Ottawa pledges fee caps in airport privatization plan

OTTAWA · The federal government says its plan to bring private investors into Canada's largest airports will include rules to moderate fees. Transport Minister Steven MacKinnon told an aviation conference in Ottawa that contracts with new operators will contain price controls. He said the government will regulate through these agreements as it seeks bids for long-term leases. Prime Minister Mark Carney announced the initiative last month, targeting airports in Toronto, Montreal, Vancouver and Calgary. Under the plan, private entities would manage operations while the government retains oversight and ownership.

Airline executives at the conference insisted clear rules on fees must be established before any bids are solicited. "The regulation needs to be decided before we do any tenders," said Porter Airlines president Kevin Jackson. WestJet CEO Alexis von Hoensbroech warned that privatization without safeguards risks higher costs for passengers. He said a private investor in a local monopoly will try to maximize returns. "The temptation just to increase passenger fees would be really high," von Hoensbroech said, citing examples from London's Heathrow and some Australian airports.

Von Hoensbroech pointed to the "dual till" regulatory model used in Austria as a better approach. This system separates aeronautical operations like landing fees from commercial activities like retail. Fee increases for aeronautical services require regulator approval and must be based solely on costs. Operators have more freedom to profit from non-aeronautical areas such as shopping and parking. "That's why a European airport looks like a shopping centre and not like a bus station, because they invest a lot in this and that's where they make all their money," he said.

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Jeff Morrison, CEO of the National Airlines Council of Canada, said more details are needed but affordability for travellers is key. Christopher Read, a former Air Canada executive, said carriers need clarity to plan their businesses. "We need some more colour ... You need to be able to effectively plan your business out," Read said. "The devil is in the details. The devil is in the contract structure." MacKinnon said the government is in discussions with stakeholders, including First Nations, but no decision has been made on which airport will be first.

International examples show mixed results from airport privatization. Australia's experience is often cited, where private control led to billions in capital investment and improved services. However, the country's competition watchdog reported the four biggest airports increased fees charged to airlines by 81 per cent over a decade. Those costs are often passed on to customers. Canada already has one of the world's most expensive aviation markets due to fees and taxes, according to industry representatives.

With files from The Canadian Press, The Globe and Mail and BNN Bloomberg