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GTAA at it again (Globe and Mail)

Kip Powick

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Pearson landing fees to take off


From Tuesday's Globe and Mail

Ottawa — The operator of Canada's largest airport plans to raise landing fees by 18 per cent next year, putting further financial pressure on domestic airlines and providing foreign carriers with more incentive to reduce services to Toronto.

According to a document obtained by The Globe and Mail, the Greater Toronto Airports Authority has told airlines that it plans to increase landing fees at Toronto's Pearson International Airport by $4.97 a tonne for 2005 — an increase of 18 per cent from the year-ago level.

The figures are contained in a confidential GTAA memo that was delivered to airlines earlier this month.

The document says the figures are part of the GTAA's draft 2005 budget but that the numbers likely won't change much — if at all.

“This document is still in draft form and is presented to you for comment, although the final 2005 rates and charges are not expected to vary materially from this draft,” the document states.

The document also points out that the airport authority is constrained in what it charges because about two-thirds of its costs are fixed, and that the authority has little discretion over the remaining third.

The GTAA is also limited by its corporate structure because it's a non-share capital corporation that is prohibited from running deficits, the document states.

Connie Turner, a GTAA spokeswoman, said the authority hasn't made a final decision about landing fee increases for next year. “I want to underline the fact that no decisions have been taken yet.”

Airlines, both domestic and foreign, and Toronto politicians are growing increasingly concerned about costs at Pearson, which have soared in recent years. Landing fees are a major expense for the struggling industry and some foreign-based airlines have said they're now looking for alternatives to Pearson.

“If your costs become unbearable, you simply pull out of that place,” Stanley Morais, Canadian general manager of Israeli-based El Al, said earlier this month.

Warren Everson, spokesman for the Air Transport Association of Canada, said limiting fee increases at Pearson is critical for Canadian airlines and Toronto. “It's the key hub in the Canadian system and a key for Toronto's economic system.”

A new international study of 2003 landing fees, meanwhile, says Pearson ranks among the most expensive airports in the world to land.

Tae Oum, a professor at the University of British Columbia's Sauder School of Business, said the Toronto airport ranked second behind Tokyo's Narita Airport on the list.

The GTAA, which runs Pearson, and the airline industry have been engaged in a bitter battle in recent years and fees have been one of the main irritants.

The GTAA says the airlines have always known they would have to pay significantly higher fees to help finance the airport's new $3.6-billion terminal, which is part of a $4.4-billion capital program. The airport authority has also argued that the airlines — and their customers — are getting better services.

Transport Minister Jean Lapierre wasn't available for comment yesterday but has said he's interested in cutting the rents charged to airports, provided they pass on the bulk of the savings to airlines.

Mr. Lapierre has asked the Commons transport committee to conduct a major review of Canada's air policies, while suggesting it's time to open up competition and reduce regulation, perhaps even relaxing restrictions on the foreign ownership of Canadian airlines.

Jim Karygiannis, Mr. Lapierre's parliamentary secretary and a Toronto MP, said he's particularly concerned about the effects the increased fees will have on smaller airlines and the services they provide the city's ethnic communities.

“If you raise landing fees, the smaller airlines will not be able to operate and will look for other airports to land in.”

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I'm gonna miss seeing the big birds when this station becomes a RJ hub.

If ya hafta pay by the ton, then I guess the Heavy Metal will be operating out of YUL.

El Al started by downsizing from a 777 to a 767, who will be next?

Iceman cool26.gif

Precisely. It's weight based. I can bet AC will have more Embraers and fewer Airbuses in YYZ before long. Having YUL as an alternate hub for transatlantic flights, plus Embraers to feed Montreal from a number of new points, could well spark YUL's revival, at YYZ's expense. As for the discount carriers, I am waiting for somebody to make a break back to YHM. There's a bit of space there now.

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How's this for an evil thought.....

YUL as an eastern hub for all the European and Southeast Asia flights, and YWG as a hub for all the Asian longhauls.

With the recent renovations at each station, the airlines could turn YYZ into a ghost town in short order.

You could even build intransit lounges so that the pax could avoid re-screening.


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As for the discount carriers, I am waiting for somebody to make a break back to YHM. There's a bit of space there now.

...and if YHM had got its act together a few years ago, it might be sitting in the catbird seat right now...

Any chance that GTAA could go the route of Mirabel?


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