Ottawa says privatizing Canadian airports could improve them and possibly even lower the cost of air travel, but not everyone is on board with selling off national assets.
Speaking to the media on 29APR, Canadian Transport Minister Steven MacKinnon was asked about reports, including a story in Open Jaw, that said Prime Minister Mark Carney’s government is considering some level of private investment for Canadian airports.
The minister said Ottawa is in the early stages of examining the issue, but said it could benefit Canadian consumers.
“The ultimate goal here is to improve passenger experience and to keep air travel affordable for Canadians,” MacKinnon said. “Again...we’re in the early stages of working with partners and assessing what our options might be.”
In an economic statement issued earlier this week, the federal government said Ottawa is looking at ways to “unlock the full value of airports in support of investments in Canada’s long-term growth, including through alternative models of ownership.”
The Carney government has indicated it wants to “reform” the airport system to lower air passenger costs and “better position airports to attract private investment,” said the Toronto Star. However, very few details have been provided.
Canada’s major airports are already run by private, not-for-profit airport authorities on federal land leases, and Ottawa collects airport rent of up to 12% of gross airport revenues. The government had previously stated it is looking at lease extensions, more economic development on airport lands, changes to ground lease rent formulas, and possible airport privatization, with affordability and competitiveness among the stated objectives.
If Ottawa cuts or changes airport ground rent, airports could reduce pressure on landing fees, terminal charges, or airport improvement fees. That would lower airline operating costs, but only lowers fares if airlines pass savings through in competitive markets.
MacKinnon suggested he has already been in talks with NAV Canada, which oversees air traffic control in civil airspace, as well as the Canadian Air Transport Security Authority, which oversees aviation security in Canada, about how to proceed.
“We’re in the early stages of a process with airport authorities and other partners to determine the best way forward,” the minister said. “This is something that we’ve been working on for some time.”
The Globe and Mail said the most logical buyers for government-owned assets would be institutional investors, including Canada’s largest pension funds.
“The chief executives of some of those funds have advocated for years that Ottawa should sell off assets such as airports, which are sometimes already privately owned in other countries,” the paper said.
Not everyone is so sure privatization will help Canadians with travel costs.
The Canadian Labour Congress has raised significant concerns about the privatization of Canadian airports. In a statement following the spring economic update, it said that public infrastructure must remain in public hands.
"Privatization risks higher costs, weaker accountability and puts good union jobs at risk.”
