Prime Minister Mark Carney expressed on Tuesday his desire for private investors to assume control of operations at the four major airports in Canada, located in Toronto, Montreal, Calgary, and Vancouver. During a government-led investment summit in Toronto, he outlined a policy shift that would allow the federal government to retain ownership of airport land and assets while redirecting spending from major airport operation costs towards smaller regional airports. This move aims to potentially lower travel expenses at these regional destinations.
Under the proposed model by the prime minister, investors could be responsible for managing airports for specific lease periods, while regulatory oversight would remain under Transport Canada.
The current operational structure of Canadian airports involves private, not-for-profit airport authorities leasing airports from the federal government and independently managing various aspects such as runway maintenance, baggage handling, and terminal upkeep. These airport authorities determine their own fees to cover operating costs.
Karen Hennessey, a business law partner at Gowling WLG’s Ottawa office, indicated that Carney’s plan would likely necessitate legislative adjustments. She described the proposal as a concession agreement, akin to a lease, where the government’s expectations regarding service standards, safety, costs, and management would be integral to the agreement.
Privately operated airports are uncommon in North America but more prevalent in other parts of the world. A study in the Journal of Air Traffic Management revealed that over half of the top 100 busiest airports in 2018 globally had private sector involvement, with Europe leading at 43%, followed by Asia and the Pacific region at 26%.
Carney emphasized at the summit that Canadian pension plans are already invested in foreign airports, and he aims to leverage that expertise domestically. However, concerns have been raised about potential price hikes for travelers when airports transition to privatized entities.
The stance on airport privatization varies among stakeholders. The Canadian Airports Council expressed openness to investment discussions aligning with growth and affordability of air travel, while opposition parties like the NDP and Bloc Québécois have voiced strong objections to the plan, citing potential increased costs for travelers.
Previous attempts to privatize Canadian airports have faced mixed feedback. A review in 2016 proposed selling long-term leases for major airports to raise funds, but the government ultimately decided against selling off Canadian airports in 2018 following varied responses to the idea.
Overall, Carney’s proposal seeks to introduce private investment into airport operations, aiming to enhance efficiency and potentially reduce costs for travelers.