Connecting Canada at a Glance: The Canadian Airports Council’s Submission to the CTA Review

Canada’s Airports: An Industry Snapshot

Thirty years after the introduction of Canada’s groundbreaking National Airports Policy, much

has changed in Canada’s air transport sector and indeed in the Canadian economy as a whole.

This is why in 2014, Canada’s airports community through the CAC

welcomed news of the first comprehensive review of Canada’s air

transportation policy by the Hon. David Emerson under the Canada

Transportation Act Review. Canada today is more heavily reliant on

aviation than ever before, but our industry faces challenges.

This is the environment in which Canada’s airport leaders have spent

much of the past year considering the important role that air transport

plays in the Canadian economy today and for the next 30 years. Canada

cannot ignore what has become a more dynamic competitive

environment or risk losing out to foreign competitors. Connecting

Canada: An Aviation Policy Agenda for Global Competitiveness and Economic Prosperity

represents the Canadian airports community’s collective thoughts on the industry’s future—

with 20 policy recommendations designed to support a strong Canadian aviation sector for the

coming decades.

PASSENGERSIN 201

MILLION12

TAXES ACCRUED

7B ILL ION

34.9BILL IO N

CONTRIBUTION TOCANADIAN GDP

141,000DIRECT JOBSSUPPORTED

: CURRENT ECONOMIC IMPACTCANADA’S AIR TRANSPORT INDUSTRY

• The Canadian Airports Council (CAC) is the unified

voice of large and small airports from across Canada

• 95% — the percentage of commercial air tra�c in

Canada handled by the CAC’s 48 members

• 405,000 — the number of jobs in Canada supported

by the air transportation industry

CONNECTING CANADA: An Aviation Policy Agenda

for Global Competitiveness and Economic Prosperity

Canadian Airports Council Submission to the

Canada Transportation Act Review

January 2015

C A N A D I A N A I R P O R T S C O U N C I L

• $305 million — the amount Canada’s airports paid in rent

to the federal government in 2014

• $4 billion — the amount Canada’s airports have paid in rent

to the federal government since divestment to non-share,

not-for-profit airport authorities began in 1992

Safe and strong local airports

ISSUES • Reinvest federal aviation taxes, fees and charge into the air transportation system, such as through a fund for aviation infrastructure

• Expand Airports Capital Assistance Program (ACAP) eligibility to include small National Airports system airports, clarify project eligibility criteria, improve Web-based applications process and improve airport/government communications

• Eliminate federal ownership of land as an exclusion for federal infrastructure program eligibility

• Continue the current non-share capital airport authority model

• Establish a process to review and update the Public Accountability Principles – in consultation with airports

• Negotiate a long-term solution to end-of-lease issues, such as by providing a recurring lease renewal arrangement or by allowing airports to buy out their leases

RECOMMENDATIONS

Canada has a strong local airport authority model that has served communities well and should be strengthened. But cost and funding concerns impact airports in various ways.

• Government taxes and fees the

highest in the world

• NAS airports not eligible for

federal infrastructure funding

• ACAP for small airports needs

modernization

• Airport authority model working

• End of lease issues need to be

resolved

OUR PRIORITIES:

Value for money in government user fees and taxes

ISSUES

• Restructure or renew the Canadian Air Transportation Security Authority (CATSA) to achieve internationally competitive service standards with a policy, regulation and standards development role for those delivering screening services

• Establish an industry advisory group to help develop a new governance structure

• Provide measures in the meantime such as competitive service level standards and allocate future Air Travellers Security Charge (ATSC) revenue into the aviation security system

• Reform airport rent to improve industry positioning over the long term, including options as a cap on rent or changes to the rent formula from revenue to profit-based

RECOMMENDATIONS

Canadian air passengers pay some of the highest government taxes, fees and charges in the world. In exchange, they expect to receive value for their investment and support.

• CATSA governance and funding

model broken

• ATSC revenue diverted from

services

• Increasing wait times

• No service level standards for

screening

• Airport rent a unique cost

disadvantage

Improving the traveller experience

ISSUES • Implement host of recommendations to improve passenger experience at security screening and at the border

• Continue airport-government partnerships that drive innovation and technology solutions

• Implement policies like Arrivals Duty Free and value-added ForeignTrade Zones

• Provide more focus on air travel in Beyond the Border 2.0, including

further harmonization of aviation security and border innovations,

joint U.S.-Canada preclearance overseas and over the longer-term a

move to full Perimeter Clearance with the U.S.

RECOMMENDATIONS

Canada’s airports are constantly improving the passenger experience. Innovation in passenger facilitation has enhanced the passenger experience while making airports safer and more secure.

• Missed commercial opportunities

such as Arrivals Duty Free, Foreign

Trade Zones

• Room for greater international

border cooperation

• Continued innovation needed in

service delivery

Growing a globally connected Canada by air

ISSUES• Proceed with further Transit Without Visa (TWOV) and China Transit

Program expansion

• Introduce more competitive visa policy initiatives, such as a common Canada-U.S. visa, accepting other trusted country visas for visiting or transiting Canada, continue to streamline the visa application processes, and use eTA (Electronic Travel Authorization) to expand the list of visa-exempt countries

• Apply the Blue Sky Policy more progressively in a manner that is strategically aligned with Canada’s trade agenda and tourism objectives

• Allow Canada’s airports with a vested interest in the outcome of bilateral air agreements the option to participate as observers in the same way as airlines

• Move to 49% ownership of Canadian airlines for EU investors as soon as possible

• Ensure the availability of reliable market data

• Pursue a single aviation market with the U.S. and eventually a Trans-Atlantic Open Aviation Area with the U.S. and EU

RECOMMENDATIONS

Airports are the local connection to Canada’s global trading economy. More flexible and nimble approaches to border, visa and air trade policies will support continued international growth.

• Transit Without Visa successful but

expansion needed

• Cumbersome visa procedures

impacting reputation and arrivals

• Blue Sky Policy not progressively

pursued

• Greater liberalization warranted in

some markets

• World is moving ultimately to open

aviation areas

Over the next 25 years, Canada’s airports are anticipating a wide array of changes. While it is di�cult to predict exactly what the global air transportation environment will look like in 2040, current trends are likely to further evolve, particularly in the area of technology and innovation. Canada’s airports are prepared to respond to these new opportunities and challenges while leading positive change on a number of fronts.

By 2040, Canada’s airports anticipate a more liberal environment in North America similar to the Schengen Area in Europe, with long security lines a distant memory and more globally consolidated airlines. Canada’s airports will remain among the driving forces behind revolutionary change in technology convergence and process innovation characterized by continuing rapid advances in information technology and biometrics. Airports also expect more broad-based competition from countries that recognize the importance of air transportation as a driver of economic growth, along with changing aircraft capacity and a continued focus on environmental issues such as noise.

In 25 years, Canada’s airports will be integrated parts of the local transportation system and essential partners with government, airlines, tourism and business interests using a Team Canada approach to align policy and stimulate air travel and trade to, from, through and within Canada. Our airports will also rank among the most cost-competitive airport systems in the world as top generators of retail and commercial revenues to reduce dependency on fees.

In terms of sustainability, Canada’s airports will continue to be leaders in high-quality, cost-e�ective sustainable infrastructure and innovative technology where funds taken out of the system by government either cover the cost of providing government services or are reinvested into beneficial programs for industry. Financially viable small airports will also continue to provide competitive air services to local and regional markets in part through equitable access to federal capital funding programs.

Vision 2040: Canada’s Airports Taking Flight for the Future

Canada’s airports are prepared to respond to these new opportunities and challenges while leading positive change on a number of fronts.

In 25 years, Canada’s airports will be integrated parts of the local transportation system and essential partners with government, airlines, tourism and business interests using a Team Canada approach to align policy and stimulate air travel and trade to, from, through and within Canada.