LILLEY: Decision to open Canadian airports to private investment should be welcomed
· Toronto Sun
Bring it on. That should be the reaction to Prime Minister Mark Carney opening up Canada’s four busiest airports to private capital.
Carney made the announcement on Tuesday morning at his investment summit in Toronto .
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“I’m announcing today that we will seek private investment through long-term concessions to operate Canada’s four largest airports,” Carney told the crowd.
The airports that are part of Carney’s plan are Toronto Pearson International Airport, Montreal-Pierre Elliott Trudeau International Airport, Calgary International Airport and Vancouver International Airport.
This isn’t selling off the airports. This isn’t having a fire sale where the land and buildings go to the highest bidder. This is partnering with the private sector to improve the flying experience for passengers.
“The government of Canada will retain ownership of the underlying land and assets, but we will unlock their true value by bringing in new capital and expertise to their operations and their growth,” he said.
Common business model in Europe
That’s a concession model. A long-term operating lease to a private consortium, usually one with airport experience. The goal is greater efficiency, lower costs and a better passenger experience.
It’s a common business model in Europe, as is outright privatization. Some of the biggest airports in Europe, including Heathrow in London, Charles de Gaulle in Paris and Rome’s Leonardo da Vinci–Fiumicino airport, operate under private ownership or concession models.
The Canada Pension Plan is a part owner of Groupe ADP , which operates Charles de Gaulle. PSP Investments, which looks after pensions for federal civil servants, RCMP officers and the military, fully owns AviAlliance , which operates airports in Athens, Dusseldorf, Germany, Glasgow, Scotland, and Southampton, England, among others.
The Ontario Teachers’ Pension Plan and OMERS have held similar stakes elsewhere.
“Our pension funds operate these concessions around the world,” Carney said. “They have that expertise and we’re bringing that expertise back home.”
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Critics line up to pan plan
Carney’s move won’t happen without criticism, though he got a tentative yes from Conservative Leader Pierre Poilievre .
“We want to know the details of this plan and want to see how it’s going to save money for Canadians. Because if it doesn’t save money, then why do it?” Poilievre said.
“We want to make sure that it doesn’t end up being sweetheart deals for corporate power brokers and Liberal insiders at the expense of hardworking Canadians.”
Carney is facing outrage from other opposition parties, unions and a good slice of the public. A poll taken earlier this year by Nanos Research showed that 53% of Canadians opposed the government’s plans for airports.
“Privatizing airports is a terrible deal for travellers, workers and the public purse,” NDP Leader Avi Lewis said.
The Bloc Quebecois put out a statement saying the move was “high risk” and would lead to higher ticket prices.
Lana Payne, the head of Unifor, also came out against the plan.
“We have seen over and over again how the sell off of public infrastructure leaves us more vulnerable economically,” said Payne, who leads Canada’s largest private-sector union.
The political test
So now the question is whether Carney can withstand this type of criticism.
Earlier this year, he backed Ontario Premier Doug Ford’s plan to expand Billy Bishop Airport. That is until organized protests erupted. In the face of opposition, Carney melted like a chocolate soldier.
He can’t afford to do that on this file after unveiling the plan to a room full of international investors he hopes to lure to Canada.
Earlier this year, airline executive Duncan Dee, a former Air Canada chief operating officer who is now helping revive U.S.-based Spirit Airlines, argued that Canadians shouldn’t fear this move or higher prices.
“We already pay astronomically high fares and the current airports model is part of the reason for that,” Dee said.
Dee is critical of the current setup, where airports are run by supposed not-for-profit airport authorities that he said act like private companies without the fiscal discipline private companies require.
This move by Carney is a good one. It is the right one. The real risk isn’t trying something new. The real risk is sticking with a system that already isn’t working.