An Issue of Competitiveness

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.

The next thing going forward, which on the surface doesn’t look like much, there is in the House of Commons an act to amend the Customs Act. There are some suggested changes in it that we’re looking for quick passage, that will allow for a number of other facilitation issues to be dealt with at an an airport. For example, in transit departure facilities, we have some amendments to the Customs Act to allow for entry and departure facilities to be returned to airports.

That’s something that can be done in the short term that would help airports to move passengers and makes life easier for the airlines.

AB: SMS has already been implemented in Canada. Is there a ‘lesson learned’ for the U.S.?

Facette: One of the lessons learned is, while it’s a regulation that thou shalt have SMS in place, you want to ensure that the culture of the regulator changes. The culture of SMS is supposed to be, you have a system in place; you’re ensuring that it’s operating properly by having the regulator come in and do a series of regular audits. There needs to be a cultural change. We’re not seeing old prescriptive regulations being stripped away fast enough.

You have inspectors who are used to going down a list; they have to fundamentally change how they do their business.

AB: One ongoing charge by industry in the U.S. is that FAA regions interpret the regs differently than headquarters.

Facette: That’s a very familiar tune up here.

AB: What other anti-competitive forces are out there?

Facette: There is also forced under the competitiveness umbrella the provision of border services at airports. The international passenger transiting through or commuting to Canada is very important; it’s a high priority for Canada’s airports. We need to ensure the border services meet the demand. That means technology and more border officers, long term. Whether you are Toronto or a smaller airport, the demand for border services outstrips their ability to meet it.

AB: Canada and the European Union are in open skies discussions. How’s that going?

Facette: The details of the talks are not public at this time. What I gather from public statements made by the EU ambassador and the Minister of Transportation is that the talks are going well; they are in negotiations; this government would very much like an open skies agreement with the European Union. We at the CAC have two official delegates on the Canadian negotiating team, in an advisory capacity.

AB: Projections of what such an agreement means for airports?

Facette: It means opportunity for airports to attract carriers. We get a lot of international traffic from Europe. And it would mean competition. We all knows what happens with pricing in a competitive environment, right?

AB: It would seem that environmental issues are a heavy focus today.

Facette: We have a program right now with Transport Canada to identify what is the [environmental] footprint of airports across Canada.
CAC is working with Transport Canada so when it does consider any new regulations, which we’re not looking for, that they write policies that come from ICAO and its current efforts and that they actually make sense.

AB: When it comes to security, it appears a major issue for Canadian airports is U.S. screening policies.

Facette: One of biggest issues when it comes to bags is how they have to be rescreened when a passenger connects through a U.S. airport — say from Ottawa to Chicago to LA. That bag from Ottawa is taken off the airplane, put back into the Chicago airport system, rescreened by a CTX machine, and then put back onto the airplane. It is redundant. It places an awful lot of cost on the system – manpower hours; lost hours; handling extra bags that is unnecessary.

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