AIRPORT RENT EVOLUTION

National Airports System

The National Airports System is composed of 25 airports deemed to be essential to Canada’s air transportation system. The NAS airports handle about 92 per cent of all passenger traffic in Canada. These airports have year-round, regularly scheduled passenger service with a minimum of 200,000 passengers annually and/or serve in a provincial or territorial capital. The vast majority have been leased to not-for-profit, locally-based authorities from which rent is being collected by the federal government.

Beginning in 1992, NAS airports were transferred to airport authorities as ongoing businesses, including all employees, assets, chattels, consumable stocks, real estate and existing contracts of the businesses. With the exception of some environmental liabilities, all costs of airport operations were transferred to the authorities along with the revenue-generating capabilities of the federal assets. The authorities are responsible for the operation and management of NAS airports as not-for-profit businesses, which contribute to regional economic development.

The Government of Canada transferred NAS airports by way of long-term lease arrangements, which included negotiation of an agreed-to rent over the life of the leases (60 years) to 21 of the 25 NAS airports, with the remaining four airports either transferred outright or under separate arrangement. Negotiations were conducted on the expectation that the government would receive fair value for transferred airports, including recognition of their future earning potential. As a result of the timing of specific airport transfers, the circumstances at each airport, and the negotiating process, there are five different formulas that govern rent payments from the 21 airport authorities with leases.

Review process

In June 2001, Transport Canada began a review of the existing rent policy for the leased airports in the National Airports System. This review was initiated in response to demands by the airport and aviation communities and the comments of the Auditor General in October 2000 with respect to fair value of rent for Canadian taxpayers. Due to the significant impacts to the air industry resulting from the September 11, 2001, terrorist attacks, the rent policy review was delayed while the government worked to address the ensuing security and economic urgencies.

Focused work on the review began again in 2002, with analysis being completed in the summer of 2004. The intent of the policy review was to ensure that the Government of Canada’s airport rent policy balanced the interests of all stakeholders, including the air industry and the Canadian taxpayer.

Scope of review

The 21 airports with leases that are covered by the rent policy review: Calgary, Charlottetown, Edmonton, Fredericton, Gander, Halifax, London, Moncton, Montreal (Trudeau and Mirabel), Ottawa, Prince George, Quebec City, Regina, Saint John, St. John’s, Saskatoon, Thunder Bay, Toronto (Pearson), Vancouver, Victoria and Winnipeg.

The four remaining airports not covered by the review are Whitehorse, Yellowknife, Iqaluit and Kelowna.

Currently nine airport authorities pay rent. These are Calgary, Edmonton, Halifax, Montreal, Ottawa, Toronto, Vancouver, Victoria, and Winnipeg. Kelowna, which was transferred prior to 1992, pays $1 per year. In 2006, four more airport authorities, Regina, Saskatoon, St. John’s, and Thunder Bay are scheduled to begin paying rent. Quebec City could begin to pay rent in 2005 or 2006 depending on traffic volumes. 

May 2005