Thank you, Madam Chair.
Thank you, honourable members, for the chance to appear before you today.
I'm pleased to join the committee remotely from my office at the Vancouver International Airport, located on the traditional, unceded and continuously occupied territory of the Musqueam people.
YVR is a strategic trade and infrastructure asset for Canada that plays a crucial role as a reliable gateway to the Indo-Pacific, both for passengers and cargo. In this regard, YVR competes against airports along the U.S. west coast—Seattle, Portland, San Francisco and Los Angeles—to attract airline carriers and investment.
Air cargo has proven its value time and time again, with dramatic examples over the course of the pandemic. Air carriers significantly modified operations to move more goods when passenger travel restrictions were in place. In 2022, when the atmospheric river hit British Columbia, YVR was the only mode of transportation that remained fully operational both during and after the significant rainfall.
The pandemic has also challenged long-held industry assumptions regarding growth, globalization, technology and labour. Today, as our industry has emerged from the pandemic, those changes can be summarized under the heading “more with less”.
Passenger and cargo volumes have almost fully recovered, but this demand is being served with fewer aircraft and fewer routes as the industry rebuilds balance sheets and returns to profitability. Cargo volumes are generally a good indicator of economic conditions, but have been challenged recently by high inventory levels held by retailers as consumers shifted spending towards services. While the air cargo market has softened in the past year and all-cargo operators have thus adjusted investment strategies in response, we believe that the long-term fundamentals for air cargo remain strong.
The year 2023 was an excellent year for cargo at YVR despite the overall slowing of the economy and cargo trends. While U.S. airports generally recovered more quickly post-COVID, recent results have been weaker, while YVR's recovery has accelerated. Compared to 2019, YVR is up 5% versus 2% for Los Angeles, while Seattle, Portland and San Francisco are all down. Early numbers indicate an opportunity to reach record levels in 2024.
The strength of YVR's cargo operation and role in Canada's supply chain remains a key focus for us. The investments we are making to evolve YVR into a multimodal hub for trade investment will be transformative for the region and, indeed, all Canadians.
YVR opened two new airside cargo warehouses in 2023, allowing GTA dnata and Cargojet to expand their operations. We also completed a proof of concept for a truck slot booking system with partner Kale Logistics last winter, using digital technology to improve cargo efficiency. Purolator, Aerostream and Menzies are reviewing the technology for potential use.
Construction on the first phase of our new south cargo expansion project also kicked off in 2023. This $150-million investment will boost YVR's cargo capacity by 160,000 tonnes, representing a $22-billion increase in Canada's trade potential annually. I would like to express our gratitude for the support that the Government of Canada provided for this project through the national trade corridors fund. However, challenges remain with Canada's trade infrastructure if we are going to seize the opportunities that we see 20 to 30 years from now.
First, YVR agrees with the testimony that the Canadian Chamber of Commerce put forward to this committee in February. Billions of dollars of private and public investment are needed to address Canada's trade infrastructure deficit. While government isn't solely responsible, a federal commitment to major, strategic, long-term investments is key.
Second, we continue to advocate that the federal government reinvest airport rent back into airport infrastructure. Allowing airports to reinvest the $400 million the federal government currently takes out of the airport system each year would create an annual economic impact of $612 million, creating nearly 2,400 jobs with an average salary per job of $79,700 and contributing approximately $160 million in GDP.
Finally, government must continue investing in industries that create more cargo-eligible goods, such as in advanced manufacturing and pharmaceuticals.
I will conclude my remarks there, and I look forward to the discussion.
Thank you, again, to the committee for studying this important topic and taking the time to hear from stakeholders across the country. I look forward to your questions.