Pearson airport blasts Milton

[CanadaEH]

http://www.theglobeandmail.com/servlet/story/RTGAM.20031022.r-pearson-iata22/BNStory/Business/

Pearson Airport Blasts Milton

TORONTO — Canada's largest airport has accused Air Canada chief executive officer Robert Milton of masterminding an increasingly bitter battle being waged by domestic and international airlines over rising landing and other user fees.

“We believe Robert Milton is the architect of this attack,” Peter Gregg, spokesman for the Greater Toronto Airports Authority, which manages Lester B. Pearson International Airport, said yesterday.

Mr. Gregg levelled the accusation in an interview after being informed of renewed criticism of the GTAA and its president Louis Turpen by airline industry officials at a news conference organized by the Geneva-based International Air Transport Association (IATA).

“We feel this is a clandestine action by Air Canada using IATA as a surrogate,” Mr. Gregg said. “It amounts to an attack on the national airports policy, the federal government, Pearson airport and the city of Toronto.”

He said Mr. Turpen tried to reach Mr. Milton Monday to discuss the IATA' s position, but has yet to hear back from him.

Air Canada, which is in the midst of restructuring in an effort to emerge from bankruptcy protection, dismissed the accusations.

“I'm sure Mr. Milton will be flattered at the suggestion he is able to orchestrate the activities of the worldwide airline community,” spokeswoman Laura Cooke said.

She noted, however, that Air Canada has publicly expressed concerns about rising airport fees — at Pearson and elsewhere — and said it supports a campaign that the IATA has been waging here and abroad to try to win fee rollbacks. Ms. Cooke also said that the user fees GTAA charges Air Canada have risen by a total of $100-million since 1997, or an average of 45 per cent each year.

The immediate crisis that has galvanized the airlines is that Pearson is expected to impose a new round of user fee increases for 2004, which industry players and observers expect will be at least 25 per cent and potentially much higher.

[CanadaEH]

Also as a sidenote:

http://www.theglobeandmail.com/servlet/story/RTGAM.20031021.r-pearson-iata21/BNStory/Business/

Westjet considers cutting flights to Pearson over fees

Canada's second-largest airline warned yesterday that it could cut back on flights through Toronto's Lester B. Pearson International Airport if user fees there continue to rise, although it conceded it might have little room to manoeuvre.

“Obviously, we go where we can make the most money, and if it turns out that Toronto is not the most profitable place to be, then we won't be there as much,” Clive Beddoe, chairman of WestJet Airlines Ltd. of Calgary, said yesterday in a quarterly conference call with analysts.

However, Mr. Beddoe also made it clear that Toronto's size and importance in the airline market means any cutback by WestJet would have to be limited.

Toronto is the biggest city in Canada, Mr. Beddoe said, “so you have to bear that in mind in terms of demand.”

The WestJet founder made his remarks as an already bitter war over soaring user fees between airlines and the Greater Toronto Airport Authority (GTAA) escalated again, with the carriers cancelling a meeting set with airport officials today in favour of holding a press conference to try to win public support for their cause.

“The carriers have decided to call if off for the moment because we're just very, very concerned that we're getting nowhere,” Cliff Mackay, president of the Air Transport Association of Canada (ATAC), said yesterday of the airlines' decision not to attend a regularly scheduled meeting of the so-called Airport Consultative Committee with officials of the GTAA.

Instead, Mr. Mackay, along with officials of half a dozen major international airlines, including Lufthansa, Cathay Pacific and Air France, are to speak today at a press conference in Toronto organized by the Geneva-based International Air Transport Association (IATA), which represents 278 carriers around the world.

“We will be putting into facts and figures the dispute we are having with the airport,” IATA spokesman William Gaillard said yesterday when reached in Montreal.

Meetings the airlines have held with the GTAA so far about the fee increases have been “rather meaningless” in terms of consultation, he said.

“The airlines have been faced with a fait accompli instead of a true dialogue.”

Air Canada, Canada's largest carrier, which is in the midst of trying to restructure itself out of bankruptcy protection, will be represented at the news conference by ATAC, Mr. Gaillard said.

He also said that, although Air Canada is much more affected than other airlines by what happens at Pearson, U.S. airlines that “hub” through Toronto also have been hit hard by the fee increases; to a lesser extent, so have European carriers, such as British Airways, that have up to three flights a day at Canada's busiest airport.

Mr. Mackay said his understanding was that ATAC's chairman had informed GTAA president Louis Turpen that none of the carriers would be attending today's committee meeting.

However, that was news to GTAA spokesman Peter Gregg. He said early yesterday afternoon that no carriers had yet informed the organization that they do not plan to attend.

Mr. Gregg also said that, at the meeting, the GTAA was planning to give the airlines their first look at its proposed rates and charges for 2004, although he would not provide details.

Airline industry players are predicting that these user fees will rise by at least 25 per cent and perhaps 33 per cent or more as the GTAA seeks continued funding for the $4.4-billion, 10-year redevelopment plan it has under way.

The battle over fees has grown bitter over the past few weeks. In an extraordinary move in mid-September, Mr. Turpen banned IATA officials from GTAA premises following a speech by IATA chief Giovanni Bisignani in which he complained about the high costs of using Pearson.

Mr. Bisignani raised the ante last week by writing to federal Transportation Minister David Collenette, complaining that Canada's air policy “needs a dramatic rethink” and accusing the government of turning the GTAA into “a monopolist that is exercising an unfettered right to set charges as it sees fit.”

The IATA chief also wrote to Mr. Turpen, criticizing his decision to ban the IATA from Pearson as “extremely petulant.”

One industry source said yesterday that the fight over fees appears to have deteriorated into a “pissing match” between Mr. Turpen and Mr. Bisignani.

Mr. Gaillard said he cannot recall anything comparable to the GTAA ban happening to IATA anywhere else in the world in the past 30 years.

“We've had disputes, but always in a gentlemanly fashion.”

He accused Mr. Turpen of wanting to turn Pearson into ”a cathedral . . . a monument” and said that the GTAA chief “has difficulty dealing with realistic airport planning, and dealing with his main customers — the airlines.”

Mr. Gregg declined to respond to these remarks.

However, he indicated that the GTAA has been surprised by the ferocity of the fight over the user fees. In all, he said, airport user fees generally add up to about 4 per cent of an airline's operating costs.

The travel industry has been devastated by a series of shocks, such as the Sept. 11, 2001, terrorist attacks, the wars in Afghanistan and Iraq, the economic slowdown and the SARS outbreak, and this has generated high-profile restructurings, including at Air Canada.

According to a report by the IATA, Pearson has boosted landing fees 142 per cent since 1999, making it one of the world's most expensive airports. For example, it charges a landing fee of $8,560 for a fully loaded Boeing 747-400, compared with the $16,000 charged at Tokyo's Narita airport, the most expensive airport in the world.

However, Mr. Gregg reiterated that the fee increases are needed to pay for the redevelopment of Pearson, which, he said, is designed to help the airlines operate more efficiently and deliver better service to their customers.

At WestJet, meanwhile, Mr. Beddoe said airport fees have shot up “dramatically” across Canada since his airline began flying in 1996 and he thinks that the “root cause” is the rents they are being charged by the federal government.

“We calculated the other day that, over the course of the last seven and a half years of us being in business, our fees and charges have gone up by a total of 202 per cent across the system,” he said.

“So when you look at that number in relation to what's happened to our overall costs, you get some idea of just how well our other costs have gone down. We're constantly upset by the increasing charges.”

[deicer]

This is what you get when you buy into the "American" version of capitalism.

With Turpin building his second version of the Turpinmahal( I guess SFO wasn't enough) it appears that his credo is "Damn the torpedoes.....".

If he was such a GREAT airport administrator, why did SFO let him go???

And why did YYZ pick him up? If someone can't hold a job, do you really want him?

I said before, and I'll say again, maybe it's time to return Canadian interests to Canadian Interest!

JMHO

Iceman

[Guest Operation Bomberclad]

1. At one point, I was into posting lots of links, and eventually resorted to pasting all of my text into a simple text file along with bold headlines and whatnot into regional news items.

You could be very easily compile press clippings into one basket.

2. Robert Milton is not Dr. Moriarity. The GTAA is on drugs.

:[

OB

[Guest WA777]

Quote: "This is what you get when you buy into the "American" version of capitalism."

Seems to me it's more like Canadian socialism and corrupt politicians at work.....

[deicer]

Isn't it more the American style to totally disregard anything except the total profit motive? Hence the CEO game where you get to the top as quick as possible, and then get the multi-million payoff accrued on the shoulders of laid-off front line workers.

The Canadian Socialist way is to keep as many people working at overpaid jobs as possible, and then overtax them to support the next job coming up.

Wanna make a bet that Turpin cuts the ribbon on the Turpinmahal, takes the money and runs?

Iceman

[Guest Operation Bomberclad]

Find me a socialist in the whole pile and I'll buy you a round.

The quest to dig out a commie from under every rock and blame them for every ill is a tad clichéd, imo.

[Guest WA777]

I think the GTAA will be CCAA before then....

[Guest kevbert]

25% hike...or more? What kind of business management (or rather lack thereof) is sitting in Convair drive?

I find it amazing that the GTAA thinks that it is immune to the realities of business. Any business that is facing a reduced revenue stream finds ways to cut capital and expenses. The GTAA seems to be oblivious to this....

Oh right, there is the "it would cost us too much to slow down or stop, so we have to keep going" argument. That argument is only helping the GTAA avoid the obvious.

If I am supplier to the GTAA's massive construction effort and knew that the organization is running into serious cash flow problems (which they are, why else would revenue need to go up 25% or more next year?), I would rather get paid a bit slower (or even less) than have my account thrown into CCAA and get far less for it.

I believe there were people in the media and on this board who were crying bloody murder when AC was the monopoly and not making money. Same should be with the GTAA.

If you don't believe that the GTAA is bleeding cash, go to SEDAR (link below) and look for company documents; namely financial statements for June.