Toronto Board of Trade

Toronto Board of Trade

March 22, 2005 12:00 ET

'Cut The Rent, Free The Skies' : Board of Trade

The Toronto Board of Trade is calling on the federal government to reduce the cost of air travel and allow more competition Attention: Business/Financial Editor, City Editor, News Editor, Government/Political Affairs Editor TORONTO, ONTARIO--(CCNMatthews - March 22, 2005) - The Toronto Board of Trade is calling on the federal government to cut the airport ground rents that increase costs for airlines and travellers, and to open up Canada's skies to more competition.

"The government is collecting higher and higher fees from airports, but providing less and less in return," explained Board President Glen Grunwald, who says the escalating ground fees, especially at Toronto's Pearson Airport, are making it harder for airlines to compete and making it more expensive for people and businesses to use air travel.

In a submission today to the federal government's Standing Committee on Transport, the Board notes that Ottawa now collects $300 million a year in ground rents from airports, half of it from Pearson, while spending only $66 million on airport services and improvements. (See attached backgrounder)

On liberalizing air travel, Grunwald said, "It's time to open up the skies and give travellers more choice. That means the government should make fair agreements on travel routes with other companies, allow more foreign investment in our airlines and support the strategic coordination of regional airports to provide better links and more flexibility for the future."

The Toronto Board of Trade is the champion of a competitive and vibrant Toronto with a mandate to serve, represent and unite the city's business community. Founded in 1845, the non-profit organization now boasts nearly 10,000 members, including businesses of every size and type, and operates at four locations across Toronto. Further information about Board events, policies, advocacy and products is available on its website at www.bot.com.

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BACKGROUNDER - Airport Ground Rents

· The federal government now collects more than $300 million per year from Canadian airports in the form of ground rents. These costs are passed on to airlines, then to air travellers and businesses that ship goods by air.
· Federal ground rents have increased 25% since 2001 and are projected to increase another 40% by 2010 to a total of $441 million annually.
· The federal government does not provide any services in exchange for these fees. From 2000 to 2003, total federal airport expenditures declined from $123 million to $66 million. Airports in Canada now receive less than 5% of total federal transportation expenditures, down from 18% in 1997.
· Canada's treatment of airports compares unfavourably with that of the United States, where governments typically provide subsidies and grants to airports.
· Pearson International Airport is hit hardest by ground rents, which now make up a quarter of the airport's total operating expenses. Pearson pays about $146 million a year, almost half the national total.
· Pearson Airport and its associated activities are responsible for 138,000 jobs and $14 billion revenue for local businesses.

Board of Trade Recommendations

1. Reduce federal airport ground rents so that Canadian airports can be on a level playing field with their competitors.
2. Liberalize air access policy through fair, reciprocal agreements with other countries that open up more air travel routes.
3. Increase the foreign ownership limit on domestic airlines up to 49% to bring in the capital needed for expansion and better service.
4. Support the strategic coordination of regional airports to create better links to major hub cities and more flexibility to meet future demands.

See our complete submission on our website at www.bot.com/media
IN: ECONOMY, FINANCE, POLITICS

Contact Information

  • Glen Stone, Media Relations Coordinator
    Primary Phone: 416-862-4565
    E-mail: gstone@bot.com