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If you’ve ever compared the cost of flights in North America with those in Europe, you’ve probably noticed how much less Europeans pay for their airfare. Flights of comparable distances on both continents are almost assuredly more expensive in North America, even though taxes and fees are actually lower in the countries that comprise that market. While on the surface, this is a perplexing difference between the two regions, but there is actually a very simple reason why flights are less expensive in Europe, and it is unlikely to ever become a factor in the U.S. and Canada. A recent article from the Huffington Post took a quantitative look at the difference in pricing between Europe and Canada, and the results were eye opening to say the least. Using an online booking site to make flight reservations three weeks prior to travel, the author of the article compared five flights in each market, with distances totaling 5367 km in Canada, and 5358 km in Europe. The five Canadian flights came to a grand total of $1357.73, or 25 cents per kilometer, while in contrast, the European flights cost just $723.79, or 14 cents per kilometer. Of those totals, 32% of the costs of the Canadian flights were made up of taxes and fees, while 49% of the price of the European tickets was attributed to those same factors. In other words, European airfares are considerably cheaper than Canadian, even though they still get taxed at a much higher rate.
So why is there such a dramatic difference in the cost of the airfare? The answer to that is surprisingly simple. Back in the early 1990’s, when the European Union was just beginning to come together, the decision was made to open the skies over Europe to all airlines, no matter which country they originated from. In other words, any airline operating in Europe could freely fly in any country in the EU, even picking up and delivering passengers in foreign markets. The result has been more options for travelers, more competition between carriers, and lower prices all around.
The HuffPo article says that due to the relaxed regulation on airlines operating in Europe, more budget carriers have popped up across the continent. The result as been a 220% increase in cross-border flights between 1992 and 2009. Furthermore, the number of cities being served by more than two carriers more than tripled over that same time period, bringing more jobs and tourism to many markets as a result. At the same time, the average price of a ticket dropped by 34%, making it cheaper than ever for Europeans to visit their neighbors.
The situation in Canada and the U.S. is very different however. The governments of both countries prevent airlines from foreign nations from making domestic flights within their borders. As a result, there are fewer airlines to choose from, and the aggressive pricing that has made it so cheap to fly in Europe, has never appeared. Unfortunately, it doesn’t appear that that will change anytime soon either, which means that expensive flights are here to stay.