Transport Committee on Sept. 26th, 2018

[The Chair, Liberal, Judy Sgro]

Thank you and congratulations. It sounds as though you're doing a fabulous job at that airport.

Go ahead, Mr. Bruno.

[Gerry Bruno, Vice President, Federal Government Affairs, Vancouver International Airport Authority]

Good afternoon, Madam Chair and members of the committee.

I'm Gerry Bruno, vice-president of federal government affairs for the Vancouver International Airport Authority. I thank you for providing us the opportunity to make a presentation here today.

I'd like to start with an overview of Vancouver International Airport's role as a key player in Canada's trade corridors.

[The Chair, Liberal, Judy Sgro]

You have five minutes, Mr. Bruno.

[Gerry Bruno]

Yes, I'm good.

We are Canada's second-busiest airport; we are one of North America's fastest-growing international airports, in terms of both passengers and cargo. YVR plays a significant role as a connecting hub to Canada and North America, both from Asia-Pacific and Europe. In 2017, we welcomed a record 24.2 million passengers, which was an 8.4% increase over the previous year. Our terminal capacity is 25 million passengers; we expect to reach about 26 million this year and 29 million by 2020, so we are effectively at capacity.

A total of 56 airlines service YVR, connecting people and businesses to more than 127 non-stop destinations worldwide. We've been recognized as the best airport in North America by Skytrax's survey for nine years in a row, which is an all-time record. Our cargo business grew faster than our passenger count in 2017, and this includes high-demand B.C. perishables, including seafood and fruit. In 2017, we moved over 313,000 metric tonnes of cargo, accounting for over $2.7 billion in cargo exports. A significant share of our cargo is transiting to and from other parts of Canada and the U.S., primarily by truck. Consequently, surface transportation infrastructure and border capacity are critical, particularly for our perishables and just-in-time goods.

YVR is a key economic driver for B.C. and Canada, generating over 24,000 direct jobs at the airport, supporting over 100,000 jobs across B.C. and accounting for $16.5 billion in total economic output.

To address our rapid growth, we recently launched a $9.1-billion expansion plan. This includes 75 projects over the next 20 years. As you know, we receive no federal funding, and as a not-for-profit, the airport authority finances its expansion through debt, which is paid off from key revenue sources such as landing fees, retail and other commercial revenue, and airport improvement fees.

One of our other sources of funding is revenue generated by our innovative travel solutions team, which develops and markets automated border kiosks for both border entry and exit immigration. We sell these to airports, airlines, ports, and government agencies throughout North America and in other parts of the world.

Borders and security have a tremendous impact on our capacity and competitiveness. Because of this, Vancouver airport led the establishment of the binational Beyond Preclearance Coalition, aimed at further improving border and security processes through greater use of technology, which will both enhance security and move people and goods at speed. This coalition involves over 40 organizations engaged in transportation, trade, and tourism. All modes of transport are represented. We have ports, airports, airlines, rail, cruise lines, and trucking. Our coalition has raised about $450,000, has organized a number of forums, round tables and summits and has commissioned a “Beyond Pre-Clearance” white paper, which will be published in the first week of October, basically next week.

The white paper will include recommendations on long-term initiatives and public-private partnerships for technology investments as well as a number of short-term pilot projects. We expect that payoff in terms of improved border and security services and cost savings could be huge. If the recommendations of the white paper are adopted by our government partners, the Vancouver airport alone could save billions of dollars in planned capital investment.

I will be pleased to share the final white paper with the committee. It should assist you in your review of infrastructure funding priorities and strategy.

Thank you, again, for the opportunity to speak to you today. I would be pleased to answer any questions.

[The Chair, Liberal, Judy Sgro]

We'll go on to Mr. Dickson.

[Geoff Dickson, President and Chief Executive Officer, Victoria Airport Authority]

Madam Chair and ladies and gentlemen, thank you also for the opportunity to speak to you this afternoon. My name is Geoff Dickson. I am the president and CEO of the Victoria International Airport and I'm also chair of the Canadian Airports Council small airports caucus.

Just so you know, Canadian airports are economic engines and drive some $79 billion in economic output. That's the most recent information we have. A total of 355,000 jobs are generated directly and indirectly through airport activities, and close to $5 billion in federal taxes are generated. Victoria International Airport alone generates close to $1 billion in economic output for the greater Victoria region.

I commend the committee for its forward thinking, and I look back to another time, in the 1990s, when Transport Canada had the foresight to step out of operating airports and focus solely on being a landlord and regulator. If you move forward to today, since that time Canadian airports have grown from 65 million passengers in the 1990s to 147 million passengers in 2017.

Over $25 billion has been invested in airports by the Canadian airport authorities. I contend that without this model, a choke point in a trade corridor would have been created through lack of taxpayer-available funding to support this growth, and the appropriate infrastructure investments wouldn't have been made. The government of the day ran a deficit of $135 million annually, so it was a very good move all around.

Unfortunately, we see that one of the elements in the aviation supply chain has not been addressed, and that's the Canadian Air Transport Security Authority, which remains a government agency. It's allocated annual funding by no specific formula. It does not match revenue to expenses and is not keeping up with passenger growth at Canadian airports. You just heard some of the growth numbers I provided to you.

You have highly skilled individuals at CATSA, but their hands are somewhat tied, which leads to congestion in security, long lineups, delays for airlines, potentially missed slots, and inconvenience for customers. It adds potential barriers to trade growth. That area needs to be addressed.

At Victoria International Airport, we feel the velocity of travel created through the continued North American and global expansion that you just heard Mr. Bruno speak of at YVR. Hubs are gateways. They don't just rely on the local market economies, but on the overall strength of the arterial feed system from airports such as Victoria International Airport.

While we're of a size that we can make the appropriate infrastructure investments, smaller airports throughout British Columbia cannot. For YVR to continue to grow, it needs a strong economy and sophisticated connections throughout Canada, the U.S., and internationally, combined with the needed feed to and from the regional airports, such as in Prince George, Kamloops, Nanaimo, and Castlegar. There needs to be federally funded mechanisms in place to ensure these regional airports have the required access to infrastructure funding.

This is all part of a cohesive gateway strategy, and while my comments here speak to British Columbia, they are true for the airport hubs in regional feeder airports across the country. There is a program called the airports capital assistance program, or ACAP, and that has been a valuable program for small airport funding. The funding levels, however, have not changed in 18 years. There are presently six airports in the national airport system, the NAS—Prince George, London, Fredericton, Charlottetown, Saint John, and Gander—that aren't eligible for ACAP funding, and they're not able to meet their capital needs. There just simply aren't enough passengers at those airports to generate the revenue that's required for infrastructure investment.

There has been progress, and you're to be commended for the national trade corridors fund. It's been a tremendous initiative, but those levels are uncertain and it's not predictable for the future. Consideration needs to be given to raising the current ACAP funding level, which has been held constant, as I said, for the last 18 years, at least by historical CPI, and hasn't kept up with the inflationary impacts of what we see in equipment, the cost of labour, paving runways, and in apron facilities.

The economic prosperity of a region is inextricably linked to its connectivity to the rest of the world, and that's why it's so necessary to make those appropriate airport infrastructure investments.

Thanks very much for the opportunity to be here.

[The Chair, Liberal, Judy Sgro]

We'll move on to Mr. Jeneroux.

[Matt Jeneroux]

Thank you, Madam Chair, and thank you all for being here. It's our last panel of the day, and you've probably had a long day too, so I'm looking forward to getting some questions answered.

Did you want to pick up right where you left off, Mr. Dickson?

First of all, I've been to your airport many times and I'm excited to see the latest renovation under way. I was there a few weeks ago. You've done a lot of work in the last number of years, and it's looking quite remarkable, thanks to the changes you've already made.

To pick up on the ACAP funding, I have the website up in front of me. Can you help me understand why a number of these airports aren't eligible for the funding? Is it a certain number of passengers that need to go through there, or a certain dollar amount that it has to hit in terms of revenue? What are some of the...?

[Geoff Dickson]

The six airports that were identified are part of the National Airports System. One of the criteria for being an NAS airport is that you have to be self-sufficient to be eligible for that level of funding.

The other criterion was a volume of 525,000 passengers, and the airports that are applying for funding have lower volumes than that. The challenge is that those six airports I mentioned are, I believe, below that threshold.

[Matt Jeneroux]

You said this has been in place for 18 years?

[Geoff Dickson]

The funding levels haven't changed for 18 years, and the program was put in place in the late 1990s.

[Matt Jeneroux]

Have the requirements changed in the last 18 years?

[Geoff Dickson]

Considerably, yes. With the escalation on different types of equipment, a fire truck, for example, could cost $1 million. Those are significant investments that airports need to make to maintain safety and the overall level of their infrastructure.

[Matt Jeneroux]

In terms of passenger numbers—the 525,000 that you indicate—has that changed?

[Geoff Dickson]

That threshold hasn't changed.

[Matt Jeneroux]

Okay. You'd think that over 18 years, with the increase in population, you'd hit it.

Maybe just because we're tight on time, I'll switch over to Mr. Sidhu. Thank you for your presentation.

We were in the Niagara region earlier this week, and we heard from a number of airports there some concern about people going south of the border to catch a flight. When you do that, you don't then have to do an international flight; I guess you drive through the border to connect. Do you have similar concerns at your airport?

[Parm Sidhu]

Yes, there was a fair bit of cross-border leakage. I believe at one point 70% of Allegiant's traffic out of Bellingham was Canadian, so there were a couple of issues there. We never had a carrier that was willing to take that market on, and with Swoop we now have a carrier that's going to offer Canadians more competitive fares on the Canadian side of the border.

This summer we counted 47 U.S. plates in our parking lot. Depending on the destination, there's some flow coming back in the other direction now. That's why we need multiple ultra-low-cost carriers in this system. It's important to grow the market share in Canada, to take Canadians where they want to go and possibly reverse the flow.

[Matt Jeneroux]

In August 2016, you received funding for support for the Mt. Lehman Road project. Is that Highway 1? Are they different? I'm not familiar with the area.

[Parm Sidhu]

It's considered a provincial road from the highway to the airport. It's about 3.3 kilometres long. There's about a $22-million investment, which is funded by the federal government, the province and the City of Abbotsford. It connects to Highway 1. Highway 1 is two lanes up until a certain part of Langley, when it expands into three with an HOV lane.

We're requesting that the committee consider three lanes all the way past Abbotsford through to Chilliwack, which would be an enabler for everyone.

[Matt Jeneroux]

Yes, okay.

What's the status of that project now? Where is the—

[Parm Sidhu]

I believe up to 216th Street eastbound they're going to have three lanes. From 216th on to Chilliwack is still being considered.

[Matt Jeneroux]

No, sorry; I mean the funded project, Mt. Lehman Road, the four-laning in Abbotsford, the one that was funded. Is it complete?

[Parm Sidhu]

It will be in November 2019. The work has started. It will be finished about November 1, 2019.

[Matt Jeneroux]

It's to be completed November 1, 2019. Is it on target?

[Parm Sidhu]

That's correct.