REGINA, Sask. — The recently announced plans by the federal Liberal government to change to a for-profit model for Canada’s major airports are something that has Regina-Wascana MP Michael Kram concerned.
Last week at the Canada Investment Summit, Prime Minister Mark Carney indicated plans for the four major Canadian airports — Toronto, Montreal, Calgary and Vancouver — to be opened up to private investors. Under this model, the federal government would keep ownership of the airports’ land and assets, but operations would switch from a local non-profit structure to a for-profit model.
“I have to say I do find that concerning, because I would like to know what exactly will be the costs passed on to air travellers if airports change to a for-profit model,” Kram said.
“The new owners are not going to be operating these airports out of the generosity of their hearts. They will expect a return on their investments. And so far the federal government has been tight-lipped about what costs will be passed on to air travellers and how much more air travellers will have to pay. So I would certainly like to see that transparency before any of this moves forward.”
The Regina International Airport currently operates as a non-profit under a local authority but so far is not included in the plan. But Kram worries the federal government might move to open up smaller airports like Regina to a for-profit model as well.
“I would also be concerned if this privatization plan were expanded to include Regina's airport, because I would not want to see a loss of local control. I think it's always best to have local decision-making staying here in Regina instead of having the airport managed from Bay Street or Wall Street or anywhere else.”
Even if this plan doesn’t include Regina right now, Kram pointed to costs that could be passed on to connecting passengers going through the major airport hubs.
“One has to remember that when air travellers fly out of Regina, about two-thirds of those flights go to Vancouver, Calgary, Toronto, or Montreal,” said Kram. “So if there are going to be new costs passed on to air travellers in those four centres, it will be borne by anyone who flies in or out of there, and that includes members of Regina as well. So the entire air travel system is very interconnected, and if costs are added to one point, they will inevitably be passed on to everybody.”
The costs would be wide-ranging, Kram believes.
“I think the airports would be inclined to increase their landing fees on the airlines, and those costs would be passed on to the travelling public. You would see increases in rents for the gift shops and the restaurants that operate in the airports, and those increased rents will be passed on to consumers in the form of higher prices.
“There's parking, there's everything else that has a source of revenue at the airports. So I am concerned that we would see these costs passed on to air travellers, and I would like to see the federal government put forward a transparent plan before moving forward.”
Kram also said he worries about how tight-lipped the prime minister has been about how much money from private investors is actually going to remain in the aviation system. The indication from Kram is that there is still a lot up in the air.
“I do find it troubling how much hoopla and how much publicity they have on these big announcements, but they have practically zero details to follow up with them.
“And so they said that they would use this money to reinvest in air travel and other things, but other things could mean practically everything. So it would be nice if the federal government had a little bit more transparency in some of these announcements.”
As for what the Conservatives plan to do on the issue in Parliament, he pointed to his colleague Dan Albas asking questions in Question Period about what the costs would be and when they might get answers. But Kram said the Liberals “haven't provided us any details,” and that they are going to have to wait for the minister to actually table his plan.
Kram said it is “frustrating when they throw these ideas out there and they get people wound up, but they don't really have any details to follow up with. And that makes it more difficult for people to plan. And certainly an unnecessary element of uncertainty in the marketplace is never a good thing.”
Kram also said it was “very frustrating” for Canadian air travellers, who he notes already pay some of the highest airfares in the world.
“And so the prospect of adding new costs into the system to be passed on to consumers and air travellers is never a good thing because Canadians pay too much as it is.”
Regina airport takes wait-and-see approach
In speaking to SaskToday, James Bogusz, CEO of Regina Airport Authority, said there were a lot of questions that still need to be answered about the federal government’s plan.
In particular, he pointed to concerns about “overall cost escalation.” He pointed to some industry groups that have come out in the last couple of weeks and reminded the government that there have been cases in other countries where “you can see direct examples where after the airports effectively went to a for-profit model, the costs went up because shareholders expect a return.”
Bogusz said it was “very early days,” and said he wanted to “better understand it before I sort of render an opinion.”
But Bogusz said he believes in the non-profit model, which is currently in place at Regina’s airport. He said 100 per cent of the fees from parking or from concessions go right back into the Regina airport for improvements.
“So if you buy a Tim Hortons sandwich, a small amount of that comes to the airport authority. This goes right back into your local community's airport, not to a third party.”
“I really feel the current model has been very effective for Canadian airports,” said Bogusz, but he added he is open to seeing what the government has in mind.
