Transport Canada (TC) and the country’s Minister of Transport, Omar Alghabra announced that the department will study the airport capacity needs in Southern Ontario, which includes the Greater Toronto Area (GTA).
TC issued a Request for Proposals (RFP), looking to hire an “aviation professional services contractor to help the department analyze current and future airport supply and demand in Southern Ontario,” the department said in its announcement. According to the department, the contractor will help the government officials to assess the requirements “for a comprehensive study of airport capacity” in Southern Ontario as well as “a formal consultation process”.
After the assessment, TC will put forward a second RFP to attract third-party contractors to undertake the study and consultation process.
The process was started because Southern Ontario is the most populous area of the country, while the GTA is home to 6.3 million Canadians, and, according to TC, the population “expected to grow significantly over the next two decades”. In total, according to Statistics Canada, there are more than 39.8 people currently living in the country.
“Air travel is essential to growing an economy that works for everyone and creating good, middle-class jobs in Southern Ontario and the rest of the country,” Alghabra stated.
According to the Canadian Minister of Transport, the study will aim to “understand the potential impacts of a growing population on existing airport infrastructure”. Furthermore, the work that TC and third-party contractors will undertake will help the department make a final decision on Pickering Lands.
Pickering Lands is an area the Canadian government acquired in 1972. Situated 56 kilometers (34.7 miles) northeast of downtown Toronto. The purpose of the acquisition of the land was to develop a new airport. However, three years later, Canada decided to upgrade the current infrastructure of existing airports instead.
In May 2016, TC contracted KPMG, one of the Big Four accounting firms, to conduct a study called “Pickering Lands Aviation Sector Analysis”. The firm finished the three-part study in 2019, concluding that:
- While four different scenarios identify “minor capacity deficits”, the region can overcome these deficits with infrastructure improvements at current airports. As such, “a new airport is not expected to be required in southern Ontario prior to 2036 to meet the forecast demand”.
- If the TC and the Canadian government decided to go ahead with the new airport at Pickering Lands, KPMG identified that “Municipally owned and Airport Commission Operated option and the Transport Canada Owned and Airport Authority Operated” options would ensure the success of a new airport.
- Furthermore, the airport’s Project Internal Rate of Return (IRR) would be at least 8%, while the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)-to-Interest Coverage Ratio should not fall below 1.2%, and annual cash flows would be positive within five years of the start of operations of the proposed airport.
To finalize the financial outcomes of the potential airport, KPMG used six different scenarios, identifying “the minimum values for three key financial metrics that would likely be required for a private sector investor to consider investing in the development of a new airport” when assessing each.
Currently, Ontario hosts four airports in the Canadian National Airports System (NAS): Thunder Bay International Airport (YQT), London International Airport (YXU), Toronto Pearson International Airport (YYZ), and Ottawa Macdonald–Cartier International Airport (YOW).
Three, namely YXU, YYZ, and YOW are located in Southern Ontario, Canada.
All 23 airports included in the NAS are owned by TC and leased to Canadian airport authorities, including the three Southern Ontarian airports.