An Issue of Competitiveness

CAC: Regs are piled on, old ones remain; add high rent and it’s tough to compete

When it comes to the mood of airports in Canada, the president of the Canadian Airports Council says it’s all about being competitive on a North American and global scale. And it’s about getting the federal government and industry in concert toward removing the barriers to being competitive. Technology should play a big role, says CAC president Jim Facette. “Looking forward, it’s the overall competitiveness versus our competitors, the U.S. and elsewhere in the world. We continue to see a bleed of both cargo and passenger traffic to U.S. airports. We need from Ottawa a recognition that airports are an economic generator and part of the social fabric of this country, and deserve to be treated as such,” says Facette.

When discussing the issues facing Canadian airports and their businesses, Facette relates that they generally tie back into airports’ ability to process passengers and cargo — to be competitive. An obstacle: new regulations that call for a new way of operating, but keep in place the bureaucracy of the old regs, says Facette. Another is the need for rescreening of bags that connect through the U.S.; and, there is the ongoing issue of major airports paying rent to Ottawa as a result of the transfer of ownership of airports via local leases in the 1990s.

AIRPORT BUSINESS recently discussed airports and Canada with Facette. Here is an edited transcript of that interview ...

AIRPORT BUSINESS: What do you see as the biggest issue facing Canada’s airports today?

Facette: The business model of the past 15 years puts an undue burden on airports, in terms of fees and taxes that are paid by airport operators [to the federal government]. The most visible one is airport rent. It’s no secret that we are in a business climate where there is a significant downturn, with cost pressures on the carriers. U.S.-based carriers are grounding aircraft and laying off staff by the thousands; Canadian carriers are not immune to that.

Air Canada will announce major changes to its flights, it will realocate resources, and it has already announced it will be laying off 2000 staff in anticipation of slower growth, if any growth at all.

So this is an opportunity, we believe, for the government to eliminate airport rent as a first step, to make airports more competitive; by lowering the costs and passing cost savings onto the carriers, that just gives them that much more room.

AB: How are Canadian airports addressing airline costs?

Facette: Recently, a number of airports in Canada – Toronto, Ottawa, to name two – reduced fees and charges to carriers. Toronto reduced its cargo charges by 25 percent; Ottawa reduced its landing fees as well. So, as an airport community we’re doing what we can to make the business climate as competitive as possible for all concerned, but we can’t do it alone.

AB: What else needs to happen to help them be more competitive?

Facette: The next issue, perhaps larger in scope, is we’re seeing in Canada a trend toward more and more regulations, whether it’s for environmental reasons, security, or anything else; but we’re not seeing the elimination of existing regulations. So we’re just seeing more regulations being piled on top.

Regardless of whether you have safety management systems (SMS) in place; security management systems in place; or any other risk-based management tool, regulations that pre-date these management systems are not being eliminated. The burdens get higher and higher.

Now you have to have more people in place at the airport for these functions. That adds to the cost.

AB: Are there specific regulations you can point to?

Facette: For example, SMS and security management systems -- SEMS; we have safety management systems in place; the latter are under development. They’re not eliminating the regulations that are underneath it.

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