europe or the Caribbean is often cheaper than visiting their own backyard.
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