Canada’s new policy fosters private investment to boost airport infrastructure and economic growth

Canada’s airports play a crucial role in the country’s transportation network, connecting communities within Canada and globally. These airports are vital economic drivers, facilitating trade, tourism, and travel. To further enhance airport infrastructure, the Canadian government has recently released a policy statement aimed at encouraging investment in Canada’s National Airports System (NAS). This initiative aligns with the commitments outlined in Budget 2024 and seeks to bolster the development of the country’s airport facilities.

Details on Canada’s new policy to boost airports

The NAS comprises 26 airports, with 22 of them operated by private, not-for-profit airport authorities. These authorities manage airports located on lands leased from the Government of Canada. The new policy highlights opportunities for private investment, including collaboration with pension funds and developers. It introduces avenues such as subleases, subcontracts, and subsidiaries, providing flexibility for investors to engage with airport authorities.

Minister of Innovation, Science and Industry, the Honourable François-Philippe Champagne, stressed the importance of investment in airport infrastructure: “Canada’s airport operators have built world-class infrastructure, connecting people, services, and goods. As our air sector continues to grow, investment from various sources will be essential to ensure that our airports can meet the needs of Canadians.” The government’s focus is to foster collaboration with private investors to help drive airport development and economic growth.

One key player in this initiative is ADM Aéroports de Montréal (ADM), which oversees YUL Montréal-Trudeau International Airport and YMX International Aerocity of Mirabel. ADM is embarking on an ambitious investment programme, Flight Plan 2028, aimed at upgrading YUL to improve accessibility and connectivity. The recent policy changes align with ADM’s vision for modernisation, and the airport is eager to explore private investment opportunities to accelerate development.

Yves Beauchamp, President and CEO of ADM, expressed support for the government’s policy, saying, “We welcome the federal government’s stated intention to enter into negotiations to extend ADM’s lease. Our organisation is ready to begin these discussions immediately, as such an extension would facilitate the implementation of all our expansion and modernisation projects over the next 10 to 15 years.” ADM is particularly interested in collaborating with institutional investors, such as Canadian pension funds, to enhance its infrastructure.

Toronto Pearson International Airport, Canada’s largest and busiest airport, is another major beneficiary of the new policy. Deborah Flint, President and CEO of Toronto Pearson, highlighted the importance of private investment in modernising airport facilities to meet growing demand: “We welcome this policy direction which clarifies investment parameters at a time when Toronto Pearson is building new infrastructure to address increased demand by passengers.” The airport is already implementing Pearson LIFT, a long-term capital investment plan focused on improving the passenger experience through sustainable design and smart architecture.

In 2023, Canada’s airports processed 150.7 million passengers, with major airports serving as critical hubs for both domestic and international travel. The air transportation sector also plays a key role in Canada’s trade, with about 30% of the country’s non-United States cargo traffic transported by air. With the increasing demand for air travel, the need for investment in airport infrastructure is more pressing than ever. The Canadian government aims to attract private investment to ensure that airports can continue to meet both passenger and economic needs.

The new policy statement provides several ways for private investors to collaborate with NAS airports. One option is entering into subleases with airport authorities to develop and operate businesses on airport lands. These subleases can support both aeronautical and non-aeronautical activities, such as energy generation or real estate development. Additionally, the government will explore the possibility of extending airport authority ground leases, providing greater certainty for investors and encouraging long-term investment.

Subcontracting airport services is another avenue for private sector involvement. Private entities can provide essential services, such as facilities management, operations, and maintenance, helping to improve efficiency while airport authorities retain control over overall operations. Furthermore, investors can collaborate with airport authority subsidiaries to create flexible financing arrangements and joint ventures that support the development of new facilities.

Institutional investors, such as Canadian pension funds, are seen as critical to ensuring the long-term financial stability of Canada’s airports. The government plans to explore ways to extend airport authority ground leases, further encouraging private sector participation and enabling the development of new facilities. With Canada’s population growing and demand for air travel increasing, the new policy aims to strengthen the NAS’s infrastructure, supporting Canada’s economic growth.

The policy provides flexibility for airport authorities to work with private investors in ways that benefit both airports and the communities they serve. By fostering greater private sector involvement, the government hopes to improve the quality and sustainability of Canada’s airport facilities, ensuring they meet the evolving needs of Canadians.

As airports continue to grow, this new policy offers clarity on investment opportunities and mechanisms for investors. By collaborating with government, airport authorities, and private investors, Canada aims to enhance its air transportation system, improve passenger experiences, and stimulate economic growth. The policy changes are set to provide long-term benefits, helping Canada’s airports remain world-class and capable of meeting future challenges.

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