Ontario fuel tax can seriously damage Canadian airlines' long-haul competitiveness

Constant calls to lower the cost for companies doing business within the aviation sector in Canada have fallen on deaf ears in the Ontario government. The province seems poised to more than double aviation fuel tax during the next three years, creating challenges for airlines operating at Canada's busiest airport Toronto, which is located in Ontario.

Opponents of the tax increase argue that not only will it add millions of dollars to top-line expenses at airlines, but the rise threatens to send more passengers across the border where they can travel more cheaply from US airports.

It is not surprising Toronto's largest airline Air Canada is staunchly opposed to the increase, as Toronto is the main pillar of Air Canada's international expansion. The scenario adds a layer of complexity not only to Air Canada's international aspirations, but also to WestJet's long-haul ambitions, in which Toronto will play a role.