Explainer: why are Canada’s overflight fees so high?
Put simply, a country charges an ‘overflight fee’ when airlines want to travel in its airspace. It is one of many expenses an airline must cover if it wants to operate its flights, and such a fee can have a significant impact on the price of a ticket.
Some countries have low overflight fees, while others hike up the price. However, each country has a different way of calculating its fees, so there is no simple way to compare overflight fees across countries.
Crunching the numbers
The United States, for example, charges a fixed price for every 100 nautical miles (NM) an aircraft travels in its airspace. For overland flights, the price is $61.75 per 100 NM. For oversea flights, it is $26.51 per 100 NM. If the flight takes off or lands in the US, the fee does not apply.
Mexico’s rates are different. While the country chooses not to charge for flights that take-off or land in its territory (if that happens during air traffic controller (ATC) working hours), an overflying airline must pay between 0.20 and 6.97 Mexican Pesos ($0.0099 to $0.34) per every kilometer flown, depending on the wingspan of the aircraft.
Canada’s overflight fees are even more complicated. They are calculated differently for flying within its airspace (called ‘en-route charges’) or over the Canada controlled part of the North Atlantic Ocean (called Oceanic charges). En-route service charges consist of a base rate of C$0.03802 ($0.03), multiplied by the square root of the aircraft’s maximum take-off weight (MTOW), multiplied by the distance in kilometers.
Oceanic Charges consist of a C$ 230.22 ($181.19) charge for the use of Canadian ATC facilities and a Communications Services Charge, which is either C$ 74.93 ($85.96) or C$ 28.19 ($22.18) depending on the communications equipment used. There are a whole host of additional conditions, adjustments and exemptions, but let’s skip these for the purpose of brevity.
Let’s do a simple comparison instead. Say, an airline owns a Boeing 777-300ER widebody airliner and plans to overfly the territory of US, Mexico or Canada. The aircraft is going to spend just over an hour cruising through a country’s airspace, covering 1000 kilometers (321 miles). So, how much will that airline have to pay?
If the flight takes place above US oceanic space, the airline will owe $134 to the US Federal Aviation Administration (FAA). But if the flight takes place in regular US airspace, the fee goes up to $333. Here, the calculations are plain and simple.
To calculate Mexico’s overflight fee, we must consider the wingspan of the 777 is 64.8 meters (212 feet 7 inches). As such, the aircraft qualifies as large-sized. Thus, the airline will be required to pay 6,970 Mexican Pesos ($343) for the flight.
The MTOW of a regular 777-300ER is 351.5 tones (775,000 pounds). In Canada, this will result in a fee of C$712 ($558), which is significantly greater than Mexican and US airspace fees.
In the interest of fairness, the Boeing 777 is one of the largest aircraft out there. Had we performed the same experiment with, say, a much smaller Airbus A320, we would have found out that, while the US overflight fee stays the same at $134/$333, Mexico’s fee drops to 4,650 Pesos ($229), and Canada’s to C$335.7 ($263). Thus, flying narrow-body aircraft in Canada’s airspace is only slightly more expensive than Mexico, and even cheaper than the US.
However, narrowbody aircraft rarely conduct long-range routes. If a company is crossing into the airspace of another, it probably does so during routes between far-flung destinations and will use a long-range aircraft such as the Boeing 777.
And as we have already established, flying such aircraft through Canada’s airspace is significantly more expensive than through US or Mexican airspace. In practice, the rates are even more severe than in the theoretical example we discussed. Any airline that aims to connect the East Coast of the US with Europe will cover at least 2000 kilometers of Canadian airspace (more than $1,100 on the B777). This can increase to 4000 kilometers (more than $2,200 on the B777) for the US West Coast. Plus, there’s also the Oceanic Charges of up to $240.
In fact, Canada is somewhat infamous for its draconian overflight fees, an issue that led many US airlines to alter their flight paths to remain in US airspace for as long as possible.
But why are those fees so high?
To put it simply, the situation is complicated.
Overflight fees are just one part of the picture. Canada’s airports also impose notoriously high fees on jets that land and operate there, which affects both domestic and international ticket prices.
The reason for this is because Canada’s whole aviation infrastructure does not operate as a part of a governmental agency, rather it is a collection of non-profit companies that survive using their own fees and do not rely on governmental financing.
For example, in the US, air traffic is managed by the Federal Aviation Administration (FAA). It sets and collects overflight fees in addition to regular duties, such as monitoring air traffic. The FAA is an agency within the US Department of Transportation and is financed through collecting various aviation-related taxes.
Those taxes are collected into the Airport and Airway Trust Fund, an entity that recorded a revenue of nearly $16 billion in 2019. Overflight fees were just a tiny percent of that sum, and they were not used to uphold the entire US air navigation system.
In Canada, the situation is different. Its Civil Air Navigation system is operated by Nav Canada, a corporation that is required to sustain itself through service charges. Nav Canada’s revenue was a comparatively small C$1.4 billion ($1.1 billion) in 2019. It was collected almost entirely through overflight fees.
So, why are Canada’s overflight fees so high? Well, because they alone must sustain Canada’s extensive air navigation system, which is independent from the country’s other governmental structures responsible for transportation management. Nav Canada cannot lower overflight fees, as this could result in the company being unable to operate.
This situation is not unique in the world. For example, the UK’s NATS operates on similar principles, although its financing is somewhat different. However, Air Canada (ADH2) has drawn its fair share of criticism, high overflight fees notwithstanding. The criticism started back in 1995, when its decision to implement high overflight fees was met with widespread condemnation from airlines. Since then, hardly a year goes by without calls for a reform or at least the lowering of these taxes.
However, opinion regarding the commercialization of Canada’s air navigation is mixed, with some calling it a failure, and others holding it up as an example to be followed by the FAA. There are also those who highlight that both positive and negative examples can be drawn from such a commercialization.
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