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An Airbus B737/Q WestJet flight from Toronto lands at Vancouver International Airport in September, 2013.John Lehmann/The Globe and Mail

Selling off Canada's largest airports is an alluring idea.

They're worth billions of dollars and there is considerable investor interest in acquiring them.

Airports around the world typically sell for 10 to 20 times earnings (before interest, taxes, depreciation and amortization). A back-of-the-envelope calculation suggests the federal government could pocket as much as $33-billion if it sold the country's eight largest airports outright – money it could plow back into other badly needed infrastructure projects. Toronto's Pearson airport, Canada's busiest, could fetch up to $13-billion.

On the other side of the equation are the country's largest pension funds, including the Canada Pension Plan Investment Board, the Caisse de dépôt et placement du Québec and the Ontario Teachers' Pension Plan. They are desperate to find safe and attractive investments in a low-interest rate world. They have fallen in love with revenue-generating infrastructure, such as airports, but complain that there is too little available to buy in Canada.

Privatization seems like a perfect match of buyer and seller.

It could all be a mirage. It is not at all clear how selling airports would address the fundamental problem – namely, high fees that are driving away Canadian travellers.

The Calgary Airport Authority, which like most of Canada's airports, opposes the idea, calls privatization "a solution in search of a problem that does not exist."

A massive review this year of the Canada Transportation Act, headed by former Conservative cabinet minister David Emerson, says the cost dilemma is largely of the government's own making.

Mr. Emerson nonetheless reaches the conclusion that Ottawa should scrap its "antiquated" model and convert airports to profit-making entities, financed by equity from large institutional investors.

Ottawa is clearly serious. It recently hired Credit Suisse AG to explore various privatization options for the eight largest airports.

In the 1990s, the federal government "privatized" the 22 busiest airports in the country by transferring operations and management to independent local authorities. They were never truly sold. Ottawa retains ownership of the land and structures under operating leases, lasting up to 60 years. It also collects rent and fees to cover security costs.

Transport Canada has essentially been using these airports as cash cows to fund other functions, including air safety and running 18 money-losing remote airports it still operates. Ottawa collected roughly $1-billion a year from the airports in 2013-14 ($294-million in rent and $662-million in security charges), but spent less than $600-million on airport security and building improvements, according to the Emerson report.

Security fees have exceeded the government's spending on security by an average of 18 per cent a year since 2010-11.

Ottawa has also collected more in rent since 1990s – $5-billion – than the original value of the assets transferred to local authorities.

To cover costs, not-for-profit airport authorities impose fees on travellers and airlines and collect revenue from restaurants, shops and parking. They have also accumulated more than $13-billion in debts, largely to fund new and renovated terminals.

The result is higher ticket prices and reduced demand for air travel. Transport Canada's own estimates suggest these added costs mean 2.5 million fewer passengers fly every year. Some simply choose not to travel. Others find other ways to get where they are going, including cheaper flights from nearby U.S. airports.

Selling the airports would eliminate the problem of excessive rents. It would also deprive Ottawa of a steady stream of income.

But privatization would not necessarily relieve the problem of high costs. Airport buyers would have to cover the financing cost of their purchases and generate a profit.

And then there is the problem of the airports' existing debt burden. In Australia – often cited as a model for privatizing airports – the government paid off the loans, essentially foisting the burden on taxpayers.

And the privatized airports would still face roughly $600-million a year in federal security fees.

The newly privatized airports would have a strong incentive to maximize profits, either by raising more revenue from travellers or cutting back on things people take for granted, such a free Wi-Fi and other amenities. In a commentary this week in The Globe and Mail, the chief executives of the Ottawa and Vancouver airport authorities suggested the new owners might well do both of these things.

The worst-case scenario for Canadian travellers would be for Ottawa to cash a big cheque without resolving the problem of high-cost airports.