Prime Minister Justin Trudeau’s federal government is backing away from its plans to privatize Canada’s major airports to raise funds needed to construct new public transit and social housing infrastructure.
Trudeau told Bloomberg News yesterday that he is not interested in selling off the major airports in Vancouver, Calgary, Toronto, Ottawa, and Montreal and is instead exploring “fresh capital to build new things.” Airports in Canada are currently community operated on a non-profit basis, and operators pay rent to the federal government for the land used by its facilities.
A study by the Vancouver Airport Authority estimated that selling the country’s eight largest airports could raise as much as $40 billion, with Vancouver International Airport (YVR) alone worth up to $6.2 billion.
YVR partnered with the airports in Calgary and Ottawa to lobby the federal government against turning airports into a for-profit business. With new owners that need to recover their investment and profit, travellers could be forced to pay more and it would be detrimental to the competitiveness of Canada’s travel and aviation sectors.
Only the Greater Toronto Airports Authority was receptive to the idea of privatization, as private investors could potentially help fund its plans to build a multi-billion dollar transit hub at Toronto Pearson International Airport.
“Taking away the major airports back and selling it to the highest bidder… we are not in favour of it because the price of everything would go up,” Craig Richmond, CEO and President of the Vancouver Airport Authority, told the Greater Vancouver Board of Trade earlier this year.
“If we have a private operator, two things will happen. To make the return, the price will go up and it will no longer be a community-run airport. It will be run out of New York, London, and Toronto.”
Currently, all revenue raised by Vancouver International Airport is reinvested into day-to-day airport operations and capital improvement projects, except for the rent paid to the federal government and taxes to the local municipal government.
The three airport authorities against privatization issued the following joint statement today in response to Trudeau’s comments:
Canadian airports operate under a not-for-profit governance model giving us the flexibility to best meet the needs of the communities we serve while investing in customer service and airport infrastructure.
As such, Canada has some of the most efficient, modern and competitive airports in the world. We do so while receiving no government funding and by paying the government millions in rent each year.
A sell off of Canadian airports to private investors would have resulted in a one-time cash grab by the federal government and an increase in costs for passengers and aviation partners.