Ottawa, Canada to Reduce Airport Rents, But Most Cuts Won't Kick In Until 2010

May 9, 2005
The Canadian federal government will announce Monday that it will cut the rent that airports pay by $8 billion, but the plan will do little to ease airports' short-term woes.

TORONTO (CP) -- The federal government will announce Monday that it will cut the rent that airports pay by $8 billion, but the plan will do little to ease airports' short-term woes, the Globe and Mail reported.

The changes don't take effect until next year and more than 95 per cent of savings won't kick in until after 2010, said the newspaper.

The reductions will result in a cumulative cut of more than 60 per cent of the $13 billion that the airports would have paid over the remainder of their leases with the government.

Those leases don't begin expiring until 2052. But the formula won't come into full force until five years from now, which means only $350 million, or 4.4 per cent, of the savings will be achieved over the transition period.

An industry official, who asked not to be identified, told the Globe that the new deal is a step forward but it won't provide the immediate rent relief that Canada's airports need.

''There's obviously some good news in it, but it falls short,'' the official said.

The industry has endured tough times in recent years, particularly in the months that followed the Sept. 11, 2001, terrorist attacks.

Airport rent is considered a critical issue by the industry because it directly affects what the airlines must pay the non-profit airport authorities for such things as landing fees.