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Trudeau government may privatize Canada’s airports

Residents protesting against the expansion of the OTPP-owned Bristol Airport.

Is the proposed “asset recycling” of Canada’s airports a climate crime in the making?

Metro News reports, “The federal government is looking at whether Canada’s major airports should be sold off to private investors as a way to raise tens of billions of dollars in new cash to fund other infrastructure projects. Transport Canada bureaucrats are reviewing the ownership structure of Canadian airports, now operated by not-for-profit airport authorities, to assess the possibilities of transferring them to for-profit enterprises — and collect a windfall in the process.”

The article notes, “Under the National Airports Policy in the mid-1990s, Ottawa transferred management of 26 major airports to local not-for-profit airport authorities. The authorities are on the hook for the costs of day-to-day operations and capital infrastructure. They raise funds through fees charged to passengers and airlines as well as revenue from commercial leases. Any excess revenue is reinvested in the airport. The authorities also pay annual rent to the federal government [some $5 billion since 1992 and at least another $12 billion more over the next 40 years].”

But, “A review, led by former federal cabinet minister David Emerson, said [that while] the airport authority model has worked so far … the not-for-profit authority model is ‘antiquated’ and puts the cost competitiveness at risk. The report lays out a detailed recommendation to further privatize larger airports, urging Ottawa to move within three years to a share-capital structure with equity financing from institutional investors, accompanied by legislation to ‘enshrine the economic development mandate of airports and to protect commercial and national interests’.”

In terms of next steps, the article adds, “Asked about the review now underway, a Transport Canada spokesperson would only say that Transport Minister Marc Garneau is ‘leading an engagement process’ to hear feedback on the review’s recommendations, including the ‘competitiveness of airports and the Canadian air sector’. However, details of those consultations are still being worked out, the spokesperson said. But two sources told Torstar that bureaucrats are under the gun to complete their review of options by August. There is speculation that their conclusions could help shape a potential mini-budget that could be rolled out this fall.”

The Council of Canadians has spoken against “asset recycling” in these blogs and in this Vancouver Coop Radio interview. In short, “asset recycling” is a form of privatization. It works this way – a government sells or leases existing public infrastructure to an investor and uses the revenue from that sale or lease to fund new infrastructure.

The Globe and Mail has previously reported, “Mature Canadian infrastructure is still mostly owned by governments and putting a ‘For Sale’ sign on it would offer a tantalizing opportunity for large players such as the massive Ontario Teachers’ Pension Plan [OTPP]. Andrew Claerhout, who leads the pension plan’s infrastructure group, [says his organization] is on the lookout for ‘relatively large’ investment opportunities — from the ‘hundreds of millions to the billions’.

The OTPP believes it could make returns on its investments into what was once public infrastructure by by “luring” more airlines to airport runways and “selling more lattes and duty-free goods” at airports.

The OTPP already owns 48.25 per cent of the Birmingham Airport and 100 per cent of the Bristol Airport in the United Kingdom, as well as holdings in the Brussels Airport and the Copenhagen Airport. As we noted in this December 2014 blog, generating an even greater profit from an airport can be controversial because it can involve increased carbon emissions, removing restrictions on the weight of aircraft on runways, increased noise levels, more roads and encroachment on the land.

Please share this blog with your Member of Parliament and express any concerns you may have on this issue with them. You can also email this blog to Transport Minister Marc Garneau at marc.garneau@parl.gc.ca or tweet him at @marcgarneau