TORONTO, Feb. 13 /CNW/ - In light of the current economic climate which
has resulted in projections for a downturn in passenger traffic at Toronto
Pearson in 2009, the Greater Toronto Airports Authority (GTAA) has announced
changes to reduce expenses and increase revenue. The economic climate has
worsened significantly since the GTAA's 2009 budget was developed in the fall
of 2008. Transport Canada's passenger volume forecasts are now anticipating a
5.8 per cent reduction, which translates to roughly 1.8 million fewer trips
through Toronto Pearson this year.
As the GTAA is a not-for-profit authority which runs Toronto Pearson with
the goal of breaking even on budget each year, there is a need to make
adjustments to account for the difference between the approved budget and the
new economic reality.
In response, these four major steps are being undertaken by the GTAA:
1. Additional cost containment measures will be implemented immediately -
a hiring freeze, closure of certain airside and groundside facilities,
consolidation of certain contracted services and a freeze in
2. Capital programs will be deferred - all but the most critical capital
projects have been deferred.
3. An incentive program to airlines will be introduced - a landing fee
rebate program for air carriers that offer net new services at Toronto
4. The Airport Improvement Fee (AIF) will increase - the AIF will be
increased by $5 per departing passenger, effective June 1, 2009, from
$20 to $25. The AIF is used to fund capital expenses and to service
debt associated with capital expenses.
Lloyd McCoomb, President and CEO of the GTAA, said "These changes are not
made lightly, but they are the responsible course of action to manage Toronto
Pearson today. We must ensure that the organization is well positioned to take
advantage of growth opportunities when the economy improves."
RESPONSE TO ECONOMIC DOWNTURN AT TORONTO PEARSON
In this time of economic uncertainty, the aviation industry is facing
challenging circumstances. Global passenger traffic is down, and is projected
to take a further downturn throughout 2009. The economic impact of these
factors and the overall economic climate will be significant and the Greater
Toronto Airports Authority (GTAA) has taken measured steps in order to respond
to these challenges.
The first step was cost reduction. There are limits, however, to where
financial cuts can be made as two-thirds of the GTAA's costs are fixed,
including rent paid to the federal government, debt servicing and payments in
lieu of taxes. Despite this challenge, many cost reductions have been
highlighted for 2009 and more must be done. Examples include: the closure of
certain airside and groundside facilities, the consolidation of contracted
services and a freeze in management salaries.
The deferral of capital spending is the second step. The infrastructure
in place at Toronto Pearson places the airport in an excellent position for
growth once the economy recovers. It would not be prudent for the GTAA to
spend capital funds on expansion in this economic environment, and therefore
certain projects have been deferred for the near future. These projects
include: Pier G planning and design, Terminal 1 parking garage expansion,
Terminal 3 Master Plan and Terminal 2 garage demolition.
A key factor in using Toronto Pearson to help drive the economy in a
positive direction will be stimulating traffic at the airport. This led to the
third step by the GTAA - an airline incentive program. This program will offer
landing fee rebates of up to 50 per cent for a 12-month period to air carriers
that are introducing new services at Toronto Pearson. This includes new air
routes that are not currently being served and net increases in service on
existing routes. This program is meant to drive more traffic to Toronto
Pearson and result in a measurable economic benefit for the airport as well as
the surrounding community.
The fourth step of response was to increase the Airport Improvement Fee
(AIF). The AIF, a program in place at all other major Canadian airports, was
brought into effect at Toronto Pearson on June 1, 2001. At that time, the GTAA
was in the midst of a $4.4 billion redevelopment of the airport and the AIF
was brought in to help fund the redevelopment and the associated debt
servicing, which continues today. As a result of this development, Toronto has
the necessary airport infrastructure in place to be a strong catalyst for
economic growth in this region.
For further information:
For further information: GTAA Media Office, (416) 776-3709