This year could be a pivotal one for Canada’s air transport sector in terms of the federal government’s policy approach to the industry, much of which hasn’t changed in 25 years.
At least, this is if competing priorities and a fiscal crunch don’t distract government too heavily from the once-in-a-decade opportunity to reshape the industry to better serve Canadian travellers and communities.
The sense of opportunity comes from the publication of a government-mandated, but independently prepared review of the legislative, regulatory and policy framework around transport, conducted by a former cabinet minister.
The report aligns with industry concerns about the screening function, for example, where growing wait times have made screening the biggest operational challenge at several airports.
It also proposes solutions to another CAC priority – access to government funding for capital projects at smaller airports. However, the report is just advice to government, not government policy.
User pay policies and the cost of air transport
The panel recommends a less rigid adherence to user pay, in line with jurisdictions in Europe and Australia. This includes increasing capital funding for small airports, the phase out of airport rent, and the reduction of the Air Travellers Security Charge.
It also recommends more work with the provinces on their role in cost competitiveness, including payments to municipal governments and the introduction of duty free for arriving passengers.
National Airports Policy: Ownership and governance
Under the current model, Canada’s major airports operate as non-share capital corporations, which means they operate essentially as not for profits, with any operating surpluses poured back into the airport.
This would change under recommendations from the review, which includes the controversial suggestion that the federal government divest of smaller federally owned airports and move larger airports
to a share capital structure. There are also recommendations to legislate changes to airport governance.
Domestic air carrier competition and foreign ownership limits
Recommendations include increasing foreign ownership limits on Canadian airlines to 49% (from 25% today) and 100% for all-cargo and speciality carriers. This is supported by airports as the current limits are seen as a barrier to entry to new competitors.
International air carrier competition and international air policy
The report proposes a minimum of daily frequencies for each side in bilateral air agreements, and scheduled capacity increases in increments of seven weekly flights. This would be a measured improvement over the federal government’s current approach in many markets.
Global hub strategy
This includes improved border facilitation through harmonisation of trusted traveller programmes and Transit without Visa for citizens of all but ‘high risk’ countries. Canada’s airports called for recommendations in this area to be included and are pleased to see the section in the report.
Airport security screening and governance
The review recommends an overhaul of the regulatory, financing and delivery models for airport security, including a fix to the funding model, a legislated customer service mandate and regulated performance standards benchmarked internationally. As the biggest operational concern of many of Canada’s airports, airports have urged the federal government to make this area a priority.
Consumer protection of airline passengers
The review recommends a regime “as harmonised as possible” with that of Europe and the United States. It seems that this is an area in which the federal government may act and while air carriers would be most directly affected, airports will monitor the proposals to ensure they adequately account for circumstances outside of the control of industry – such as the weather.
Notwithstanding some concerns with the recommendations on airport ownership and governance, airports are supportive of most of the recommendations in the CTA Review report as they would address many of their biggest concerns.
The federal government is now busy consulting with industry on the report, with an eye to proposing changes to the legislative, regulatory and policy framework as early as the fall.
Not having commissioned the Emerson report, Canada’s Minister of Transport, Marc Garneau, will seek to imprint his own vision in these changes. But while it is still very early to project what his agenda will look like, he has signalled an increased focus on the needs of the traveller – an approach that airports certainly can endorse.