Transport Minister Announces Agreement in Principle to Amend Airport Leases….
May 16, 2008 | General
CALGARY — Transport Minister David Anderson today announced that the federal government has agreed in principle to amend its ground leases with the local airport authorities (LAAs) that operate Calgary, Edmonton and Vancouver international airports.
The lease amendments will bring the LAAs more in line with the Canadian Airport Authority model set out in the federal government’s National Airports Policy.
The amendments will:
-give the authorities the financial flexibility they need to respond to the unprecedented growth in passenger traffic that has taken place since the original ground leases were signed in 1992;
-provide for the adoption of public accountability principles that are similar to those found in the current airports policy; and
-allow the nomination of federal representatives to the authorities’ boards of directors.
Under the agreement in principle, Calgary International Airport will see its rental payments to the government decline by approximately $116 million, Edmonton International by $127 million and Vancouver International by $46 million over the next 10 years. These figures are based on estimates of future passenger traffic volumes.
These funds from reduced federal rents will be invested in airport expansion and improvement. The smaller reduction in Vancouver’s payments is a reflection of the fact that the authority was provided with the funds necessary to construct a new runway as part of its original lease negotiations with the federal government in 1992.
“Our challenge is to make transport policy sensitive to the needs and opportunities of Canada’s regions,” said Mr. Anderson.
“These three airports — Calgary, Edmonton and Vancouver — have experienced a dramatic increase in traffic over the past four years to the United States, the Pacific Rim and elsewhere,” he added. “This increase is the result of our government’s `Open Skies’ agreement with the U.S., our new international air policy, the buoyant Western economy, the consolidation of flights at Edmonton International Airport, and the very successful management and marketing undertaken by the airport authorities themselves.”
As a result of these rent reductions, Calgary and Edmonton will be able to proceed with more than $500 million in urgent development work. Similarly, Vancouver International Airport will have enhanced flexibility in financing capital improvements.
In 1992, the federal government transferred operational control of the international airports at Calgary, Edmonton, Vancouver and Montreal (Dorval and Mirabel) to LAAs under the terms of 60-year lease agreements.
Since that time, the LAA model has been superseded by the Canadian Airport Authority model set out in the current government’s National Airports Policy, announced in July 1994. The four existing LAAs were invited to adopt this new model at the time the National Airports Policy was announced.
In contrast to LAAs, Canadian Airport Authority leases recognize the recent growth in the industry and the need to develop airport infrastructure. This is reflected in the amount of rent paid to the government and the flexibilities the authorities are given to direct increased revenues to capital investment and airport development.
With today’s agreement in principle, the authorities at Calgary, Edmonton and Vancouver gain this flexibility.
“Our government has worked hard to stimulate growth in the air sector and create opportunities for the Canadian aviation industry, travellers, shippers and airport communities,” said Mr. Anderson. “The result has been a marked increase in air traffic — an increase we don’t want jeopardized by inflexible lease agreements.”
Development projects planned for Calgary and Edmonton will create more than 10,000 jobs in Alberta.
Details of the new lease agreements will be made final over the next few months as the authorities work towards adopting the public accountability principles.
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