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AIRPORT PROFILES Last modified on September 12, 2017

The next step

CEO, Howard Eng, tells Joe Bates more about the Greater Toronto Airports Authority’s ambitious plans to create a ‘mega hub’ at Toronto Pearson.

Toronto Pearson International Airport has been one of the fastest growing major airports in North America for the last three years with annual growth of around 8%.

The upward trajectory led to it becoming the first Canadian gateway to break the 40mppa milestone in 2015, and then register an all-time high of 44.3 million passengers (+8%) in 2016.

It attributes the impressive annual rises to a combination of the business and tourism appeal of Canada; a healthy airline mix of 70 airlines that includes four “strong Canadian carriers” (Air Canada, Westjet, Sunwing and Air Transat); lower fuel prices acting as the catalyst for route development and more competitive fares; the growing population of the Greater Toronto Area, which now stands at 6.4 million; and a catchment area of 150 million people living within a 90-minute flight of Pearson.

A similar rate of growth this year – passenger numbers were up by 7.4% in the first quarter of 2017 – will almost certainly elevate Toronto Pearson into the top 10 busiest airports in North America for the first time in its history.

Achieving such a lofty status would cap an amazing five years of traffic growth for Pearson, but shouldn’t exactly be a surprise to airport aficionados as operator, Greater Toronto Airports Authority (GTAA), recently stated that it can become a ‘mega hub’.

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Bold ambitions

The ambition is outlined in its Growing Canada with a Mega Hub Airport report, which claims that Toronto Pearson is poised to become one of the world’s next top tier international airports, providing air connectivity to up to 80% of the world’s economies.

The report states that existing mega hubs as Dubai International, Singapore Changi and New York-JFK have a large percentage of international passengers, significant connecting traffic, and are growing at faster rates than their local economies.

And it argues that Toronto Pearson is close to joining them based on its passenger growth, traffic mix and the economic benefits it delivers to Toronto, the province of Ontario and the whole of Canada.

Indeed, it points out that 180 destinations across the globe are served non-stop from Pearson, which directly employs 49,000 staff. Moreover, some 300,000 people work in the area surrounding the airport.

However, the GTAA claims that Pearson is not a mega hub yet and believes that six concrete steps need to be taken in conjunction with the Canadian government before it can realise its potential and deliver economic benefits from coast to coast.

These, it says, include improving transportation access to the airport, achieving the hassle-free flow of passengers through Pearson, and policy amendments to attract international passengers.

But, first things first, what does GTAA consider a mega hub to be and why has it stated this ambition now?

“We believe that mega hubs are global hubs that get to a certain size and then defy the conventional wisdom and still continue to grow by 4%, 5% and 6% per year,” says GTAA’s CEO, Howard Eng.

“By our definition this size is around 55 million passengers per year or higher, and the traffic mix must include at least 30 million international passengers per annum. We also believe that connecting passengers must account for more that 35% of the traffic at a mega hub, which must have a route network that directly serves 80% of the global GDP.

“Traditionally, airport growth rates have slowed as airports have become bigger and more mature. For example, traffic typically might grow by 3% to 4% annually until you get to 50 million passengers, then the growth slows to around 1% to 2%. However, we have noticed a change in this pattern across the globe in recent years with some airports continuing to show much higher growth rates.

“If you are handling 50 to 60 million passengers yearly and growing by 5% to 6% annually every year, you are going to grow pretty big, pretty fast.”

Eng – who notes that Toronto Pearson is currently one of 35 to 40 global hubs around the world – continues: “There are only so many opportunities around the world for an airport to become a mega hub and one of them is here in Toronto.

“The time is right, and if we don’t act now, we may miss the opportunity to capitalise on the airport’s full potential. Market competition is increasingly global and the competitiveness of the Greater Toronto Area, and the entire country, depends on its access to international markets.

“For our region to be able to compete with other city-regions around the world and reap the economic benefits, it needs a globally competitive mega hub airport.

“We will make the necessary investments to enable this growth. However, to achieve mega hub status and all the associated benefits for the region and the country, we will need support from government.”

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Government support

Enhancing transportation access to the airport; improving Customs, Immigration and Security staffing levels to reduce queue times; and policy amendments to attract more international passengers are just a few of the ways GTAA claims that the government can help the airport achieve mega hub status.

One of its key recommendations is for all levels of government to prioritise regional transit connections into Toronto Pearson to serve the airport area. The area around the airport has been identified as Canada’s second largest employment zone by the Neptis Foundation and is home to a significant concentration of manufacturing and transportation-related employment, as well as a growing number of finance and business services jobs.

Its importance means that over one million car trips a day are made into and out of the airport employment zone, due in part to a lack of public transport options, and GTAA knows that the sustainable development of Toronto Pearson will be severely hampered without better ground transportation links.

Its vision is for an on-site multi-modal transportation centre capable of facilitating multiple transit connections such as local, regional commuter and light rail links as well as high-speed, inter-city services.

“We are lucky enough to have a direct ‘Heathrow Express’ type train link to Union Station today, but what we are saying is that this is not nearly enough for Pearson or the entire region,” says Eng.

“Our ground connectivity must match the quality of our air connectivity, as people need to be able to get quickly and easily to Pearson or their final destination in Canada upon arrival at the airport.

“Simply put, to leverage the value that the air hub brings to this region we must work on improving the ground transportation options for both passengers and cargo.”

He says that GTAA is providing ‘thought leadership’ on the issue, and while it expects to fund the construction of the transit centre, the task of approving the projects and subsequently funding new roads and rail links ultimately falls to the provisional and federal governments.

“The airport’s location at the heart of the GTA’s three municipal areas means that we have the opportunity to create a regional transit centre like London’s Paddington Station at Toronto Pearson,” enthuses Eng.

“Our vision will reduce congestion on our roads and take the airport to the next level in terms of passenger numbers, bringing even greater economic benefits to Southern Ontario.”

Eng cites Amsterdam Schiphol and Frankfurt Airport as gateways with excellent rail links and ground transportation facilities and is optimistic that Toronto Pearson could have something similar within a decade.

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Airport infrastructure

Eng admits that space limitations mean that the possibility of expanding Pearson’s airfield are limited, although he believes that the industry trend of upgauging aircraft will significantly expand the airport’s capacity without the need for new concrete.

Indeed, he believes that wide-bodies will eventually account for 50% of all aircraft movements at Pearson, which he says would allow the airport to handle “significantly” more passengers than it does today.

As an example of the new trend, he notes that annual 2.1% and 2.8% increases in aircraft movements in 2015 and 2016 respectively resulted in passenger growth of 6.4% and 8% during the same years.

He also believes that the continued advancement in new passenger processing technologies means that there is still plenty of scope to more effectively and efficiently use the airport’s existing terminal facilities before more capacity-enhancing infrastructure is needed.

Having said that, Eng tells Airport World that GTAA has been in discussion with Pearson’s airlines over what comes next in terms of facilities, and a new pier is likely within the next five or six years.

“New technologies are changing the way we use airports and will play a big part in our future expansion plans in addition to new infrastructure, which will be built when demand dictates it,” reveals Eng.

“We are actually working closely with the carriers to define our growth plan and will shortly be going out to the industry with some preliminary designs for a new pier.

“At the end of the day it is the runway capacity that ultimately decides the capacity of an airport, as although you can always use a terminal more efficiently, you can only have so many aircraft landing on a runway. Based on our airside capacity and current and planned air traffic control technologies, I would say the capacity of Toronto Pearson is around 80 to 85 million passengers per annum.”

Southern Ontario Airport Network

With passenger numbers across southern Ontario expected to reach 110 million by the early 2040s, the region’s airports are aware that many of them will have a key role to play in ensuring that the province is equipped to meet future demand.

Indeed, GTAA is already thinking about the niche types of traffic and aviation services that could be better served at the region’s airports as Pearson reaches capacity.

Its desire to work more closely with the region’s other airports to examine a number of potential future capacity and connectivity issues proved integral in the establishment of the Southern Ontario Airport Network (SOAN) association earlier this year.

Fellow SOAN members are Billy Bishop Toronto City Airport, Hamilton John C Munro International Airport, Kingston/Norman Rogers Airport, Lake Simcoe Regional Airport, London International Airport, Oshawa Executive Airport, Niagara District Airport, Peterborough Airport, Region of Waterloo International Airport and Windsor International Airport.

SOAN’s short, medium and long-term goals include understanding the ground transportation needs in Southern Ontario and “advocating for investment in ground transportation improvements that will reduce congestion and greenhouse gas emissions”.

It also states that it is committed to “developing best in class strategies for responsible and sustainable airport growth”, and in conjunction with its launch, released a statement of intent entitled, ‘Flying Together: The Southern Ontario Airport Network’.

The document emphasised that planning for growth in a responsible way is essential and that without it, the region could potentially “leave C$15 billion in GDP on the table and force more than 20 million passengers to look elsewhere for their air travel needs”.

“Thankfully, we have a network of great airports, who have come together to start brainstorming ways to capitalise on this incredible opportunity for growth,” says Eng.

“We know that the efficient movement of people and goods to and from our region is an important part of Canada’s broader supply chain, and that we have a role in enabling economic prosperity through our actions and investments.

“As we look to the future of this growing region, we know that each of our airports can play a greater role in supporting our local and regional economies.”

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Airlines and traffic growth

Not surprisingly national flag carrier, Air Canada, is the biggest operator at the airport, accounting for 58% of its 44.3 million passengers in 2016, operating over 350 daily departing flights to 165 destinations, the most recent of which are Delhi, Mumbai and Berlin.

WestJet, which last year launched international services to London Gatwick, is the next biggest airline in terms of market share followed by Air Transat, Sunwing, American, Delta, United and British Airways.

A growing international route network saw Toronto Pearson handle 27.4 million international passengers in 2016, a new record for the airport and close to the 30 million target GTAA believes it needs to accommodate to become a mega hub.

In 2016, transfer traffic accounted for 31.5% of Toronto Pearson’s overall traffic, including cross border connections between Canada and the USA.

In fact, the number of connecting passengers at Toronto Pearson is one of the gateway’s biggest success stories of recent times, the airport handling 5.5 million more transit passengers last year than
it did in 2010 – an increase of 64%.

“Toronto Pearson’s strong performance in the first half of this year, particularly with regard to our significant increases in total and international passengers, is testament to our growing status as a vital connector of people and businesses,” says Eng.

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Customer service

Eng says that Pearson takes the provision of good customer service very seriously and believes that this philosophy is reflected in a number of ways, ranging from the opening of innovative new retail/F&B outlets and other ambience enhancing facilities to the launch of an ‘I am Pearson’ programme designed to make all airport staff proud of the airport.

“You just need to look at our mission statement, which is ‘Passengers are our passion’, to realise how seriously we take customer service,” he says.

“We are part of ACI’s ASQ customer satisfaction programme and place great value on being assessed by our passengers on 34 different areas and learning what we can do to improve every year.”

As a direct result of ASQ feedback, the airport has scrapped a fee for baggage carts and made wayfinding easier by installing 6,000 new signs, reveals Eng, remarking that Pearson really does listen to its passengers.

He states that wait times at security and passport control are “adequate to good, but not exceptional”, quickly adding that there is always room for improvement.

“When I was in Hong Kong we succeeded in getting 95% of passengers through security in four-and-a-half minutes. Are we achieving that here? No, but we are upgrading our screening equipment and are funding the opening of additional security lanes as we aim to do better, and match or better, those times,” says Eng.

Other examples of GTAA investing in new facilities include the purchase of the airport’s biometric passport reading machines in a bid to minimise queuing times.

Without doubt Toronto Pearson is already a success story and its ambitions to become a mega hub and provide an ever better service to passengers arguably ensure that the best is still to come!

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