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Behind the numbers: why airports matter

Canada’s airports have been one of this country’s great economic and policy success stories.  Before 1990, airports were a blot of red-ink on the federal balance sheet, costing Canadian taxpayers $135 million a year (a quarter of a billion dollars in today’s currency). Today, not only have airports contributed more than $5.6 billion in rent to federal coffers since 1992, and $6.9 billion in taxes annually, they have also invested more than $22 billion in new infrastructure, without costing taxpayers.

The Canadian Airports Council’s (CAC) report on airports’ economic impact sheds new light on the sector’s performance, showing a clear and continuous upward trend in passenger growth, employment, contributions to GDP, economic outputs and more.

The numbers are impressive: in 2016, Canada’s airports handled over 140 million passengers, up an incredible 112 per cent from 1988, directly contributing $48 billion in economic output, $19 billion in GDP, 194,000 jobs and $13 billion in wages.  These are big amounts – almost too big to get your head around. But if you peel off some of the zeros, a very compelling story emerges.

Averaged out, a million passengers move through Canada’s airports roughly every two and a half days. That means that for every 63 hours, airports directly create 1,400 full time jobs, and generate $137 million in GDP and $50 million in taxes.

Here’s another way to look at it: For every 1,000 aircraft take-offs and landings at Canada’s airports, about 30 jobs are required, generating $3 million in GDP and $1 million in taxes for all levels of government. With 140 million movements a year, it adds up quickly.

And that’s only the direct impacts — when indirect and induced data are included, the total impacts jump to $79 billion in economic output, $35 billion in GDP, 355,000 jobs, and $22 billion in wages.

But numbers don’t tell the whole story. By enabling the movement of people and goods to destinations in Canada and around the world, airports have an important role to facilitate economic and social opportunity – sometimes in unexpected ways.

Everyone knows that the Toronto Pearson International Airport is an international hub that connects Canadians to the world. But people may not realize how that connectivity embraces the rest of Canada. For example, flights from and to Toronto-Pearson allows entrepreneurs in Prince Edward Island to reach Asian markets, to promote not only the ever-popular Anne of Green Gables and lucrative high-end tourism, but also the island’s 1000-person strong aerospace sector. Hubbing through Toronto also gives 500 students from India (the fastest growing market in Canada for international students) the opportunity to get a quality education in Canada.

Along the same lines, many people may not know that the Ottawa Macdonald-Cartier International Airport is home base for First Air, facilitating the movement of more than 19.4 million kilos of cargo freight to Canada’s Arctic communities, including food, mail, medical supplies and other critical goods.

Airports’ economic contributions are impressive, but even more impressive is their importance in supporting and enhancing opportunities for all Canadians – and Canadian businesses.

An excellent example is Avigilon Corporation, a Vancouver-based high-tech company with an international clientele. James Henderson, president and chief executive officer, explained the airport’s central role: “We ship a massive amount of product throughout the globe: tens of thousands of units moving in and out every month. And as a company we need to be sure that as we continue to scale (up), that we are close to the resources we need such as the Vancouver International Airport to help support that scale.”

Whether you look at airports’ direct contributions to the economy, or look beyond to their role as an economic catalyst, there is no question that Canada’s airports are an engine that drives jobs, wealth and opportunity for all.  Canada’s airport system should be seen as a source of pride and opportunity for all Canadians. Airports benefit everyone, even those who may never board a plane.

 

A Consultative Approach for Capital Investment at Canada’s Airports

YYC Calgary International Airport

Last fall, the YYC Calgary International Airport launched an industry-leading facility that recycles glycol.

The facility transforms used de-icing fluid into a reusable product, providing both environmental and economic benefits.

While this is a great environmental initiative, one of the key things to take from this, is the airport’s close collaboration with the airlines. In fact, the de-icing facility is owned by Calgary Glycol Facility Corporation, a consortium of airlines, making it the first-airline owned facility of this kind in Canada.

“This is a great example of how the airline community at YYC collaborated to invest in infrastructure and an innovative Canadian-based technology to ensure its operations are environmentally sustainable,” said Geoffrey Tauvette, director of environment and fuel at WestJet, in a news release.

This is just one example of the work airports do to ensure business decisions reflect the needs of stakeholders, specifically airlines. Before decisions are made, airports conduct comprehensive and meaningful consultation and engagement initiatives through public meetings and events, one-on-one briefings, surveys, social media outreach as well as community and airline consultative committees. Airports often align their investments based on the changing needs of their stakeholders.

They refurbish runways, purchase ground power units to supply power to aircraft, install pre-conditioned units at gates to help airlines save money on fuel, and invest in initiatives to improve the flow of passengers.

Halifax Stanfield International Airport

For example, Halifax Stanfield International Airport is currently undertaking a Passenger Processing Terminal Expansion project to provide additional passenger screening capacity, additional retail concession space and additional gate seating capacity based on projected passenger growth.

The Montreal-Trudeau International Airport recently completed the expansion of the international jetty, and refurbished one of its runways. It worked in partnership with the Canada Border Services Agency last summer to develop a connections centre and added automated terminals and inspection lines to shorten lineups at the border.

At Toronto Pearson International Airport, it consults and seeks airline endorsement for all projects over $50 million. One recent example is the Terminal 3 Enhancement Program. The renovation of Terminal 3 resulted in improved capacity for passenger flow, introduced new and refreshed facilities and retail offerings to better meet the needs of airport users today and in the future.  In advance of projects of this magnitude, it engaged with our airline community through the Technical Sub-Committee of the Airline Consultative Committee. It is through this forum that Toronto Pearson seeks input and feedback on projects and programs and presents its annual capital program to the airline community.

Vancouver International Airport

The Vancouver International Airport’s 2037 master plan accommodates growth in passenger, aircraft and cargo volumes, and looks at how the needs of stakeholders and communities will be met in the future. While the master plan involves multi-year planning and consultations, the airport recently developed a more in-depth approach to consulting with airlines early and often in the process. The approach involves a number of steps.

Once there is a recast of a long-term capital plan, the airport presents a business plan to the airlines that includes costs, scope of work, construction period, airline payments, and a breakdown of revenues such as airport improvement fees, among other details.

Once airlines have been consulted, an agreement is sought by way of a majority in interest vote (66 per cent based on passenger volume). After about 30 per cent of the design is completed, the airport develops a report justifying the project, as well as a detailed costing and risk assessment.

Comparisons are made of the capital expenditure budget and the amount in the capital plan to ensure the project remains within the amounts contained in the long-term projections. This report is presented to the airlines for consultation and endorsement, at which point, another vote would happen.

Involving stakeholders early and often in the process is common for Canadian airports, and demonstrates the airport industry’s commitment to be transparent in its capital planning.

Canada’s airports will continue to work in harmony with local stakeholders to support the needs of travellers now and into the future.

Locally managed and community-based: Dispelling myths about airports

If you’re like most Canadians, you probably believe that your airport is managed by the federal or provincial government or even a profit-making business.  In fact, a recent poll by Nanos Research showed that only 10 per cent of Canadians know that Canada’s largest airports are operated by local airport authorities – people who work and live in your community.

Airports are community assets – literally.  Not only are they critical parts of Canada’s transportation network – a fact recognized by 98 percent of Canadians – they are also major contributors to local economies, facilitating commerce and directly injecting 194,000 jobs and $48 billion to Canada’s economy annually.

According to Nanos, most Canadians appreciate that airports have value beyond being a place to wait for flights.  But, the poll also reveals that there is room to improve our general understanding of airports, and by extension, enhance the relationship between airports and residents.

Does it matter? I think it does. For example, if you believe that your airport is run by government – a view shared by 51 per cent of Canadians – then you may also believe that it receives tax subsidies.

The truth is that Canadian airports receive no operational subsidies.  Federal  dollars are not used to run airports. In fact, airports are taxpayers themselves, remitting an estimated seven billion dollars to federal, provincial and municipal governments every year.

Beginning in 1992, the federal government decided to turn over airport management to local authorities, based on the idea that airports would be run most effectively by those who have the greatest stake in their success – the people who live and work in the area.

The government made the right call.  In 1990, airports were a red blot on Canada’s balance sheet, costing taxpayers $135 million a year – almost a quarter of a billion in today’s currency. Fast forward to 2018, airport authorities are not only taxpayers, but they are astute and prudent financial managers.  Any profits (excess of revenues over expenses) are reinvested into improving services to the travelling public or reducing rates and charges.  Canadian airports have injected more than $22 billion into capital projects and operational improvements in virtually every region of the country, increasing access, enhancing safety and efficiencies and improving the travel experience.

The fact that airports are important to Canada is not a secret.  The survey confirms that, for the most part, the vast majority of people – about 90 percent — understand that their airports contribute to their local economies.  But, while impressions of airports and their role remain positive, the intensity of positive impressions and impressions of importance have generally decreased over time.

This trend is unfortunate, but I can surmise why it’s happening: the poll also demonstrates that people think their overall travel experience has been getting worse, with concerns including the cost of travelling out of one’s area airport, followed by long wait times at security checkpoints, a lack of flight options, cancelled or delayed flights, long wait times at customs and, finally, aircraft noise. It is conceivable that these impressions could cast a shadow on people’s overall perceptions of airports.

Ironically, airports often have little or no direct control over many of these issues.  But, they have a role in addressing them.  Airports are at the centre of a complex machine with many moving parts and many divergent interests: airlines, security, customs, air traffic control, and of course, passengers.

They are in constant communication with their partners and clients, as well as with community-based groups to work together to attract new services and routes, find efficiencies and cost savings, and, at the same time, ensure that they are responsive and responsible members of the community.

An airport is not located in the centre of town, but it is certainly in the heart of the area’s economic and social well-being.  You may not think of your airport as a community asset in the same way as a hospital, park, library or hockey arena, but, given how much they impact your quality of life, perhaps it’s time to begin.

Working together: How regional airport networks can grow access and opportunity

Toronto Pearson International Airport

Growth is good – it’s something we all strive for. But what is the right strategy when on the horizon, your growth is starting to near your capacity? You bring together a group of airports to find solutions together.

That’s the idea behind the Southern Ontario Airport Network (SOAN), a network of the 11 most commercially significant airports between Kingston and Windsor.  Southern Ontario is not only Canada’s most populous region, it’s essential to Canada’s prosperity, accounting for over a third of the economy, almost 40 per cent of exports, and home to several Fortune 500 corporations, 15,000 high-tech companies and 28 universities and colleges.

As the fastest growing region in the county, Southern Ontario will continue to be an engine of Canada’s economy, but it will require long-term, high-quality air access into and out of the region. The growth in demand and diversity of air service needs requires that the region and stakeholders think differently about how to support these needs.

CAC’s president, Daniel-Robert Gooch explained that with international passenger travel expected to reach 7.2 billion annually by 2035 worldwide, many countries are looking to some form of airport network to manage capacity. However, he emphasized that the SOAN is taking its own “made-in-Canada” approach, respecting local communities’ needs and goals, and retaining each airport’s decision-making autonomy.

“The network is not prescriptive in any way” said Chris Wood, general manager of the Region of Waterloo International Airport.  “It simply allows everyone to plan on a regional basis, rather than trying to deal with problems in isolation.  At the end of the day, the SOAN accommodates the reality that passengers will still want to go where they want to go, and communities will need what they need.”

Region of Waterloo International Airport

But there is no doubt that a capacity milestone is looming. “Our forecast tells us that by 2043, aviation demand in this region will be around 110 million passengers,” said Howard Eng, president and chief executive officer of the Greater Toronto Airports Authority.  “When we look at the current capacity amongst airports in the region, we could be leaving millions of passengers ‘on the table’ if we don’t take action. Thankfully, we have a network of great airports that have come together to start brainstorming ways to capitalize on this incredible opportunity.”

And it’s these opportunities that keep all the airports engaged and active around the table.  The group, which includes Toronto Pearson International Airport, Billy Bishop Toronto City Airport, Hamilton John C. Munro International Airport, Kingston/Norman Rogers Airport, Lake Simcoe Regional Airport, London International Airport, Oshawa Executive Airport, Niagara District Airport, Peterborough Airport, Region of Waterloo International Airport, and Windsor International Airport, has already identified a number of ways that their communities, region and the country could prosper using a regional strategy.

The SOAN will allow member airports to plan on an unprecedented scale and continue to be strong economic facilitators for their local communities — whether it be tourism in the Niagara region, the high-tech sector in Waterloo or executive air services in Oshawa. The network also provides an opportunity to grow demand and raise awareness of the many airport choices passengers and businesses have to meet their air service needs.

With the region’s airports supporting more of the demand for air services — from passenger to corporate aviation flights, flight school and training to aircraft maintenance — resources at Canada’s largest airport could be freed up to support its evolution into North America’s next Mega Hub airport. This would provide the region and country with connectivity, similar to what is being offered by other major international airports around the world including London Heathrow, Dubai and Singapore.

The creation of a Canadian mega hub would be significant for the country, not only securing Canada’s place as a major nexus for global transportation, but as a way to build synergies for international business and trade opportunities. Every airport involved in the SOAN understands the long-term benefit for their own communities.

“The creation of the Southern Ontario Airport Network is an important step in the evolution of airports in our region,” said Mike Seabrook, president and chief executive officer of the Greater London International Airport Authority. “The London International Airport fully supports this initiative and believes it will allow Toronto Pearson to fulfill its destiny as Canada’s mega-hub airport while better utilizing the infrastructure of airports like London. Meeting the passenger demands of our market and improving their airport experience are at the root of this initiative.”

Outside of Southern Ontario, Canada’s airports cooperate in many ways, but no one is expecting the capacity challenges in the same way as southern Ontario any time soon.  But “soon” is a relative word.  Considering that we are seeing unprecedented demand growth in virtually every region, it is likely that other Canadian airports may eventually have to take a serious look at the benefits – and necessity – of developing their own regional network.

Your Friendly Neighbourhood Airport

If you asked the average person how their airport supports their community, they may talk about economic opportunity.  They most certainly would talk about transportation.  It’s unlikely that they would think about advance voting.

But the Winnipeg James Armstrong Richardson International Airport did.

Winnipeg James Armstrong Richardson International Airport

“At Winnipeg Airports Authority the focus is always on enhancing the customer experience. The advance polling booth was a way to help travellers exercise their democratic right, albeit in a very unique setting,” said Barry Rempel, president and chief executive officer of Winnipeg Airports Authority. “We are always looking for new ways to showcase our community and augment the travel experience.”

Helping travellers exercise their right to vote is only one of dozens of examples of how Canadian airports reach out to support and enrich their communities in ways that have little or nothing to do with travel.  The activities reflect the needs of each community, but taken together, a bigger picture begins to emerge.  It’s one of a deeply proud, engaged and uniquely Canadian airport community.

Business-speak may call it civic engagement.  Airports call it being good neighbours and friends.

And like any good neighbour, airports welcome newcomers.  Halifax’s long tradition of receiving new Canadians was given a 21st century twist when Halifax Stanfield International Airport hosted a public citizenship ceremony in its main lobby as part of Canada’s 150th celebrations.

“We were honoured to have been chosen to host this special event for Canada’s newest citizens,” said Joyce Carter, president and chief executive officer of the Halifax International Airport Authority (HIAA). “We welcome new Canadians at our airport every day and we’ve come to think of the airport as the modern-day Pier 21. The ceremony provided us with a wonderful opportunity to celebrate our nation’s 150th birthday and to show appreciation for our great country.”

President and CEO Joyce Carter of HIAA on the left

The ceremony struck a deep chord for at least one member of the board. “I know first-hand what a momentous day this is for these new citizens,” said Wadih Fares, HIAA chair and an order of Canada recipient who became a Canadian citizen in 1980. “I first came to Canada as a teenager when I was escaping the civil war in Lebanon. I believe strongly in celebrating the unique talents and contributions everyone brings to this country and today we celebrate these new Canadians.”

Vancouver International Airport

Canada’s airports celebrate peoples and cultures, from the newest Canadians to the first nations.  The Vancouver Airport Authority recently signed The Musqueam Indian Band – YVR Airport Sustainability & Friendship Agreement, a 30-year agreement based on friendship and respect to achieve a sustainable and mutually beneficial future for the community. The Vancouver International Airport (YVR) and the Musqueam Indian Band are located in the same community on land that is Musqueam traditional territory. Musqueam have historically played an integral role in many areas of YVR’s business and operations, from noise management and environmental advisory to development planning and cultural engagement.

“This marks the evolution of our relationship with the Musqueam people. We are proud to look ahead to a future where we continue to learn and grow together for the economic and social benefit of the region,” said President and CEO Craig Richmond of the Vancouver Airport Authority. “Being able to celebrate this new and exciting way forward with our friends is not only good for our business – it is the right way for YVR to move forward in the community we serve.”

Details of the Agreement include a path of education to employment with a number of scholarships and new jobs, one per cent of annual revenue from YVR, identification and protection of archeological resources and support for ongoing operations and long-term development at the airport.

The Flight Path at the Victoria International Airport

Other airports focus in on mental and physical well-being.

The Victoria Airport Authority knows that flying is only one way to get around and encourages residents and travellers to get healthy while experiencing the natural beauty of the Saanich Peninsula by running, walking or biking its 9.3 nature trail called the Flight Path. Combining spectacular scenery with historical sites and quiet contemplation, the airport’s Flight Path offers a unique experience for everyone.

“The Victoria Airport Authority (VAA) is one of the first airports in the world to develop this type of recreational facility,” said President and CEO Geoff Dickson. “The Flight Path is one part of our commitment to sustainability and environmental stewardship that also includes, among other practices, protecting our forests, rehabilitating our airport creeks to remediate previous pollution and improve aquatic health, harvesting our farm fields and providing airport lands for play grounds and sports fields.”

Airports lift the Canadian economy and connect Canada to the world, but they are more than that: they are good neighbours and collaborative community partners.

Airports are Flying High

In the history of Canadian airports, there are two eras: before the 1990’s, and after. Why? Because in the 1990’s, Canada’s airports – once managed by the federal government – were transferred to local control under a not-for-profit model.

“Today Canada’s model is unique in the world,” says Daniel-Robert Gooch, president of the Canadian Airports Council. “We were ahead of the curve. The combination of private expertise with not-for-profit, community-based boards is admired by jurisdictions around the globe.”

The airport system has never looked back, and for good reason. The benefits have been extensive.

“The current airport authority model has served Canadian air travellers very well over the past 25 years”, notes Halifax International Airport Authority President & CEO Joyce Carter. “Halifax Stanfield, for example, has seen infrastructure investments of over $550 million in the past decade, under the watchful eye of our locally-appointed Board of Directors, all directed toward increasing the airport’s economic and social contributions to our region.”

Canada’s air transport sector, of which airports are a big part, contribute $35 billion in economic activity and $7 billion in federal taxes. They have also paid $5 billion in rent to the federal government since 1992.

Beyond the numbers, airports have made an incomparable impact on building Canada into an economic powerhouse.

“Think of all the links airports enable – trade links, business links, between communities in Canada and around the world,” says Gooch. “Airports are truly Canada’s gateways to the world, connecting communities at home and abroad.”

So, what is so powerful about this uniquely Canadian, not-for-profit model? To understand success today, you must understand the struggles of yesterday. Before the 1990’s airports were centrally managed by the federal government. Operating at a significant loss, by the time airport ownership was transferred, the cost to taxpayers was a whopping $135 million per year.

Beyond the cost deficit was the infrastructure deficit. With little money to go around, infrastructure investments were few and far between. Airports aged and repairs were desperately needed.

“The airports that were transferred absolutely needed to be reinvented,” says Gooch.

Reinvention was called for, and the calls got louder and louder. It was around this time that leaders at the Greater Vancouver Board of Trade came together and said, our airport needs to be doing more for us. Vancouver was poised to be a gateway city between the Asia-Pacific and North America. To do it, they needed a better airport. How? Through local control.

Today, officials on the boards of Canadian airports are nominated by local business groups, the municipalities and provincial and federal governments. Airports operate on a not-for-profit basis, meaning every dollar of profit is reinvested back into infrastructure and the passenger experience. That’s led to $22 billion in infrastructure investment without a penny of taxpayer support.

But at the end of the day, the greatest benefit is local orientation.

“Airports have been transformed over the last couple of decades – they are now proper gateways to their communities,” says Gooch.

Airports are locally rooted like never before; every dollar made is reinvested back into the airport; and today Canadian airports are world leaders in the industry. Yes, there are two eras in the history of airports: before not-for-profit status, and after – and airports aren’t looking back. This uniquely Canadian model works for Canada, and works for Canadians who fly.

Airports’ Tax Contributions

Passenger Flow

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