Deborah Flint had such plans. When she left the top job at Los Angeles World Airports to become CEO of the Greater Toronto Airports Authority (GTAA), Hamilton-born Flint saw great things ahead for Pearson International Airport. Vying with New York’s JFK for status as the largest gateway into North America, Pearson anchored the second-biggest employment zone in Canada outside downtown Toronto. But the airport’s 50,000 employees, plus the 300,000 who worked in that employment zone, needed better access to transit. And Pearson had failed to tap much of its revenue potential. It needed what Flint calls “a big and bold vision” to continue to grow and to build on the hundreds of millions of dollars in economic impact a world-class airport can bring to a region. But before she could get started, COVID-19 hit. Since then, her airport has been in survival mode. Flint’s improvement plans have changed, and her revenue needs are greater than ever. Speaking of which, she’d like to tell you about some land she has for sale.
You arrived at Pearson in February 2020. How tough have the past 20 months been for you?
A lot of turbulence. The airport was empty. It was eerie. It was jarring. In the early days, our focus was on the health safety of our passengers, our employees. We saw very early on that the health element of the pandemic would create a new lens for the industry. Very similar to 9/11 creating a heightened security lens, there would now be a permanent heightened health lens to air travel.
In November 2020, you said the airport had suffered significantly because of the pandemic. You had to cut 500 jobs at one point. How much are you still suffering?
Significantly. We are surviving on debt. We will probably have $1 billion in additional debt as a result of keeping the airport open, with minimal activity for the majority of this year. So it is still very challenging. We’re still paying the government rent—about $100 million a year. For 2021, they have deferred rent for Canadian airports. What we’ve been talking to them about is either waiving that 2021 rent (1), so we don’t have to borrow to pay it, or allowing us to invest that rent back into our infrastructure, which is sorely needed, or back into our operations.
At its peak in 2019, Pearson was handling 150,000 passengers a day. What is the number now?
It’s a very uneven and volatile time. The numbers in September are significantly different from what they were back in July. This year, I expect we will still be in the single-digit millions of passengers coming to the airport. Compare that to 50 million passengers in 2019. Our business, historically, has been very volume dependent. So getting passengers through the doors is a key source of our revenue.
What about cargo?
Cargo became the star of the day during the pandemic. The only flights coming in were full of cargo. There was huge demand, because most passenger aircraft would carry belly cargo—that was a substantial part of how goods were moved around the world. In this case, there were no passengers on top of that belly, and we needed to get those planes to the gates. So our team developed a whole new operational approach to allow what we call “preighters”—passenger aircraft retrofitted to be all-cargo aircraft. Cargo became a huge opportunity for the industry to keep planes flying.
Has anything positive come from this experience? Last June, you said the pandemic was “an opportunity to reinvent the travel experience and make it incredibly better.” How’s that going?
Not so great! [Laughs] Yes, I did feel that. I still feel it was an opportunity not just to incorporate efficient health policies and practices into the industry but to go back and fix the pains that travellers feel, still, post 9/11, where the security screening is a stop-start inconsistent process in many countries. I saw the opportunity to use digital tools and technology, and create new processes that were more efficient. Instead, it’s been challenging. Processes are very much disharmonized between countries, within countries, within regions. The Canadian government rolled out ArriveCAN (2), which allows for electronic documentation of your quarantine plan and health status. But I’m looking forward to the next era of the technology, which actually authenticates that data and keeps it permanently, so a traveller doesn’t have to do it every single time, and there’s more trust and credibility in that electronic tool. We need that. (3) Right now, passengers are very confused and anxious about the travel process.
Let’s talk about the JD Power survey that came out a few days ago. Pearson ranked second-lowest among 20 mega-airports in North America. A spokesperson said Pearson fared poorly because of its facilities and pandemic policies. What’s your reaction?
We look to learn from every survey out there, but I would say some surveys are better than others. I look at the ones that are more specific to the airport experience—that ask people at the airport, in real time, what their experience is. For that, we got the best large airport in North America for airports with more than 40 million passengers. (4) We had several other awards. Skytrax awarded us the cleanest airport in North America.
Are there facilities you want to upgrade?
Absolutely. We have a vision of being a smart airport, integrating our operations across the board to be very efficient. We were reaching some capacity problems, even at 50 million passengers, so we looked at both of our terminals for additional facilities. When you arrive in Terminal 3 today, there are challenges, because there is not a very efficient transfer process. Passengers have to leave the secure area and go back through a check-in process in order to transfer from international to domestic. We want that to be smoothed out. We have to think even more aggressively about digitizing the entire experience, to really personalize the experience for the passenger.
You developed a strategic plan for Pearson called Pearson Strong. Did you do that after you arrived, in the midst of the pandemic?
Yes, indeed. It was a fearful time, a really challenging time for our people. There was angst about the future of the industry, people’s employment and their families. So I became more intently communicative in emails to the organization. And I signed one of my emails, “Pearson Strong.” That became a rallying vibe for our entire organization. People were using it in meetings. It was put on signs and painted across the airport. Because it reflected that need for us all to come together. By the second or third quarter of the year, it became clear that we needed some direction to allow the organization to perform effectively. It’s very difficult to do a long-term plan, even a three-year plan. But it was going to be very important for us to be aligned on the most important priorities for the organization. So the four pillars of that were about people, about operational efficiency and effectiveness, about our healthy airport commitments, and about financial stability and generating revenue differently than we had in the past. The industry is facing a lot of volatility, so it seems logical that we develop a strategy to not be so fully dependent on passengers coming in the door. What other assets could we leverage, whether it’s real estate, cargo, logistics, warehousing?
Have you been able to act on any of these new revenue initiatives?
Yes, absolutely—two, for example, in the healthy airport arena. We partnered with Switch Health and developed a fully accredited testing lab within the airport itself. We also have one off-site lab on our campus. Between the studies we did in the early days and then the departure-testing partnership we have, we have done almost 100,000 tests through our certified lab. It is expected to generate millions of dollars for us, which is pivotal.
Further to this notion of revenue, I’m curious about something. Chicago and Toronto are similar in geography and population. But until recently, Pearson was generating $1 billion a year in revenue, while O’Hare was generating US$8 billion. Why is there such a huge difference?
Many reasons. Number one, the profile of the passenger can contribute to the revenue generation, as well as the size of the land, the number of land development deals and opportunities, and how those deals are structured. You’ve got to look at the origins and destination of traffic. The models are different, as well. Our government has semi-privatized the aviation sector. In the U.S., government entities own those airports, and tend to contribute and invest national funds into the airport system. (5) We have had to self-fund and access debt markets in order to continue our operations. I do want to talk about those land opportunities, if I can.
We have three of them. One is a two-acre piece of property on Convair Drive, right across from our administrative headquarters. So a nice piece of property for industrial, for warehousing, for logistics. Then there’s a substantial 30-acre parcel at the corner of Derry and Airport roads. It should be in very high demand, because it’s right there in the airport employment zone. It will be on the market in the fourth quarter of 2021. Then, in ‘22, we’ll be releasing another 14-acre site at the corner of Airport Road and Highway 409. So there’s a lot of opportunity.
You’ve said in the past that you’re often the only woman in the room. How have you managed to succeed in such a male-dominated industry?
Hard work is the mother of good luck. I worked incredibly hard to make sure that when I showed up in those rooms, I would be credible. And I’m very thankful for people who intentionally opened doors for me. I take that very seriously today, to keep paying that forward, and mentoring and nurturing. We still don’t have nearly enough representation of women or men of colour in the industry today. I think I’m still just one of two Black female airport CEOs in all of North America.
How do you think being a woman of colour has affected your experience?
My parents raised us with the attitude that you better work twice as hard. You have to be twice as good. So there was always that fervour to make sure we showed up strong, prepared. I do think that fuelled me quite a bit. And I believe that in wanting to represent my people very well, that has just driven me to work harder, and opportunities have presented themselves.
I have to touch on something regarding your transition to Toronto. There was a controversy at the time about your having taken a paid position on a corporate board without getting the necessary approval. (6) Do you want to talk about that?
No, I think it’s best not to. At some point, I will want to talk about that story, but not now.
Are you planning to be involved with boards in Toronto? (7)
My focus is turning around the business here at Pearson, delivering on the strategic plan. We were in a loss position in 2020. We’re going to be in a loss position in 2021. We are running the business in a way that protects us in the event that there’s more volatility, with our focus being on getting back to profitability in 2023. So that’s where my energy and my focus are—making sure we turn the business around.
When do you think your passenger levels will get back to pre-pandemic numbers?
It’s anyone’s guess. Right now we’re at 1970s numbers. So I’ll be happy to get back to the 2000s.
How do you think business travel will be changed by the pandemic?
Permanently, in my view. Technology has enabled virtual meetings, and they can be very effective. And the way the travel experience is today, so challenging and cumbersome, I do think is a threat to the recovery of business travel. This is a significant issue to grapple with. Business travel is very important to the carriers’ model. The front of the plane typically pays for the entire operation. So it’s mission critical. I’ve seen some forecasts that say business travel this year will recover by 40%. That’s pretty positive for 2021. I wonder about the last 20% of business travel coming back. Corporations may have figured out it’s great on the budget not to have that travel anymore.
1. In 2020, governments waived more than $300 million in rent for 21 Canadian airports. Pearson’s 2021 rent has been deferred but must be repaid over 10 years starting in 2024. Normal rental payments are due to resume in 2022. With a shortage of revenue, the airport’s capital expenditures are currently being funded by debt.
2. ArriveCAN is a phone app Canadians must use to submit necessary information to the government before and after entry into Canada by air, land or sea.
3. Flint cites the IATA Travel Pass as an example. An initiative of the International Air Transport Association, the pass is a phone app that allows governments to verify the authenticity of a traveller’s test and vaccination certificates, and gives airlines, travellers and labs a way to exchange required documentation and information. It’s being introduced on a trial basis with a limited number of participating airlines.
4. Airports Council International named Pearson the best large airport in North America for the fourth year in a row. Though its passenger numbers were vastly reduced, it was grandfathered into the category.
5. Flint’s team calculated that if Pearson had received the same level of infrastructure aid from governments as U.S. airports, it would have received $500 million.
6. In December 2019, the L.A. Times began raising questions about whether Flint had taken a position on the board of Honeywell International, which paid her US$100,000 a year, without getting required approval from the Los Angeles World Airports board. Within days, the GTAA named Flint its next CEO. When the Times pressed its investigation, the LAWA board moved up the date of Flint’s departure.
7. Flint is still on Honeywell’s board.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.