An Airport on Autopilot; A Veil of Secrecy has Shrouded this Canadian Airport

The City of Hamilton, Ontario, has poured millions of dollars into its airport over the past 10 years without once having looked at the financial health of the airport or the private operator that runs it. A Spectator investigation shows the...

Councillors appear disturbed by the realization that the city's grip on the airport may not be as secure or productive as they assumed.

Guy Paparella, the city's recently appointed director of airport development, was grilled about the status of certain lease provisions with TradePort at a recent special committee meeting, and there has been grumbling about the overall direction of the airport's development.

The spark that ignited some councillors' discontent was the revelation that the city's first cut from airport revenue sharing was going to be dramatically less than forecast.

This year marks the first point in the lease that requires TradePort to begin sharing airport revenue with the city.

The payment was due on Feb. 15. It has not yet been received by the city.

Councillors were warned earlier this year that the amount was expected to be around $50,000 -- a far cry from the C$300,000 that TradePort first projected to hand over when it was bidding for the airport contract.

But some councillors are now saying the city's share may be as low as C$35,000.

That's about how much it costs to fill an A310 Airbus with fuel -- once.

On top of that, the city is required to give half of that first payment back to TradePort because of a clause in the deal.

In fact, the city will spend about $100,000 on staff and legal fees this year just to manage the contract with TradePort.

"So I'm in the hole right now," an incredulous Chad Collins said at the recent special committee meeting.

"That's apart from the C$19,000 that we're paying for the review," added Collins, Ward 5 councillor in Hamilton.

"I'm C$120,000 short."

The city had originally budgeted C$10,000 for the TradePort financial review, but then learned it would cost C$19,000 because the auditors would have to plow through 10 years of accounting that has never been examined.

There are also serious questions about how much information the city will learn when the auditors do start.

A clause in the TradePort contract stipulates that any auditors hired by the city to examine the company's books would only be allowed to provide the city with general conclusions about TradePort's finances.

No one at the city knows how much TradePort collects in landing fees, airport improvement fees, terminal fees or parking.

No one at the city knows what TradePort pays its executives and board members.

No one at the city knows how much debt TradePort is carrying or whether any of its shareholders have significant loans.

No one at the city knows how much TradePort makes in profits.

The city hasn't done itsperformance review yet and all the company has said to date is that it has reinvested all of its earnings back into the airport.

Stripped down to its basic elements, the central question is this: what type of relationship exists between the city and the operator of its airport?

To TradePort, the answer is clear.

"We are in a partnership with the city and we both have obligations," said Richard Koroscil, president and CEO of TradePort.

That's not the way some councillors see it.

"It is not a partnership," said Collins. "It clearly states in the document that this is a lease."

In fact, one clause specifically states, "The Landlord and the Tenant expressly disclaim any intention to create a partnership, joint venture or joint enterprise."

One former politician who was on city council when the deal was approved said he's skeptical of private-public partnerships, based on Hamilton's past history.

"The guys in business are in business to put money in their jeans, the guys in the city aren't," said former Ward 6 councillor Bob Charters.

"If there is a reason for the city to be involved in it, they shouldn't be doing it with a partner, they should do it themselves.

"If the argument's real strong that they should have a partner then they shouldn't be in it," he added. "We should have sold it."

Rather than sell it, the city turned over operation of the airport to TradePort in exchange for $1 a year for the first 10 years.

TradePort would collect all the revenue from operations and take on the cost of all capital improvements at the airport, with the exception of runway expansions.

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