9 AIR TRANSPORTATION
INFRASTRUCTURE
Canada's air transportation infrastructure consists of
aerodromes and a civil Air Navigation System (ANS).
Since the introduction of the National Airports Policy
(NAP) in 1994, the federal government has been reducing
its role in the management, operation and ownership
of airports. Transport Canada's role has shifted from owner
and operator to landlord and regulator of Canadian airports.
Transport Canada continues to be responsible for the
regulation and safety of the ANS, but facility ownership
was transferred to NAV CANADA. These changes were
designed to promote safety, efficiency, affordability,
service integration, innovation and commercialization.
The transfer process has been largely completed and the
current state of transfer is posted monthly on the Internet
at www.tc.gc.ca/programs/airports/status/menu.htm.
AIRPORTS
Canada has approximately 1,700 aerodromes; facilities
registered with Transport Canada as aircraft take-off and
landing sites. The aerodromes are divided into three
categories: water bases for float planes, heliports for
helicopters and land airports for fixed-wing aircraft.
Most of Canada's commercial air activity takes place at
certified land airports; sites that are required to meet
Transport Canada's airport certification standards
because of their level of activity or location.
AIRPORT AUTHORITY REVENUES AND EXPENSES
The NAP designated 26 National Airport System (NAS)
airports as essential to the national transportation
infrastructure. Of these, 22 were transferred by way of
long-term leases to airport authorities. The airport
authorities are not-for-profit, non-share capital corporations,
with locally nominated and publicly accountable Boards of
Directors, which are responsible for the management, operation and development of the individual NAS airports.
The three territorial NAS airports were transferred outright
to the three territorial governments and Kelowna Airport is
operated by the City of Kelowna.
Airport authority financial statements for the year
ending in 2003 are shown in Table A9-1 in the Addendum.
AIRPORTS CAPITAL ASSISTANCE PROGRAM
Since April 1995, Transport Canada has provided the
Airport Capital Assistance Program (ACAP) to help
eligible non-NAS airports finance capital projects related
to safety, asset protection and operating cost reduction.
To be eligible, the airports must receive a minimum of
1,000 passengers annually, meet airport certification
requirements, and not be owned by the federal
government. In 2004, the program announced 42 projects
at 35 airports for funding at an estimated total of
$34.3 million. Table A9-2 in the Addendum shows the
allocation of funds by province since the inception of the
program. ACAP projects approved in 2004 are listed in
Table A9-3 in the Addendum.
AIRPORT IMPROVEMENT FEES
A number of airport authorities collect Airport
Improvement Fees (AIFs) to pay for and finance their
capital expenditures. AIFs now represent approximately
22 per cent of total NAS airport revenues on average and
this percentage continues to grow. Currently, most AIFs
vary from $10 to $15 per passenger. The majority of AIFs
are collected through the airlines ticket systems, but some
are collected directly by the airport authority. A list of the
current AIFs for NAS airports is displayed in Table A9-4
of the Addendum.
FINANCIAL PERFORMANCE OF NAS AIRPORTS
The outbreak of Severe Acute Respiratory Syndrome
(SARS) contributed to passenger volume reductions in
2003 of approximately four per cent at Toronto and
Vancouver airports. This drop at Canada's two busiest
airports was more than enough to offset modest traffic
increases at other airports, resulting in no change in
overall passenger traffic. Despite this fact, revenues
continued to rise in 2003, with operating revenues and
airport improvement fees both increasing by 8.5 per cent.
Some of the smaller NAS airports saw their revenues
decline or remain relatively unchanged.
In 2003, airport costs increases outstripped revenue
gains. The authorities' combined operating costs rose by
14.5 per cent in 2003, due in part to the write-off of more
than $50M in Air Canada receivables. Costs also
increased in the areas of fuel, security and the operation
of new infrastructure. The largest cost increase was in the
area of interest charges related to capital infrastructure,
where costs rose by 32 per cent. The large increases in
non-operational costs (i.e., interest, amortization) led to
a substantial decline (93 per cent) in the authorities'
combined net income, with authorities such as Toronto,
Montreal, Gander, Saint John and Fredericton ending the
year in a deficit position.
Total rent recorded by the airport authorities in 2003
was $241.5 million, with $17.6 million in rent being
deferred by eight authorities in the last six months of 2003
as a result of the short-term financial relief program
announced by the Government in July 2003. Under the
program, airport authorities that pay rent receive a
reduction of a minimum of 10 per cent of their rents for a
24-month period commencing July 1, 2003, with larger
deductions depending on the decline in passenger levels
experienced between April 2002 and April 2003. The rent
reductions are to be recovered, interest free, over a
10-year period beginning in 2006. As part of this program,
the smaller NAS airports were able to defer their chattel
payments by two years, beginning January 1, 2004.
Airport authorities made $1.6 billion in capital
expenditures in 2003 as several airports including
Ottawa, Toronto, Montreal, Calgary, Edmonton and
London continued major capital expansions. Toronto
accounted for $1 billion of the total expenditures and
continues work on its Airport Development Program. Its
new Terminal 1 was opened in April 2004. In 2003,
Montreal completed work on Phase I of its Terminal
Expansion Project at Pierre Elliott Trudeau International
Airport. London's new terminal building opened in
November 2003. Regina is constructing Phase I of its Air
Terminal Building Re-development Project, which is
expected to cost $15 million. Prince George has begun a
three-phase, $20 million airport improvement plan. In
terms of planned expenditures, several authorities have
major capital projects under development. Vancouver has
announced plans to spend $1.4 billion over the next
10 years to upgrade its facilities and Winnipeg has
unveiled plans for an airport redevelopment program that
will cost $350 million for the first phase commencing in
2004/05. Halifax and Victoria have also announced plans
for further airport infrastructure development. A
substantial amount of the capital infrastructure was
financed through debt, with the total long-term debt of
NAS airports amounting to $7.6 billion at December 2003.
AIR NAVIGATION SYSTEM
NAV CANADA is a not-for-profit, private corporation
that owns and operates Canada's civil air navigation
system — providing air traffic control services, flight
information, weather briefings, airport advisories and
electronic aids to navigation. NAV CANADA has the right
to set and collect customer service charges from aircraft
owners and operators. Most customer service charges
are applicable to commercial air carriers. For more
information on NAV CANADA, visit the corporation's Web
site at www.navcanada.ca.
Major Events in 2004
Infrastructure
Industry Structure
Price, Productivity and Performance
Freight Transportation
Passenger Transportation
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