What Carney’s pitch for private investment could mean for major Canadian
Prime Minister Mark Carney said Tuesday he wants private investors to take over operations at Canada’s four largest airports, in Toronto, Montreal, Calgary and Vancouver.
Speaking at a government-led investment summit in Toronto, he said the policy change — which would maintain the federal government’s ownership of airport land and assets — would allow Ottawa to shift spending on major airports’ operating costs toward smaller regional airports. That, he said, could reduce traveller costs at those destinations.
Under the prime minister’s proposed model, investors could manage airports for set lease periods, while regulation and oversight would remain with Transport Canada.
Here’s what you need to know about the proposal.
How do airports operate now?
Under Canada’s current airport operational structure, private, not-for-profit airport authorities lease airports from the federal government and run the facilities themselves, overseeing everything from runway maintenance and baggage handling to terminal building maintenance.
Airport authorities are financially independent and are responsible for setting their own fees and recovering their operating costs.
How could Carney’s plan work?
Karen Hennessey, a partner in the business law group in Gowling WLG’s Ottawa office, said Carney’s plan likely would require legislative changes.
Hennessey said what the prime minister is proposing is a concession agreement, something similar to a lease. She said the government’s expectations on service levels, performance, public safety, passenger costs and employee management would have to form part of that agreement.
“This isn’t going to be the situation where the concessionaire is allowed to just take over and run it the way they would run any other business,” she said.
The concession holder, in turn, would want clarity on their investment commitments and the regulatory environment, Hennessey said.
“Like any commercial arrangement, there’s going to be some balancing to be done to meet those competing interests,” she said.
She said such deals could materialize within six to nine months if both sides are motivated. They could also take much longer to negotiate.
“Getting the structure right, I think, is more important than moving quickly,” she said. “So I don’t think we’re going to see this happening in the short term.”
Are private airports common?
Privately operated airports are rare in North America but not everywhere around the world.
A study published in the Journal of Air Traffic Management found 51 per cent of the top 100 busiest airports in 2018 had some type of private sector participation. Europe had the most private involvement at 43 per cent, followed by Asia and the Pacific region at 26 per cent.
Carney told the investment summit Tuesday that Canadian pension plans are already invested in airports abroad and he…
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