Airlines respond angrily to Toronto Pearson rent increase
Thursday November 17, 2005 "Crown Rent Policy Madness," a headline on a statement released yesterday by IATA, was emblematic of the vitriol directed toward the Canadian government and the Greater Toronto Airports Authority following GTAA's proposal to increase landing fees 6.9% and terminal fees 8.9% for 2006, making Pearson International Airport the most expensive in the world, according to IATA.GTAA claims it needs to raise fees owing to Canada's policy of charging airports rent on their land grants. The authority said in a statement that it pays two-thirds of the country's airport rent despite handling just one-third of the traffic and owes payback of a deferral it was given to mitigate losses caused by the 2003 SARS outbreak. It warned that it may have to pay Transport Canada as much as C$151.5 million ($127.1 million) for ground rent in 2006, compared to the C$133 million paid in 2005.
IATA DG and CEO Giovanni Bisignani, who has clashed with GTAA in the past, agreed that the rent policy "is the single largest obstacle to lowering airline fees at Pearson [and] should have died when the government recouped its airport investments." However, he also called on the authority to "do a better job of managing its costs," declaring, "We are paying a heavy price at Toronto for the excessive airport redevelopment that the government allowed to proceed unchecked."
The government agreed to cut rent at Pearson 6% by 2010, compared to 63% at Vancouver, 60% at Calgary and 20% at Toronto. Additionally, it has not assumed any of the debt associated with GTAA's C$4 billion redevelopment investment.
The US Air Transport Assn. suggested that US airlines may avoid Toronto in the future owing to the high fees, serving southern Ontario "through nearby US cities such as Buffalo, Detroit, Chicago and even New York."
Air Canada, which sued GTAA over its "excessive" redevelopment program, urged the government "to revisit the rationale for charging airport ground rents and to amend the governance policies for Airport Authorities to provide airlines and other users with meaningful input in airport development and operations."
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