Privatize Canada's Airports
, Mary-Jane Bennett, Winnipeg Free Press
VANCOUVER -- If airport performance were an Olympic event, Heathrow Airport would win gold in all categories: for its ability to attract development capital, to achieve financial self-sufficiency, to maintain customer satisfaction, and to increase traffic to become one of Europe's busiest hubs.
Canada, on the other hand, wouldn't even come close to a bronze.
In 1992, Canada shifted control of the country's airports from the federal government to a series of not-for-profit corporations in an effort to cut costs. At that time, Canada had one of the rich world's highest annual budget deficits, and the federal government was seeking to limit the staggering amount it was paying in transportation subsidies.
Unfortunately, the high, and erratic, leasehold rents it charged the non-profit corporations have resulted in competitive turbulence for Canada's airports ever since.
Despite Canada's geographic advantage for European and Asian routings, its airports have been unable to capture that traffic. Airports in the United States have taken a competitive lead with policy that reflects the value of airports in attracting global markets.
On the other hand, Canada sees airports primarily as reliable sources of government revenue.
To meet their high rent payments, Canadian airports have had to increase their airline landing fees; by 2005, Canada had the highest landing fees in the world. For example, a 747 landing in Atlanta Airport paid $300 in landing fees while, in Toronto, it was hit with fees topping $12,000. Is it any surprise that many airlines chose to use American airports?
In 2005, Ottawa recognized that high rents were scaring off access to foreign passengers and cargo, so reduced rents by 60 per cent. But recovery from the initial traffic loss has been slow. A new model is required to increase traffic.
If you think Canada's uncompetitive airports only have an impact on airlines, think again. The reduced airport traffic has led to higher unemployment rates, and has affected just-in-time manufacturing, economies of scale, tourism and market expansion across the country. The high fees have also seriously harmed the Canadian cargo industry.
But that's not all.
In order to pay high landing fees, airlines have had to increase ticket prices. The result? With Internet booking increasing consumer options, U.S. airports have become an attractive alternative for Canadian travellers.
To take advantage of that opportunity, U. …