A recent report by the Business Council of Alberta sheds light on the rising costs of domestic air travel in Canada, revealing that federal policies and fees may be discouraging travel, limiting economic opportunity, and making it harder for smaller communities to stay connected.
Mike Holden, Vice President of Policy and Chief Economist at the Council, highlighted key findings from the report in a recent interview with Canada’s Entrepreneur. According to Holden, the government is heavily subsidizing passenger rail, including an estimated $80 billion toward a high-speed rail project between Quebec City and Toronto. Meanwhile, air travel — often the more practical option in a vast country like Canada — faces significant fee increases.
Mike Holden
Holden noted that federal fees on air travel have risen by 65%, adding about $150 to a return ticket regardless of distance. These costs disproportionately affect short-haul flights and make it financially unviable to service smaller or remote communities.
One key insight from the report is that reducing air travel fees to match international averages could result in up to 12 million additional annual passenger boardings. That increase alone could sustain the entry of a new airline the size of WestJet — without altering competition rules.
Holden also pointed to shifting travel trends post-COVID. While international travel to the U.S. has declined, domestic travel and flights to other international destinations have risen. Still, Canada ranks poorly compared to countries like the U.S. and Australia in terms of air travel affordability.
For Canadians near the U.S. border, it’s often cheaper to fly out of American airports — a missed opportunity for Canada’s airlines and economy.
The Council’s findings suggest a re-evaluation of federal transportation policy could unlock significant economic and regional benefits.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024 and 2025.
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