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Airline group urges Ottawa to not privatize airports

The federal government is considering privatizing the eight largest airports in Canada, including Toronto’s Pearson International, whose operators say has reduced aeronautical fees drastically since 2006.

Fred Lum/The Globe and Mail

The body that represents the world's airlines is adding its voice to the chorus urging the federal government to keep Canada's major airports in public hands and not privatize them.

"We haven't found anywhere a system of privatized airports that works well from an airline point of view," Alexandre de Juniac, director-general and chief executive officer of the International Air Transport Association (IATA) said on Wednesday.

Mr. de Juniac made his comments in an interview in Toronto as the organization issued a report urging governments to make sure airports operate cost-effectively.

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"Usually, the privatization processes are not triggered by any aviation interests, they are driven by budgetary constraints [although] that's not specific to Canada," he said.

The IATA report said 16 per cent of airports in Europe were in private hands last year, compared with 9 per cent in 2010.

Between 2006 and 2016, the all-in costs of airline tickets held relatively flat in Europe, while airport charges and taxes doubled, the report said.

Mr. de Juniac said IATA identifies the five best airports in the world as being in public hands, including those in Inchon, South Korea; Singapore; Amsterdam; Dubai; and Hong Kong.

"When you question the customers, which are the airlines, they are furious about privatization of the airports, especially the main hubs – that's everywhere," Mr. de Juniac said. "They find that they don't get the value for [their] money."

The federal government is considering privatizing the eight largest airports in Canada, including Toronto Pearson International

Hillary Marshall, a spokeswoman for the Greater Toronto Airports Authority, which operates Pearson, said the airport has reduced aeronautical fees charged to airlines between 25 per cent and 30 per cent since 2006 and invested $850-million in the facility between 2010 and 2016 to support growth in passenger demand.

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"Anything that makes airports more expensive is a bad thing," Air Canada president Calin Rovinescu said in a separate interview in Toronto on Tuesday.

If an investor is guaranteed an 8-per-cent return on the capital invested in an airport, where does the money come from to provide that return, Mr. Rovinescu asked.

An airport can cut services to generate that 8-per-cent return, reduce salaries and benefits by 8-per-cent or perhaps become 8-per-cent more efficient, he noted.

"In many places in the world where you've seen airport privatizations, the examples have the costs going up," he said.

Mr. de Juniac said the growth of infrastructure such as airports and the international air traffic control systems are key issues for airlines because growth in passengers of 5 per cent annually means that traffic will double between now and 2035.

Decisions on the investments needed to handle that growth to eight billion passengers annually need to be made now, he said.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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