February 13, 2004

Alberta aviation fuel tax will be eliminated on international air service

Calgary… Effective March 1, 2004, the 1.5 cents per litre Alberta aviation fuel tax will be eliminated on eligible international passenger and cargo flights, including flights to the United States.

"A competitive tax environment is vital to Alberta's economy and eliminating the Alberta aviation fuel tax on international air traffic at Alberta's two international airports will allow them to compete on a more level playing field with similar jurisdictions, including Seattle and Vancouver," said Revenue Minister Greg Melchin.

Alberta's international airports are key factors of economic and community development in the province and international air service contributes to the growth of the local and provincial economies. In addition to attracting more air traffic to Alberta, this initiative is expected to also lead to better air service for Alberta travellers.

"Once again, the Alberta Government is leading the way in addressing air transportation issues," said Mark Norris, Minister of Economic Development. "Eliminating the international component of the Alberta aviation fuel tax makes Alberta a more accessible and economical destination for visitors. In addition to benefiting the tourism industry, it also backs our airports' efforts to attract more passenger and cargo services, makes our province an even more attractive location for business and supports the expansion of Alberta's value-added industries."

"This decision illustrates how Alberta's aviation stakeholders are working together successfully, through Aviation Alberta, to partner with government on measures that build aviation services and support Albertans and the Alberta economy," said Don Matthews, President and CEO of Aviation Alberta. This change will result in the provision of approximately $3 million annually in fuel tax rebates.

See also:

• Aviation Fuel Tax Rebate Application Form AT 393 - March 1, 2004
• Information Circular:  Aviation Fuel Tax - International Flights - February 25, 2004
• Special Notice:  Alberta Aviation Fuel Tax Rebate For International Air Carriers - February 13, 2004

Backgrounder:

Some reaction from the airline industry:

"Convincing an air carrier to add to existing flights or inaugurate new services is a long process and there must be a credible business case presented," commented Julien DeSchutter, vice president, marketing for the Calgary Airport Authority. "The removal of the Alberta aviation fuel tax on international flights can be translated into real, measurable cost savings for U.S. and overseas flights."

"Airlines carefully examine costs when considering new air service," states Scott Clements, president and CEO of Edmonton Airports. "The removal of this tax will enhance our competitiveness in attracting new U.S. and international air services by lowering airline operating costs to and from Alberta."

"Following two years of difficult news in this industry, we're delighted to see a government taking action to stimulate aviation's recovery," says Cliff Mackay, President of the Air Transport Association of Canada. "The government of Alberta, and particularly Ministers Greg Melchin (Revenue) and Mark Norris (Economic Development), have recognized that inefficient taxes, like fuel excise, end up costing the economy and suppressing economic activity far beyond the operators who actually pay it."

Previous changes to Alberta's Aviation Fuel Tax

Effective January 1, 1997, Alberta's Aviation Fuel Tax was reduced from 5 cents to 1.5 cents per litre for both domestic and international air services. During fiscal year 1996 aviation fuel sales amounted to approximately 620 thousand cubic metres, and has since increased to annual sales of almost 800 thousand cubic metres.

Inter-provincial Comparison of Aviation Fuel Tax Rates (cents per litre as of September 1, 2003)

International flights are exempt from aviation fuel taxes in Quebec, New Brunswick and Newfoundland. In most U.S. states, including western coastal and inland areas such as Washington, California and Colorado, air carriers providing international services are either exempt or eligible for a full refund on fuel taxes. The elimination of Alberta's aviation fuel tax makes Edmonton and Calgary competitive with similar jurisdictions like Seattle and Vancouver.

For media inquiries, please contact:

Cathy Housdorff Director of Communications Alberta Revenue (780) 427-5364 or Cell (780) 719-4104 Dial 310-0000 for toll free access outside of Edmonton.	Anne Douglas Assistant Director of Communications Alberta Economic Development (780) 422-9476 Dial 310-0000 for toll free access outside of Edmonton.
Jim Law Calgary Service Bureau (403) 297-3191 or Cell (403) 510-7182	Traci Bednard, Director of Communications Edmonton Airports (780) 890-8055
Warren Everson, Vice President, Policy Air Transport Association of Canada (613) 233-7727 ext. 314

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