Thank you very much.
Good afternoon, members of the committee.
My name is John Gradek. I'm a faculty lecturer and academic programs coordinator for supply chain and aviation management at McGill University's School of Continuing Studies.
I'd like to start by thanking the committee for inviting me to appear today to speak on the issue of reducing red tape and costs on rural and urban Canadian airports.
My professional credentials to speak on this very important subject come from close to 20 years in direct aviation in operations at Air Canada, in several operating roles in marketing and planning, as well as teaching commercial aviation at McGill for the last 10 years.
One of the things I've done in my current role at McGill is give the students I work with, both undergraduate and graduate, the opportunity to understand the intersection between things like the supply chain and the best practices associated with airport infrastructure and airport capacity.
The evolution of the Canadian airport structure is well known to committee members, so I won't go into that detail. I will focus my remarks on the relationship between the federal government and Canada’s airports, particularly over the last three years.
It is no secret that commercial aviation was impacted as never before with the onset of the COVID-19 pandemic. In many corners of public health and economics, commercial aviation was identified as an enabler of the rapid spread of the pandemic, and governments reacted to such expression of concern by literally shutting down international air travel, back in the early days of 2020.
The aviation industry reacted quickly to this shutdown of operations by cutting staff and selling off assets in order to cut expenses and minimize risk to air service. The airports and agencies that work within airports proceeded to make massive layoffs in response to the effects of the reduction in air service.
Several Canadian airports expressed the need for additional funding to support core infrastructure, and some minor support programs were implemented.
Airlines could avail themselves of the LEEFF program assistance offered by the federal government, but no such direct funding was available to Canada’s airports. Many resorted to taking on additional debt, a financing burden that has longer-term implications for the financial viability of these airports.
An important element in McGill's academic programs is public administration and governance, and such governance issues must now be addressed for Canadian airports. The underlying principle we have in airport revenue generation has been and continues to be “user-pay”, wherein Canadian airports are directed under the terms of their Transport Canada leases to look at entities at the airport to generate sufficient revenues to cover their financial requirements. We are seeing a lot of pressure on Canadian airports to modernize their facilities, pay off increasing debt levels and maintain a safe and secure operation.
Airport administration fees have been the subject of debate for many years, a target of low-cost carriers, most recently, looking to offer airfares that have a similar look and feel to what European and American air travellers have become used to. These airport improvement fees seem to be a target for these low-cost carriers, which say that they cannot offer low fares to Canadians because of these fees that are charged. We now see Canadian airports increasing their AIFs to attempt to shore up their financial status. For example, as of January 1, 2023, Toronto Pearson will be increasing its AIF from $30 to $35.
In light of all this, one has to wonder if the current Canadian airport governance model is still the best or if it might be appropriate to consider another. As for me, I believe the current model is no longer the best and that it should be reviewed.
Thank you for your attention. I am pleased to answer any questions you may have.