Shining a light on airport fees
Ottawa gets to keep most of the money
John Gibson says it was a typically Canadian compromise: somewhere between full government ownership and full privatization.
It was 20 years ago and the then-Liberal federal government was facing a huge deficit. It wanted to cut expenditures and get a little income out of its airports.
Thus was born the National Airports System (NAS), which Ottawa turned over, one by one, to not-for-profit local authorities that would reinvest any profits into operating these airports.
Regina business folklore holds that when Reginans failed to move as quickly as Ottawa liked, federal authorities let it be known that if no authority was set up, then the Regina airport would be handed over to a contractor. And if that meant the airport was closed evenings and weekends, so be it.
But that never happened — because the Regina Airport Author-ity came together to take operation of the airport in 1999. And when the authority held its annual general meeting late last month, one of the guests was Gibson, the chair of the industry association called the Canadian Airports Council.
Gibson says the National Airports System “for the most part, it works fairly well.”
It sees NAS airports generate revenue through fees and charges that “pretty well support the capital investment” that’s needed to keep them up-to-date and running.
The system isn’t perfect, from airports’ perspectives. Gibson says these 26 airports “basically overpay for the infrastructure that we’re on.” That is, they have to make lease payments to Ottawa that, for the whole system, total about $300 million each year “and that goes right in the federal government’s general revenue,” says Gibson, who’s also CEO of the airport authority in Prince George, B.C.
In return, airports get only $38 million back — but it’s for smaller airports that don’t have enough passengers to generate much money in fees on their own. An airport like Regina, with just over one million passengers each year, “is kind of in the ‘sweet spot’ where it doesn’t have the exaggerated capitalization like Calgary and it has enough traffic going through the airport that pretty well pays for the infrastructure,” Gibson said.
That’s not to say the largest of Canadian airports resent sharing the wealth with very small ones. Gibson says the former are very aware that viable smaller airports brings more passengers into the system and ultimately benefit all airports.
The council also wants better use of the money passengers pay to Ottawa (through airport authorities) for the Canadian Air Transport Security Authority — the folks who employ the screeners at airports like Regina’s. The way the system works, an air travellers’ security charge is assessed on each ticket. Fine — but as Gibson notes, the amount of money that comes off those tickets “continues to increase, and, at the same time, the federal government is putting less money into pre-board screening,” with consequent delays for passengers.
He says the Canadian Airports Council would also like to see a “rethink” of the system so the rents they pay to Ottawa could be capped.
More challenging is leakage — airportspeak for the five million passengers who cross the border to American airports.
The big attraction is lower fares, thanks to American policies that heavily subsidize airports. Gibson notes a recent Canadian Senate report said the U.S. views airports as “sparkplugs” of the economy, whereas Canada’s government sees them as “tollbooths” that generate cash, on the backs of passengers (who pay fees) and airports themselves (which pay rent to Ottawa).
“We’ll pay our way; we’re reasonable that way because we’re Canadian,” Gibson said. “But on the other hand, it will stifle the tourism market — and it will stifle trade.”