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Rents too High


Guest JW
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Finally, the word is getting out into the public, as I railed on about for years...the aviation business in Canada has been a cash bonanza for the Government. Much of the infrastructure (airports, NavCan) was paid for (maintenance and some improvement required). The Airport Authorities are supposedly "not for profit" orgs. You'd think that Excise Tax (ie a "road repair" tax) in fuel would not be required on aviation fuel, and that in a time of rapid rate increases in fuel prices that the Government could stabilize the price of fuel by flexing the tax take, rather than grabbing the increased cash flow.

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Winnipeg Free Press

Winnipeg Airports Authority optimistic its rent will be cut

Thu Apr 10 2003

By Geoff Kirbyson

WITH the airline industry in the red and the federal government continuing to enjoy large budget surpluses, the president and CEO of the Winnipeg Airports Authority says there's no reason why its rent shouldn't be slashed or eliminated altogether.

Barry Rempel said he's optimistic the WAA's annual rent of about $4 million will be cut once federal Transportation Minister David Collenette completes his 22-month-old rent review of all Canadian airport authorities.

"The purpose of the review was to put some equity back in the way rents were applied across the country. We clearly believe there is no good policy reason for the collection of rent, it's just another tax on air transportation that no other mode has," he said in an interview yesterday.

The airline industry as a whole has been lobbying hard for a break on airport rents as well as on a controversial new passenger security fee. At the same time, pressure has been building for Ottawa to help Air Canada, the country's dominant carrier, which has been under bankruptcy protection from creditors for a week.

Collenette didn't tip his hand outside the Commons yesterday. While he didn't rule out aid for the overall industry and insolvent carrier Air Canada in particular, acting in haste could be costly and not very effective, he said.

"We're well aware that traffic is down (but) with a bit of luck with the ending of hostilities in Iraq, people's confidence will come back and I think that will happen for the summer season," he said. "A year from now, Air Canada hopefully will be restructured, the economy will be doing better, there won't be any wars, there won't be any epidemics like SARS, and the industry could be very much on its feet.

"So you've got to make sure that whatever is done, is sustainable."

Lower rents will mean lower landing fee charges for carriers and that should translate into lower ticket prices for the travelling public, Rempel said, but the biggest benefit should be felt in the WAA's ability to attract other airlines to run routes out of Winnipeg.

"This industry is in serious financial straits at the moment. The lower we can keep our costs as an airport, the more attractive we are to other carriers," he said.

Rempel said he'd like to be able to make more announcements like the one he plans to make today. Beginning in June, United Airlines will run two flights per day to Chicago, joining Air Canada as the only carriers offering direct service from Winnipeg to the Windy City.

Rempel noted when the WAA first took over the airport's management from the federal government in 1997, it was paying $900,000 in rent. The rental formula, based on improvements the WAA makes at the airport, calls for the rent to rise to $7 million by 2007. -- With files from Canadian Press

geoff.kirbyson@freepress.mb.ca

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Guest M. McRae

Of course the rub is that the money either comes from the traveling tax payer or all tax payers.... A little like the argument re who should pay for services.... municipal, provincial or federal money...all of which come out of the same pocket - yours and mine.

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Surely you jest. Why should there be rent at all. Most of these airports were derelict wrecks when the governments handed them over. Pay rent for Terminal 1 in Toronto? Its overdue for the wreckers ball. It was paid for and completely amortized twice over. The government hasn't put a dime into that building since the 1970s. Terminal 2 in Toronto. Most of the money that went into that building since the mid-1990s to keep it current has not come from the taxpayers. It came from Air Canada. Ottawa and Montreal airports were Stalinist mausoleums until the local airport authorities starting putting NEW money into them. I don't think Dorval got a dime of federal investment from the day Mirabel opened in 1975.

Ottawa didn't build the new terminal in Vancouver, and while Calgary probably got some money as a result of the 1988 Winter Olympics, most airports got zilch. nada.

Not only that, by 2010 the government will be reaping $500 million A YEAR for those derelict terminals. There was a time when the taxpayer was subsidizing the user, but that time is past, and there is no reason for the user to subsidize general revenues. Remember that the excise tax on jet fuel was supposed to be a temporary deficit fighting measure. Seen a deficit lately?

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Guest M. McRae

No I do not jest. All costs of operating the country come out of the same pocket no matter how you cut it.
I wonder where the rent money is going now, what programs does it pay for (prob. non aviation) that the taxpayer will have to poney up for under another form of taxation.

I don't agree with there being rents for the airports and if there was a guarantee that the money saved would eliminate AIFs or be dedicated to "Airport Operating Improvements - non cosmetic" I would support the rent removal.

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Guest M. McRae

No I do not jest. All costs of operating the country come out of the same pocket no matter how you cut it.
I wonder where the rent money is going now, what programs does it pay for (prob. non aviation) that the taxpayer will have to pony up for under another form of taxation.

I don't agree with there being rents for the airports and if there was a guarantee that the money saved would eliminate AIFs or be dedicated to "Airport Operating Improvements - non cosmetic" I would support the rent removal.

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I disagree. If I am an air traveller, trhe government has its hands in TWO of my pockets, not one. I am paying the AIF or implicitedly paying the rent through my fares. And I am paying income tax and GST. So there is an extra level of taxation on air travellers.

ATAC has done a magnificent report which documents this double taxation. The government no longer puts much money into the aviation sector. NavCda and the airports are self-financing.

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I disagree. If I am an air traveller, trhe government has its hands in TWO of my pockets, not one. I am paying the AIF or implicitedly paying the rent through my fares.

Another question that should be asked rather than simply blaming the government would be to question why the airports are being so poorly managed that they need to continue collecting an AIF?

What is wrong with their business plan that they are unable to be self-sustaining? So far it seems that only one airport has eliminated it's AIF...

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September 6, 2001
Thunder Bay International Airports Authority Eliminates Airport Improvement Fee

Thunder Bay International Airports Authority Inc.(TBIAAI) today announced that the $10 Airport Improvement Fee (AIF) will be eliminated effective October 15, 2001. Chairman Bert Baumann pointed out that it is a rare day in the Canadian Aviation industry, when an Airport can directly reduce the cost of air travel by $10 per person. Mr. Baumann also thanked the frequent and infrequent flyers in the community for their support and understanding of the AIF over the last 3 ½ years.

“The Airport Improvement Fee was implemented in March of 1998 as a five-year program to secure the future capital requirements for Thunder Bay International Airport. AIF income has been higher than originally anticipated, and the TBIAAI can now confidently eliminate the fee without compromising the Airport’s long term viability. We are delighted to be able to announce the elimination of the AIF 1 ½ years ahead of schedule.”

“Our success in reducing costs, attracting more, better and lower cost air service, expanding revenue opportunities and a sound long term financial plan have made possible this important step forward.”

http://www.tbairport.on.ca/whatsnew.htm

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Malcolm didn't you ever of killing the goose that laid the golden eggs ? The liberal government destroyed the fisheries in both the east and the west and now they are destroying the aviation industry.Killing AC along with many others is not going to help the Canadian econmomy.The taxes and users fees are a ripp off.The billion dollars spent on gun control is a ripp off.The 2 billion Jane Stewart &%$@! away is a ripp off.The Canadian taxpayer cannot go on forever being bleed to death.Stop the waste before it is too late.

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Guest leftbase

I'm not sure which topic we're on here, the thread started on airport rents and slid to AIF's (a favourite rant o' mine...;)

With regards to the AIF, I would submit that for most airports, the AIF was originally conceived as a way to raise capital for large improvement projects - hence the name.

The questions to ask are two, IMO:
-why is there zero accountability for the way the (enormous amount of) funds are spent?
-why are fees being charged far in excess of costs?

As mentioned elsewhere, the local AA's are going to have to become open and accountable under new proposed legislation...BRING IT ON!

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Fountains? That's poverty consciousness!

I heard just a couple of weeks ago that the Vancouver Airport Authority had approved a huge contribution to a new SkyTrain line to the VIA.

I'm not saying it's a bad idea. I'm just saying that in the current airline climate, maybe spending $300,000,000 is not the right way to say, "We feel your pain."!

neo

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