In the 1990s, the federal government privatized Canada's major airports, creating airport authorities that were mandated to operate as not-for-profit self-sustaining businesses benefiting their local communities through economic development, tourism and investment.
Since then, airport authorities have invested almost $20-billion in our national airports. Canada is now recognized as having the best aviation infrastructure and most efficiently run airports in the world and winning awards in design, innovation, safety and customer service. And, under the current model, we do it without government funding. In fact, our airports contribute more than $1-billion a year in rent and other fees to the government.
The federal government is now actively considering the idea of selling Canada's airports to private investors interested in turning airports into for-profit enterprises in the service of their business interests.
The experience of other jurisdictions, notably Britain and Australia, tells us that there are serious consequences to this approach. Australia sold its airports in the 1990s to private consortiums. The net result? Despite initial promises of large cheques for government, the airports did not deliver the hoped-for tax revenues, and passenger fees increased – in some cases doubling.
We can anticipate Canada will experience many of the same issues.
First, the cost to the consumer of air travel will increase. The private interests that favour the for-profit model have said they would increase revenues by, for example, "selling more lattes" to travellers.
In reality, among the limited ways that private-sector airports could increase revenues is by increasing the cost of travel, including related costs such as parking, or airport improvement fees. If the cost of flying out of Canadian airports increases, many travellers will choose instead to fly out of U.S. airports located just across the border. The lower passenger volumes would then force private, for-profit airports to increase costs even further, and Canada loses out on the economic activity that would have been generated by those passengers. Similarly, the costs to airlines would also increase, making Canada less competitive in the global market.
Second, the passenger experience may suffer as for-profit owners seek new ways of reducing their costs. At many airports, that could mean reducing things such as cleaning and service staff resources and eliminating services such as complimentary WiFi.
Third, Canadian airports are well served by non-political representatives from our local communities who sit on our boards. Moving to a private shareholder model will eliminate local representatives who ensure that local interests are served. This includes ensuring economic benefits from tourism and investment.
Fourth, Canadian airports carry a debt of $13.3-billion. Before the airports can be sold to private interests, that debt will have to be factored into the sale price of the assets. In Australia, the government absorbed the airports' debt in an effort to make the investments more attractive to potential bidders, but at a cost to passengers and taxpayers.
While the possibility of a one-time, short-term cash injection appeals to the federal government, the long-term result is not in the best interest of Canadians because of the increased costs to passengers and the decrease in Canadian competitiveness.
None of this is to suggest there isn't room for improvement in the current airport model. In fact, the Canada Transportation Act Review has made a number of important recommendations that we embrace.
We look forward to working with federal authorities and we remain open to change and improvement, as long as the changes are in the best interest of our passengers, our partners and the communities we serve.
Mark Laroche is president and chief executive officer of the Ottawa International Airport Authority; Craig Richmond is president and chief executive officer of the Vancouver Airport Authority.