Ruth Haines
Canada has a unique approach to airport management, with a mix of public and private ownership. While most airports in the National Airports System are owned by Transport Canada and leased to local authorities, there are a few notable exceptions. For instance, the Winnipeg Airports Authority privately owns the YWG airport, and the City of Abbotsford owns Abbotsford Airport. The question of airport ownership sparks debate, with studies suggesting that private equity ownership improves airport quality and performance, while critics point to increased fees and challenges in meeting infrastructure requirements. Canada's airports are locally accountable, with a focus on self-sustaining operations and reinvesting profits into improvements.
| Characteristics | Values |
|---|---|
| Number of airports owned by Transport Canada | 23 |
| Number of airport authorities | 21 |
| Airports owned by the City | Kelowna (YLW), Abbotsford Airport, Waterloo Airport |
| Airports with private equity ownership | Vantage Airport Group (20 airports), Winnipeg Airports Authority (Iqaluit Airport) |
| Airports with public ownership | Gander, St. John's |
| Airports with unclear ownership | Toronto-Bishop |
| Airports with private ownership | YWG airport (Winnipeg) |
| Airports with public operation | All airports in the National Airports System (except territorial capitals) |
| Airports with private operation | 21 |
| Airports with aeronautical and non-aeronautical revenue sources | Unspecified |
| Airports with improved performance due to private equity ownership | 437 |
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What You'll Learn
Most Canadian airports are publicly owned
The three territorial airports are owned and, except for Iqaluit Airport, operated by their respective territorial governments. Iqaluit Airport is operated by Nunavut Airport Services, a subsidiary of Winnipeg Airport Services Corporation, which is itself a subsidiary of the publicly owned Winnipeg Airports Authority.
In addition to the airports owned by Transport Canada, several small airports in British Columbia, Manitoba, Quebec, and Newfoundland and Labrador are also owned by the federal government.
While most Canadian airports are publicly owned, some are privately owned and operated. For example, the Winnipeg Airports Authority, a private entity, owns the Winnipeg Airport Services Corporation, which operates the Iqaluit Airport. Additionally, the City of Abbotsford owns Abbotsford Airport, the Regional Municipality of Waterloo owns Waterloo Airport, and PortsToronto owns Toronto-Bishop Airport.
The Canadian government has also privatized its air traffic control and air navigation systems, placing them under the control of the private company Nav Canada. Research suggests that airports may perform better when owned by private equity funds, as they can bring knowledge of global best practices and highly motivated managers with access to capital.
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Some airports are leased to local authorities
Canada has a unique approach to airport ownership and operations. Notably, airports in the country are not funded by taxpayers, as is the case in many other nations. Instead, Canada's airports pay back the federal government, which collects up to 12% of airport gross revenues as rent. In 2019, this amounted to $419 million, contributing over $6.5 billion to the federal government since 1992.
The National Airports System (NAS) in Canada includes all airports with an annual traffic of 200,000 passengers or more, as well as airports serving the national, provincial, and territorial capitals. Within the NAS, all airports except the three territorial capitals are owned by Transport Canada and leased to local authorities for operations. These airport authorities are not-for-profit, non-share capital corporations. For instance, the City of Kelowna operates the Kelowna airport under a long-term lease with Transport Canada.
Some Canadian airports are also owned by private entities, such as the Winnipeg Airports Authority, which owns the Winnipeg Airport Services Corporation, operating the Iqaluit Airport. Additionally, the private-equity-owned Vantage Airport Group has facilitated the transition of 20 Canadian airports from public to private ownership. This shift towards privatisation has resulted in improved airport quality, including better retail stores, waiting areas, and overall cleanliness. Moreover, private equity ownership has led to enhanced customer service, reduced cancellations and delays, and more routes.
However, privatisation has also led to significantly increased airport fees, and some airports have struggled to meet infrastructure requirements. The controversy surrounding the National Airports Policy, implemented in the 1990s, highlights the mixed outcomes of privatisation.
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Private ownership can improve airport quality
In Canada, the majority of airports are publicly owned. However, there are a few notable exceptions, such as the Winnipeg Airports Authority, which owns and operates the YWG airport in Winnipeg. While private ownership of airports is not the norm in Canada, it is worth considering the potential benefits that private ownership can bring to airport quality.
One of the key advantages of private ownership is the potential for improved efficiency and performance. Private equity ownership has been shown to result in better airport operations, including enhanced customer service, reduced flight cancellations and delays, and the introduction of more routes. This is due to the incentive structure that private equity funds have, where fund managers are motivated to make improvements and increase efficiency to generate returns for their investors. The reputation of these fund managers is closely tied to their performance, creating a strong drive for continuous enhancement.
Another benefit of private ownership is the injection of private capital into airport infrastructure. Private equity funds have invested significant amounts of capital into airports globally, raising additional investment capital. This has resulted in improved airport infrastructure, including retail stores, waiting areas, and overall cleanliness. Airports can also diversify their revenue streams through the addition of new retail, dining, and beverage options, reducing their reliance on aeronautical income. This can lead to lower costs for air carriers, which can then be passed on to travellers in the form of reduced ticket prices.
Furthermore, private ownership can lead to improved accountability and local representation. In Canada, airport boards of directors are often nominated by groups representing government, local business, and community interests. This local accountability ensures that airport operations are aligned with the needs and interests of the communities they serve. Additionally, Canadian airports operate on a not-for-profit basis, reinvesting any financial surpluses back into the airport to benefit users and local communities.
While there are potential advantages to private ownership, it is important to consider the context and potential drawbacks as well. For instance, the privatisation of airports in Canada has been controversial due to greatly increased airport fees and challenges in meeting infrastructure requirements. Nevertheless, private ownership can drive improvements in airport quality through increased efficiency, capital investments, diversified revenue streams, and enhanced accountability to local communities.
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Airports pay the federal government rent
In Canada, airports are locally accountable, with boards of directors nominated by groups representing different levels of government, local businesses, and community interests. Notably, Canadian airports do not rely on taxpayer money, and instead pay the federal government rent. In 2019, Canada's airports paid $419 million in federal rent, and since 1992, they have transferred over $6.5 billion to the federal government. The federal government collects up to 12% of airport gross revenues in rent from the 21 privately-operated airport authorities.
While airports in Canada are not privately owned, they are operated by private companies. For example, the Winnipeg Airports Authority operates the Iqaluit Airport, which is owned by Nunavut Airport Services, a subsidiary of Winnipeg Airport Services Corporation.
The National Airports System (NAS) includes all airports with an annual traffic of 200,000 passengers or more, as well as airports serving the national, provincial, and territorial capitals. All airports in the NAS, except the three territorial capitals, are owned by Transport Canada and leased to the local authorities operating them. The three territorial airports are owned and operated by their respective territorial governments, except for the Iqaluit Airport, as mentioned above.
The National Airports Policy, a program by the Government of Canada, involves the privatization or private operation of nearly all of the country's airports. This policy has been controversial due to increased airport fees and the inability of airports to meet infrastructure requirements. Despite this, some sources claim that airports perform better when owned by private equity funds, with improved customer service, fewer cancellations and delays, and more routes.
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Private equity ownership reduces cancellations
In Canada, airports are locally accountable, with boards of directors nominated by groups representing government, local business, and community interests. While airports in many countries are funded by taxpayers, Canadian airports pay the federal government up to 12% of their gross revenues in rent. This amounted to $419 million in 2019, with over $6.5 billion transferred since 1992.
Canada's airports have invested over $30 billion in infrastructure improvements since the early 1990s, funded almost entirely by the Airport Improvement Fee (AIF). This has resulted in Canada being recognised as having the world's best air transportation infrastructure, offering high levels of comfort and safety, capacity for new routes, and competitive choice.
The National Airports System (NAS) includes all airports with an annual traffic of 200,000 passengers or more, as well as those serving the national, provincial, and territorial capitals. Out of these, three territorial airports are owned and operated by their respective territorial governments. The remaining NAS airports are owned by Transport Canada and leased to local authorities.
While some Canadian airports are publicly owned, there are also privately-owned airports, which are very much the exception. For example, the Winnipeg Airports Authority, a private entity, owns the Winnipeg Airport Services Corporation, which operates the Iqaluit Airport.
Research from the University of Alberta's Alberta School of Business suggests that airports perform better when owned by private equity funds, with improved customer service, fewer cancellations and delays, and more routes. Specifically, flight cancellations decrease by 50% on average when a public airport is acquired by private equity. Private equity ownership also improves airport quality, including retail stores, waiting areas, and overall cleanliness.
Over the past 50 years, there has been a global trend of infrastructure, including airports, transitioning from public to private ownership. Private equity funds are "closed-in", with a limited term of about 20 years, and investors expecting a return on their investment. This motivates fund managers to make improvements and increase efficiency to maintain their reputation and stay in business.
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Frequently asked questions
Most airports in Canada are not privately owned. Airports in the National Airports System (NAS), except for the three territorial capitals, are owned by Transport Canada and leased to local authorities operating them.
Vantage Airport Group has helped transition 20 airports from public to private ownership. Airports such as YWG (Winnipeg) and Toronto-Bishop are privately owned.
Airports under private equity ownership have seen improvements in customer service, with fewer cancellations and delays, and more routes. There have also been improvements in retail stores, waiting areas, and overall cleanliness.
Airports under private ownership have seen greatly increased airport fees. There is also an ongoing inability to meet infrastructure requirements.
Out of the total airports examined, 437 had been privatized. Canada has a total of 21 privately-operated airport authorities.
