Pearson airport hopes ownership change can fuel regional transit

The operators of Pearson International Airport say they are open to letting private investors take a stake in the airport to help fund ambitious transit hub to move commuters, airport workers and passengers.

Thestar.com
March 29, 2017
By Bruce Campion-Smith

The operators of Pearson International Airport say they are open to letting private investors take a stake in the airport as a way to help fund an ambitious, multi-billion dollar transit hub to move commuters, airport workers and passengers, the Star has learned.

The federal government has been considering possible changes to the current ownership structure of major federal airports, which are currently run by not-for-profit authorities.

Now, the Greater Toronto Airports Authority (GTAA) - which manages Pearson airport - is signaling for the first time that it’s open to change but only if it gets assurances that some of the billions of dollars raised from the private sector get reinvested in the airport and its connections to the communities around it.

That, they say, would help kickstart the investments required to help transform Pearson - already Canada’s busiest airport - into a so-called mega hub, joining the ranks of airports like London’s Heathrow with high passenger volumes and a wide selection of international connections.

In a discussion paper delivered to federal bureaucrats earlier this year, the airport authority says it’s committed to working with Ottawa to grow Pearson and develop its regional transit centre, which was unveiled earlier this year.

That transit centre, located on airport lands, would be served by the Eglinton Crosstown LRT, Finch West LRT, Mississauga Bus Rapid Transit, GO Transit rail lines, UP Airport Express and perhaps even high speed rail in the future.

“A regional transit centre at Toronto Pearson would be one of the most economically significant investments in the nation,” the paper states.

To make it happen, Toronto’s airport authority is hoping to capitalize on the ongoing debate on the future ownership structure of Canadian airports.

An external review of Canada's transportation sector, submitted in 2015, urged Ottawa to look at further privatizing airports, calling the existing model “antiquated.” That prompted the federal government to commission investment bank Credit Suisse to evaluate potential ownership models for Canada’s biggest airports.

But the prospect of privatization has stirred opposition from airlines and airports, who fear the profit motivation of private investors will mean higher fees for travellers.

While other airports have publicly protested the potential change, Pearson officials have been quietly discussing the possibilities with bureaucrats in both the finance and transport departments.

The authority prepared a detailed 39-page paper outlining its growth ambitions and the kind of investments it says are needed, especially in transit, to help make it happen.

That paper - marked “confidential” and circulated in government circles - was obtained by the Star.

“Enhanced transit will be necessary to unlock the value of Toronto Pearson as a mega hub and bring associated benefits to the region and nation,” the paper states.

“Improving access, choice and comfort in travelling to, from and around the airport with transit lines linked directly to Toronto Pearson will shorten commute times for passengers and employees and strengthen the growth of the surrounding community,” it says.

The briefing paper notes that a change in ownership “provides an opportunity to unlock significant capital that could be used to invest in Canada’s infrastructure.”

The Liberals’ most recent budget made no moves on the issue of airport ownership, saying only that the federal government would continue to consider the potential sale of federal assets. But Ottawa could reap billions of dollars if it gave private investors, such as pension funds, a stake in airports.

The paper indicates Pearson’s willingness to discussion various ownership options with the federal government but underscores the desire to have some of that windfall reinvested back in the airport.

“The GTAA believes there may be an opportunity to capitalize on the government’s review and consider changes to the airport’s business model that would support the mega hub vision,” the paper notes.

“Specifically, the GTAA believes this review may present an opportunity to leverage investments and policy changes that could help to realize the GTAA’s long-term strategy,” it states.

The authority makes the case that Pearson is a “critical and valuable economic asset,” supporting an estimated 332,000 direct and indirect jobs and responsible for 6.3 per cent of Ontario’s economic output.

That impact could be even more substantial if the airport is able to become a mega hub, attracting even more flights and passengers that could double to 80 million a year by 2035.

Hillary Marshall, vice-president of stakeholder relations and communications for the Greater Toronto Airports Authority, confirmed that the authority has been in touch with the government about its vision, including the transit project.

“As the Government of Canada considers potential policy changes to the current airport ownership and governance model, we believe that any change must support and accelerate Toronto Pearson’s progress toward mega hub status and deliver transit investments, while also assuring passengers and carriers that costs will remain competitive,” Marshall said in an email to the Star.