As the holiday travel season approaches, many Canadians are preparing to take to the skies. Yet, a familiar sense of frustration looms over the nation's air travel experience, marked by high costs, limited choice, and service concerns. In a potential shift, Prime Minister Mark Carney's government has signaled a major policy review, announcing in its recent budget that it will examine options for the full privatization of Canadian airports.
The Current System: Government as Landlord
For decades, the federal government owned and operated Canada's major airports directly. This changed in the 1990s under Prime Minister Jean Chrétien, who initiated a partial privatization. The operation of major airports was transferred to not-for-profit local authorities, while the federal government retained ownership of the land itself.
This arrangement effectively made Ottawa the landlord, collecting substantial annual rent payments from these airport authorities. While this moved operations away from direct government control, critics argue the current model lacks the accountability and competitive drive of a truly private market.
What Full Privatization Would Mean for Travellers
Full privatization would involve transferring ownership of airport assets to private, for-profit companies. Proponents, including economists Alex Whalen and Jake Fuss of the Fraser Institute, argue this would create powerful incentives for efficiency, customer service, and innovation, as these entities would need to satisfy shareholders and compete for business.
Private, for-profit airports are common in many other countries, and studies suggest they can lead to lower costs for passengers. The current not-for-profit authorities, critics contend, report only to government officials in a limited way, insulating them from the direct market pressures that drive improvement.
Beyond Airports: Opening Skies to Competition
However, analysts stress that airport privatization is just the first step in a necessary overhaul of Canadian air travel. To truly benefit consumers, the federal government must also tackle restrictive policies that stifle competition among airlines themselves.
Canada currently maintains strict limits on foreign ownership of domestic airlines and prohibits foreign carriers from operating flights within the country. These protections limit the number of players in the market, reducing choice for consumers and weakening competitive pressure on fares and service quality.
Reversing these policies could invite new investment and new airlines into the Canadian market, forcing incumbents to compete more aggressively. Furthermore, the government is urged to review the array of taxes and fees added to airline tickets. Research indicates Canada imposes some of the highest such levies among peer nations, costs that are inevitably passed on to travellers.
The Carney government's consideration of airport privatization marks a potential turning point. If implemented alongside broader reforms to increase airline competition and reduce government-imposed costs, it could begin to address the long-standing grievances of Canadian air travellers. The success of any such initiative, however, will depend on a comprehensive approach that moves beyond a single policy change to genuinely reshape the industry for the better.
