Thank you, Mr. Chair.
Good afternoon, ladies and gentlemen. Thank you for the opportunity to address you today on the importance of Canada's airports to our nation's economic competitiveness.
The Canadian Airports Council is the national voice for Canada's airports, with 45 members representing 150 airports, including all national airport system airports. Our members handle 95% of passenger traffic and 100% of the cargo traffic.
The theme of the pre-budget consultations--Canada's place in a competitive world--is one that the Canadian Airports Council is honoured to address. Several key areas of federal policy today directly, and often adversely, affect the competitiveness of Canada's airports in the world. On a host of issues, federal policy and spending priorities have an important impact on competitiveness for our airports. In the short time that I have, I'll present our five-point plan that we believe is worthy of this committee's attention in its report to the minister.
Airport rents. Canada is unique in the developed world for charging airport rents, and it creates a dramatic competitive disadvantage for Canada's airports, a burden of some $300 million a year. On assets valued at about $2 billion at the time of transfer, Canada's airports have paid back more than $2.5 billion in rent. Canada's airports have more than repaid the federal government for its initial investment in the nation's airports, while simultaneously investing more than $9 billion to upgrade and expand Canada's air transportation infrastructure to ensure we are well positioned for future growth and tomorrow's trade opportunities.
The future cost to airports of rent is estimated by our industry at $35 billion. As an interim measure, the definition of airport revenue that is used to calculate rent should be reformed. Most notably, revenue raised to cover debt servicing costs should be excluded from the total revenue used to calculate rent. It is not today. And as currently written, the definition punishes airports for making the very capital infrastructure investments that were tasked to them under Canada's national airport policy.
Canada Border Services Agency. Simply put, we are asking this committee to recommend to the Minister of Finance that the Canada Border Services Agency be given more money in order to meet the growing demand for customs services at airports. The role of customs agents at airports cannot be understated. As we move toward more liberalized air service agreements, we will need to have the necessary infrastructure in place to deal with the growing demands on the system.
Our smaller airports, that is, airports with less than two million passengers per year, find it difficult to attract international carriers if they don’t provide customs services. Many other small communities also have to pay for customs services and basically, these communities are being penalized for ensuring essential economic ties by means of a new international air service.
Arrivals duty-free. This summer, on August 10, security incidents demonstrated how vulnerable Canada's airports can be to ever-changing security requirements. Currently, Canadian federal duty-free-related laws and regulations do not permit the sale of duty-free goods upon arrival at Canadian airports. Duty-free or tax-free sales at Canadian airports are only available for persons who are about to leave Canada. The prohibition of arrivals duty-free creates a competitive disadvantage for Canadian airports and reduces the potential revenues that could be generated from international visitors and returning residents. Canadian airports are seeking support to change the Customs Act and duty-free shop regulations to permit arrivals duty-free at Canadian airports.
International air service agreements. CAC believes that we must liberalize our air service agreements in order to be more competitive. We need a new international air policy, one that will open up opportunities to Canadian airports and the communities they serve to the world.
In conclusion, Canada's airports play a vital role in the competitiveness of Canada in the world. They facilitate trade, connecting Canadians and Canadian business with the world. Strong, financially viable airports able to compete on an equal footing with other airports around the world, and with the resources required to take advantage of opportunities present today, are essential to Canada's continued economic viability.
Thank you very much, Mr. Chair.