Daniel-Robert Gooch is president of the Canadian Airports Council.
The federal government spends billions of dollars every year on roads, bridges and airports, right? Actually, not airports.
While the federal government, academics and think tanks ponder the future direction of Canada’s airports, many Canadians are unaware that the burden of paying for airport infrastructure no longer rests with the federal government. Rather, Canada’s world-class airport facilities are built primarily using fees charged to passengers.
Up until the 1990s, airports were operated by the federal government with public servants managing the business, and taxpayers paying all capital and operational costs not covered by airport charges. By the early 1990s, the annual cost to taxpayers for airport operations alone was $135-million a year with very little investment in infrastructure improvements. To get government out of the business of running airports, operating and funding responsibilities were transferred to local airport authorities operating on a not-for-profit basis.
By all accounts, this transfer has been a success. Over the past 25 years, Canada’s airports have invested more than $21-billion on infrastructure improvements with virtually no public funding. Airports also pay “rent” to the federal government – a levy of 5 per cent to 12 per cent on virtually all revenue. Last year, the federal government received $323-million from airports in rent.
This circumstance is unique in the world. Indeed most of Canada’s global counterparts, and most notably the United States, subsidize their airport system. By way of example, the Ogdensburg International Airport in New York State has been granted more than $18-million (U.S.) in the past two years from the Federal Aviation Administration and the Department of Transport to extend its runway to allow ultra-low cost carrier Allegiant and capture the Canadian “cross-border” travel market. In contrast, the Ottawa Macdonald-Cartier International Airport, 45 minutes away from Ogdensburg, invested $30-million (Canadian) to expand and improve its runway and was required to raise the capital funds entirely on its own.
While Canada’s largest major airports are self-sufficient and the airports system as a whole delivered a $285-million surplus last year, airports in smaller communities do need support at times. Airports are a capital-intensive business and many smaller airports with lower passenger volumes, less stable traffic and aging assets, have greater difficulty obtaining capital for infrastructure maintenance and upgrades.
Transport Canada created the Airport Capital Assistance Program in 1994 so that smaller airports could access much-needed capital assistance from that pool of funds. However, it was never well-funded, with just $38-million a year – a pittance compared to what is raised through rent. ACAP needs modernization and a major funding injection. The program is pivotal in providing small airports with access to funding to complete essential safety projects. However, funding has not increased in 15 years while the cost of doing business has risen considerably in this period.
In a recent report on transportation policy in Canada, former cabinet minister David Emerson recommended increasing capital funding for smaller airports, including through ACAP. Mr. Emerson also addressed a peculiarity of federal policy unfairly affecting six small airports in Charlottetown, Fredericton, Gander, Nfld., London, Ont., Prince George and Saint John. As “National Airports System” airports on federal land, they have been barred from both ACAP and other federal infrastructure programs.
Mr. Emerson’s answer to the question of the six small NAS airports is for the federal government to divest itself of them. His report recommends that Ottawa divest all federally owned airports with passenger volumes under 550,000 and consider divestment of airports in the range of 550,000 to one million passengers.
While divestiture may make sense for some of the smaller NAS airports, this would not be a simple endeavour. It would take some time to complete. A review of ownership and funding of small airports is timely and appropriate.
However, Canada’s airports have a good story to tell about what can be accomplished without taxpayer support. While government could ultimately decide to seek changes to the ownership model for some airports, it is important to remember that the system as a whole today is self-sufficient and that the needs of smaller airports in the system must be considered.Report Typo/Error
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