Canadian Labour Congress warns of the cost of airport privatization

The recently-announced plan to open four Canadian airports to private investment will do more harm than good, analysis from labour researchers shows. The Canadian Labour Congress (CLC) and the Canadian Centre for Policy Alternatives (CCPA) have both shared concerns that airport privatization will lead to higher costs for passengers and more pressure on workers. 

On Tuesday, the last day of his investment summit in Toronto, Prime Minister Mark Carney said that Canada has decades of experience where airports have had private operators come in to manage them while the underlying assets and the airport itself are retained by the government.

“Our pension funds operate these concessions around the world, from Heathrow to a series in Asia,” Carney said. “They have that expertise, and we’re bringing that expertise back home.”

Simon Enoch from theCCPA wrote that the proposed plan is effectively a public-private partnership. Past partnerships of this type have shown that privately controlled public assets do not operate in the interests of the people. 

“And why would they?” Enoch wrote. “The private investor has every incentive to minimize their costs and maximize their returns for the life of these multi-decade contracts.” 

A recent report from the CLC highlighted that private investors would require 15 to 20 per cent more profits than airports currently generate. Airports generate profit from landing and terminal fees charged to air carriers, leasing fees charged to commercial businesses operating on the airport’s land and fees on airfare charged to the consumer. The report cautioned that increasing revenue will likely come from fees charged to air carriers which will be passed onto consumers. 

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Speaking to reporters on Tuesday, Carney said private investments in airports will generate billions of dollars that the government can reinvest into regional airports.

“We need to be smart with how we use the assets we have,” he said. “There’s an opportunity here to provide better passenger service, to reinvest in our regional airports, which are underinvested in, and to provide that better experience.”

The CLC report, however, showed that private investment in airports runs the risk of decreasing regional connectivity. Looking at the example of Australia, airport privatization was followed by a decrease in regional air service for smaller communities.

“If both airports and airlines are attempting to maximize profits, the less efficient routes – the remote and regional ones – will likely be cut,” the report reads. 

Despite Carney’s assertions that opening airports to private investors will serve Canadians, opposition to the plan has been strong. CLC Secretary-Treasurer Lily Chang said that airports created an estimated $525 million in revenue per year but Carney’s announcement will trade that value for cash in the short-term. 

“Private investors don’t put billions into airports unless they expect to make billions back,” Chang said. “The government is pointing to Australia as its model, and we’ve already seen the results there: higher costs for passengers and airlines, pressure on workers, and more airport revenue flowing to private investors.” 

“Canada needs to invest in itself and protect good jobs,” she said. “We won’t build a stronger Canada by selling pieces of it to the highest bidder.”

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