Good afternoon. I'm John Kaldeway. Thank you for the opportunity to appear here this afternoon.
As you are most certainly aware, Toronto Pearson is an economic asset of unparalleled importance to southern Ontario, and indeed to all of Canada. As a critical component of the nation's transportation infrastructure, our airport connects Canada with the world and generates thousands of jobs and billions in annual economic output, wages and taxes.
However, there are three core issues impacting our competitiveness that I would like to address to this committee today. The first is infrastructure. The first challenge we face is to ensure that Canada's airports are equipped to compete with the world's best, by making sure the right infrastructure is in place. Today the GTAA is nearing the completion of a decade-long $4.4 billion infrastructure redevelopment project, which has seen the replacement of obsolete and derelict facilities in order to handle the current and future demand for air transportation services.
Prior to the transfer to the GTAA, the federal government was operating with a large national debt, and funds for airport infrastructure simply did not exist. The GTAA's development program was privately funded, through the issuance of debt securities; it received no government funding. The project will be completed on time and on budget.
The airport is now well equipped to meet future demands with a world-class facility that is modern, safe, and secure. With our new facilities we are now in a position to continue to play a crucial role as Canada's premier gateway, which would not have been possible with the facilities we inherited in 1996.
The second issue is air policy. With the right infrastructure now in place, the core issue impacting our competitiveness is the policy framework governing Canada's air policy. It is critical that the government's international air policy, as well as individual bilateral air service agreements with other countries, not impede the industry's ability to compete. A less restrictive market would allow Canada's entire airport system to grow and to flourish.
We recognize that the federal government is moving towards a more open and liberalized policy. I must say we're particularly pleased with yesterday's announcement of Transport Canada's consultation process to liberalize Canada's international air policy. The GTAA encourages the government to continue this approach and to abandon the former practice of negotiating agreements containing restrictions that hinder airports and air carriers from meeting the needs of the competitive market.
The third and most important factor that impacts the ability of an airport to compete globally is fiscal competitiveness. Much has been made of the cost of operating and redeveloping Pearson. Everyone agrees that the airport was in need of redevelopment. We have put into action a responsible plan to do that and to contain costs, maximize revenues, and develop new sources of non-aeronautical revenues to ease the pressure on the landing fees of air carriers.
One such source of non-aeronautical revenue I'd like to specifically mention is something called “arrivals duty free”. Such arrivals are not possible today in Canada. It's only possible—through the rules of the Canadian government—to have departures duty free, which creates a competitive disadvantage for Canadian airports and reduces the potential revenues that could be generated from international arriving passengers.
More than 45 jurisdictions or countries in the world have implemented an arrivals duty free program, and this has eroded the Canadian departures duty free program. Arrivals duty free would generate various economic benefits, including jobs, wages, tax dollars, and so forth. Our estimate is that these sales could generate as much as $338 million a year of additional revenue for Canadian business. In order to succeed as a global gateway, these types of initiatives that drive competitiveness have to be in place.
The third one, which I'm sure you've heard before is fundamental to us, is the issue of airport rent. As you've already heard from some of our industry partners, airport rent negates the competitiveness of not only Canadian airports but also the air transportation industry as a whole. The Greater Toronto Airports Authority has paid more than $1 billion in rent to the federal government since 1996. In 2005 the landing fees at Pearson, which you hear so much about, could have been 34% lower if there had been no airport rent.
We have given you a proposal in previous papers. It has been presented to the Department of Transport as well as to the Department of Finance, and it would make a major difference on the airport rent issue. It is a key financial policy change that we continue to ask for; it is critical to us. We've invested $4.5 billion basically in building a new airport on top of an existing one while keeping one running, but we need assistance to get the inequities out of the way. This solution could also apply to all other airports in Canada and provide some benefits to all of them.
Thank you very much.