Canada extends aviation fuel tax suspension through January 2027

The federal government is extending its temporary suspension of excise taxes on aviation fuel into early 2027, providing continued cost relief to airlines and other aviation operators amid elevated global fuel prices.

Finance Minister François-Philippe Champagne announced Wednesday (Sept. 2) that Ottawa will extend the suspension of the federal fuel excise tax until Jan. 31, 2027.

The tax will then return at 50 per cent of its regular rate for February and March before being fully reinstated on April 1, 2027.

The measure applies to gasoline, aviation gasoline, diesel and other aviation fuel.

Ottawa first temporarily suspended the federal fuel excise tax on April 20, 2026, citing economic uncertainty and rising costs driven partly by conflicts in Europe and the Middle East.

For the aviation sector, the measure eliminated a tax of 10 cents per litre on unleaded aviation gasoline, 11 cents per litre on leaded aviation gasoline and four cents per litre on other aviation fuel.

Aviation fuel taxes to return gradually

The extension means the federal excise tax on aviation fuels will remain at zero through Jan. 31.

From Feb. 1 through March 31, 2027, the tax will return at half its regular rate. Unleaded aviation gasoline will be taxed at five cents per litre, leaded aviation gasoline at 5.5 cents per litre and aviation fuel at two cents per litre.

Full federal excise tax rates are scheduled to return April 1, bringing the levy back to 10 cents per litre for unleaded aviation gasoline, 11 cents for leaded aviation gasoline and four cents for aviation fuel.

The fuel tax relief, however, isn’t expected to eliminate the temporary fuel surcharge airlines and tour operators have introduced in recent months.

The relief represents less than five per cent of the amount by which the jet fuel cost increased on domestic flights since the beginning of the Middle East crisis, the WestJet Group told PAX back in April.

The measure comes as fuel remains a significant operating expense for Canada's aviation sector and amid broader concerns about the impact of global economic and geopolitical uncertainty on transportation costs.

Ottawa estimates the latest extension will have an additional fiscal impact of approximately $2.9 billion, bringing estimated total fuel-tax relief for Canadians to $5.3 billion in 2026-27.

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