Is privatizing Canada's airports a good idea?

Mark Carney's latest announcement is about privatizing Canada's four biggest airports: Toronto, Montreal, Vancouver and Calgary. Under this plan, the federal government would retain ownership of the underlying land and assets, but the day-to-day operation of the aiports would be opened up to private investors.

The theory is that airline customers would benefit from improved services and infrastructure, and the government would receive a large cash influx which can then be used to improve some of the smaller regional airports around the country, which are currently underfunded. It's being presented as a win-win scenario.

Seem too good to be true? Well, maybe. But studies do seem to show that, when airports are privatized, they do tend to be glowed up, the number of routes flying into them increases (including from low-cost carriers), and cancellations go down, soften drastically. These improvements are particularly noticeable where airports are acquired by private equity funds.

Is this a slam-dunk, then? Well, Canada's case is definitely not the same as parts of Europe and Asia, where distance are smaller and populations denser. But, when Australia privatized its airports, it too saw substantial improvements, and Australia is much more similar to Canada in its geography and demographics.

Some costs will definitely go up, though, for ticketing, parking and food. Private companies expect a profit after all. Experience shows that, after privatization, most airports will put a price on baggage carts, for example, and pick-ups and drop-offs by private vehicles (and, by extension, ride-hailing services) will be charged sometimes quite onerous fees. 

The Canadian Labour Congress has pointed out that Australia's experience resulted in significantly higher fees imposed on travellers, as well as some substantial job losses as airports look to economize and rationalize their operations. Also, while the government may benefit from a one-time infusion of cash, it will be giving up a steady public income of around $525 million a year from rents and other fees.

So, slam-dunk may be an exaggeration, but some advantages do exist. Whether they outweigh the drawbacks depends very much on your point of view.