Ottawa Promises Airport Fee Controls Under Privatization Plan, Airlines Warn of Higher Costs

Canada’s federal government is promising safeguards against rising airport fees as it moves ahead with plans to introduce private investment at the country’s four largest airports, but airline executives say clear regulations are essential to prevent higher costs from being passed on to travellers.

As reported by the Canadian Press, Transport Minister Steven MacKinnon says Ottawa intends to regulate airport charges through contractual agreements with private operators, although details of how those restrictions would work have yet to be finalized.

Speaking at an aviation conference in Ottawa on Thursday (Oct. 8), MacKinnon said the government would build protections into agreements with investors.

“We will regulate through contract,” MacKinnon reportedly told journalists. “Those concessions will contain price moderation, if I can call it that, or fee moderation.”

However, it remains unclear whether Ottawa will introduce standardized caps on landing fees and other airport charges or negotiate restrictions individually with private operators.

Canada’s Four Largest Airports in Focus

The proposed privatization model follows an announcement last month by Prime Minister Mark Carney, who outlined plans to attract private investment into operations at Canada’s four largest airports: Toronto Pearson, Montreal-Trudeau, Vancouver International and Calgary International.

Under the proposal, private investors, including pension funds and First Nations, could bid on long-term leases to manage airport operations.

The federal government would retain ownership and oversight of the facilities.

Unlike arrangements that allow private companies to operate individual airport services, the proposed model would extend to the full range of airport operations.

MacKinnon acknowledged that discussions with potential stakeholders are underway but said the government has not decided which airport would be first to transition to the new model.

He also did not dispute a report from The Globe and Mail indicating that Ottawa has been in discussions with the Musqueam First Nation regarding Vancouver International Airport.

“I certainly acknowledge that there have been fulsome discussions, as you can imagine, whether it be major projects, reconciliation writ large, or this initiative,” MacKinnon said.

“We’re in constant communication with relevant First Nations.”

WestJet Warns of Higher Passenger Fees

Airline executives have expressed concerns that privatization without appropriate safeguards could result in substantial increases in airport charges, ultimately raising ticket prices for consumers.

Speaking with the Canadian Press, WestJet CEO Alexis von Hoensbroech said international examples demonstrate both the potential benefits and risks of private airport management.

Having witnessed “the good and the bad” of airport privatization, von Hoensbroech cautioned against allowing operators unrestricted control over fees.

“If you just privatize it and then you just let the market play out, it’s a risky game because a private investor will try to maximize the returns and an airport is a local monopoly,” he told CP.

“The temptation just to increase passenger fees would be really high,” he added, pointing to London’s Heathrow Airport and some Australian airports “where it has really gone in the wrong direction.”

Von Hoensbroech suggested Canada could look to Austria’s regulatory framework, known as the dual till model, which separates airport revenues and expenses into two categories.

The first covers aeronautical operations, including landing fees and passenger terminals. Under the model, increases to these charges must be tied to operating costs and capital investments, with regulatory approval required before fees can rise.

The second category covers non-aeronautical operations, including retail, hotels, parking and real estate development, where airport operators have greater flexibility to generate revenue.

“That’s why a European airport looks like a shopping centre and not like a bus station, because they invest a lot in this and that’s where they make all their money,” von Hoensbroech told CP.

Lessons From Australia

Australia has emerged as a frequently cited example in Ottawa’s discussions about airport privatization.

Between 1997 and 2003, the country transferred control of its airports to private investors, a move that generated billions of dollars in capital investment.

Those investments helped modernize airport infrastructure, improving baggage handling, passenger check-in processes and airport lounge facilities.

However, Australia’s experience has also raised concerns among airlines about the potential for higher aeronautical charges under private management.

For Canada’s aviation industry, the debate centres on how to attract private capital for airport improvements without increasing the financial burden on airlines and passengers.

With the government still developing its regulatory approach, the structure of future fee protections — and whether they will be established before investors submit bids — remains a key unanswered question.

ALPA flags risks

Meanwhile, Air Line Pilots Association (ALPA) Canada has raised its own concerns about Carney’s airport plan.

“Opening our largest airports to foreign private investment poses significant risks – not only to Canadian sovereignty but airport operations decisions affect runway maintenance, de-icing capacity, staffing and the pace of infrastructure investment, all of which could impact safety, service, affordability, and the long-term sustainability of Canadian jobs,” said Capt. Tim Perry, president of ALPA Canada, in a previous statement.

“For Canada’s pilots, airports are also our workplaces and a fundamental part of the aviation safety system. Any change to how these critical assets are operated must ensure that safety remains the overriding priority and protect the infrastructure, services, and skilled aviation workforce that pilots and passengers rely on every day.

“Canada’s airports are important national assets, and the government must ensure they continue to prioritize the public interest, safety, and the needs of Canadians—not the interests of private investors and shareholders.”