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Federal government rejects Gander airport demand for more funding

GANDER, N.L. (CP) _ The federal government has rejected a request by Gander International Airport for $12.5 million in funding over the next five years.

Federal Transport Minister Lawrence Cannon said he understands the economic challenges being faced by the airport but insists government can't be writing blank cheques.

"The federal government's offer represented a fair balance between the desires of the (airport) and the need for accountability to taxpayers,'' Cannon said in his letter to the authority.

Ottawa offered last month to cover any of Gander's losses up to $5.9 million over 24 months.

But the Gander International Airport Authority rejected that offer and made a counter-proposal.

Cannon said the government's original offer “was not negotiable.''

Gander International has struggled in recent years due to a decline in passenger traffic. Military activity remains steady, but the military does not pay landing fees.

Documents obtained by the St. John's Telegram show the airport authority outlined two options in its counter-proposal; both designed to give the airport a five-year window to improve its situation.

The first option was to provide a "one-time, up-front cash payment of $10 million to be used at our discretion for capital and operating as required."

The second option called for the federal government to "offset revenue lost from providing services for government for free,'' which the authority stated would mean" an annual payment of $2.5 million for five years.''

The authority had set a deadline of Dec. 20 for the federal government to respond to its counter-offer.

Airport CEO Gary Vey and chairwoman Donna Rideout have both suggested the authority will have to turn the airport back over to Transport Canada if the response to the counter-offer wasn't favourable.

Cannon doesn't appear to be blinking on the threat.

"In the unfortunate event that the (authority) elects to seek early termination of its lease, Transport Canada would work with authority officials to ensure a smooth transition of the airport back to the Crown," he wrote in his letter.

Cannon also questioned the authority's suggestion that it needs five years to become self-sufficient, insisting "it is not obvious that the airport can achieve this goal."

Asked about the two options presented by Gander officials, a source with the federal Treasury Board said the requests were not only outside his department's guidelines but also went against the idea of overall government accountability.

"This was how the whole sponsorship scandal happened," he said. "Simply handing out money without the recipient of that money showing exactly how or where it will be spent is, well, Gomery-esque.''