Passengers flying out of Toronto Pearson International Airport will see their fees go up 25 per cent as Canada's largest air transport hub reacts to a reduction in the number of travellers.
The Greater Toronto Airports Authority, Pearson's not-for-profit manager, said Friday that its airport improvement fee will increase to $25 per departing passenger on June 1, up from $20.
The authority also announced an immediate hiring freeze on its 1,200-person work force. There also is a freeze on management salaries, along with the closing of some facilities such as lightly used gates at Terminal 3. All but critical capital projects have been postponed.
The moves are being made "in light of the current economic climate, which has resulted in projections for a downturn in passenger traffic," the GTAA stated.
"Transport Canada's passenger volume forecasts are now anticipating a 5.8 per cent reduction, which translates to roughly 1.8 million fewer trips through Toronto Pearson this year."
Airline fee increases in the midst of a struggling economy are uncalled for, said Jacques Kavafian, an airline analyst at Research Capital Corp.
"They should be cutting costs, lowering expenses, salaries if they're having problems. But no, they're taking the easy route," he said.
"It's just an excuse for them to increase [the improvement fee]"
The authority noted that its room for cost-cutting is restricted as two-thirds of its expenses are fixed, including rent paid to the federal government, debt servicing costs and payments in lieu of taxes.
"Despite this challenge, many cost reductions have been highlighted for 2009 and more must be done," the GTAA stated.
However, airports in Montreal and Vancouver both said they aren't planning to boost their charges any time soon, even though they're facing similar economic challenges.
Mr. Kavafian said that boosting the cost of flying will only discourage Canadians from air travel.
"In a bad economic environment it's the worst thing to do," he said.
In an effort to attract traffic, Pearson is offering airlines rebates of up to 50 per cent on their landing fees for new flights into and out of the airport.
Pearson is also putting several projects on hold, including a Terminal 1 parking expansion, Terminal 2 garage demolition, planning for a new Pier G gate complex, and the Terminal 3 master plan.
"There are things passengers will notice" as a result of the cost-cutting, spokesman Scott Armstrong said, "but you'll still be able to get on the plane you need to get onto."
The higher airport improvement fee is required as "we need to increase revenue to compensate for the downturn in passenger traffic."