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Alternate Approach: Can a winter wind blow change?

After too many years on the back burner, the pot is starting to bubble again.


March 3, 2014
By David Carr

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After too many years on the back burner, the pot is starting to bubble again. Abacus Data, a market research organization, is reporting that Canadians are warming up to selling off public-owned assets, including the Canadian Broadcasting Corporation (45 per cent), Canada Post (47 per cent) and VIA Rail (53 per cent). At the same time, resistance to privatization is softening. Less than 40 per cent are strongly opposed to the federal government placing any of the above-mentioned assets in the shop window.

snow day  
 To set the record straight, a case for or against privatization is not going to be won or lost on the reaction to a ‘snow day.’ Photo: GTAA


 

Airports were not on the list, but that should not come as any surprise. Airports are no longer the financial drain they were in the 1980s ahead of commercialization (Pearson being the sole exception). Indeed, the case for a selloff rather than leasing airport lands to local non-profit, operating authorities has weakened with better infrastructure, improved customer service levels and added revenue opportunities.

Many factors can drive the privatization agenda. In the Mulroney/Chretien years the country was steered through a bold overhaul of its transport system with the public selloff of shares in Air Canada and the Canadian National Railway; the sale of the air navigation system to NAV CANADA, a non-profit private enterprise; and the lease of airports to local operators. Motivation this time would be for a heavily indebted federal government to raise needed cash. Airports like Pearson, Vancouver and Calgary are sitting on piles of it.

The Mulroney government left the door open a crack for airports to eventually be privatized. The Chretien government saw to it that this door was shut and bolted. Few have complained, until now. But a harsh winter has sent a chill over how airports are owned and operated.

The Greater Toronto Airports Authority (GTAA) has not had a good year so far. The decision to order a “ground halt” for several hours one extremely cold day in January after temperatures plunged and the tarmac and equipment iced over has exposed the GTAA to some heavy criticism and calls for the inevitable shakeup. A lot of it has been unfair.

To set the record straight, a case for or against privatization is not going to be won or lost on the reaction to a “snow day.” There is no guarantee that the GTAA in private hands would have acted any differently, as evidenced in 2010 when privately held London Heathrow, the world’s busiest international airport, closed its runways for several days due to heavy snow.

Still, in politics it is not usually the breach but the cover-up that triggers the scandal. With the GTAA’s Heathrow moment, it was not the “ground halt” but the lack of communication and an early striptease on how much of an internal review into operations would be released to the public that has invited questions over how accountable Canadian airport authorities really are? The answer? Not very.

Full disclosure: in 1995, this correspondent co-wrote a report urging the government to scrap commercialization (which we called privatization-lite) in favour of the national selloff of airport infrastructure. In a recent editorial entitled “Who’s the pilot of Canada’s airports?” the Globe and Mail suggested it was time for Ottawa to rethink the airport ownership model. The editorial touched on identical points raised in the almost 20-year report, including the lack of profit motive (that can lead to built-in inefficiencies and overbuilding in a non-profit model where surpluses must be ploughed back into the asset) and self-selecting a board of directors accountable to whom exactly?

The Globe and Mail argued that airport authorities are “neither fish nor fowl” and as such, lack the necessary accountability mechanisms of either a private-sector company or Crown corporation. That is one of the flaws of public-private partnerships, upon which airport authorities are loosely based. Lines of accountability are blurred as politicians and operators find cover by pointing fingers. That is if they respond at all.

The shutdown at Pearson presents an emotional argument, so it is unlikely that privatization will pop up like spring crocuses in a winter snow anytime soon. But privatization is not a radical undertaking. Airports already act as shells for private-sector businesses, including previously state-owned airlines. The Vancouver International Airport Authority and Canadian pension funds have cashed in on foreign airports and other infrastructure investments.

The motivation in Canada for privatizing airports in 2014 is much different than what drove commercialization 30 years ago. Airports are no longer taxpayer sinkholes for one. But they are sitting on billions of dollars of land that the federal government could unlock to lower the debt or invest in other infrastructure projects. From rusting bridges to crumbling roads, there is no shortage of opportunities.


David Carr is a Wings writer and columnist.