By Skies Magazine | January 5, 2024 Estimated reading time 5 minutes, 9 seconds.
As Canada’s business aviation community navigates the effect of a new luxury tax on aircraft and tries to ramp up sustainability efforts, the industry’s main advocacy group is highlighting the sector’s contributions to the national economy.
Business aviation operations and manufacturers generate a combined $11.7 billion in direct economic output and support 25,600 direct jobs, according to a 2023 economic impact study from the Canadian Business Aviation Association (CBAA).
“The study clearly demonstrates that business aviation is not only an enabler of business efficiency but also a substantial economic driver,” Anthony Norejko, president and CEO of the CBAA, said in a statement.
“It contributes billions of dollars to Canada’s GDP, supports a considerable number of high-skilled jobs, and is a catalyst for technological innovation.”
The study, released in December, is an attempt to articulate the sector’s larger benefits in the face of long-running public relations concerns linked to the climate crisis. It positions business aviation as a business tool, rather than an indulgence.
CBAA has contended for years that business aircraft are crucial to the economy because they enable employees to travel more efficiently to close business deals, build business relationships and conduct secure in-flight meetings, in contrast with airline travel.
“Business aviation may be considered a luxury for executives who want to avoid commercial airlines,” the association said in its report.
“This misconception, however, fails to recognize the many uses of aircraft for fast, flexible, safe, secure, and cost-effective access to a range of destinations, including remote locations that may be impossible to reach by commercial air and even ground transportation.”
In 2022, an estimated 1,500 business aircraft operated in Canada, down from around 1,900 in 2017, according to the study. The mix is primarily made up of fixed-wing aircraft (88 per cent), and it amounts to four per cent of the total registered aircraft in Canada.
Ontario is the most active province for business aviation, with 423 aircraft based there. Alberta (293), Quebec (245) and British Columbia (235) make up the bulk of the remaining fleet.
Canada’s business aviation operations — including fixed-base operators and company flight departments — contribute an estimated 10,900 direct jobs, while manufacturers generate 14,800 direct jobs, the study found.
Total wages and salaries in these positions amount to an estimated $3 billion, with average annual salaries of $108,100 in operations and $122,500 in manufacturing.
This produces $5.3 billion in direct gross domestic product (GDP) every year, CBAA said. With indirect and induced economic impacts added, the sector supports 53,600 jobs, $4.8 billion in wages, $9.2 in GDP and $17.9 billion in economic output.
Direct annual taxes from business aviation were estimated at $1.2 billion in 2022, with the majority going to federal and provincial or territorial governments, the CBAA said.
The study also raises concern about the federal luxury tax, which came into effect in September 2022 and applies to the sale of aircraft produced in Canada, and aircraft imported to Canada, with a value of more than $100,000.
“This introduces a competitive disadvantage for Canadian aircraft manufacturers, with added consequences to business aviation operators within Canada as well,” the association said.
“Beyond the impact to industry and economy, there may be unintended environment costs associated with operators retaining older and used aircraft with lower fuel efficiencies instead of buying new technologies.”
