Canadian airports and cities

Before the pandemic, Canadian airports were very profitable in 2019

Our second annual review of airport finances shows that despite the grounding of the Boeing 737 Max for most of the year, airports earned $328 million in 2019

The passenger concourse at Victoria International Airport in January 2020. The airport recorded $9.2 million in net income in 2019, and was one of only two airports without debt (photo: Brett Ballah).

It seems a lifetime ago, but Canada’s airports had a profitable year in 2019, raking in $339 million more in revenues than they spent, up 31% from 2018, and an astonishing 100% increase compared to 2017.

Western Aviation News compiled data from 21 of Canada’s busiest airports shows they earned $4.2 billion last year. Revenues were up a shade under four per cent, despite airlines facing mammoth challenges caused by the world-wide grounding of the Boeing 737 Max.

“In 2019, as we closed off our first five years, we started to see the early negative impacts of the prolonged Boeing 737MAX grounding, which led to our airline partners
reshuffling their fleets and rearrange their schedules in 2020 to accommodate lost aircraft capacity,” wrote Fort McMuray International Chair Michael Chwelos and President RJ Steenstra in their 2019 Annual Report. “This accumulation of adverse events placed a significant downward pressure on our passenger volumes and represented a 55% decline in traffic compared to when we had first opened the new terminal.”

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At the same time, those airports took in $1.4 billion in Airport Improvement Fees, which are used to build, renovate, and refurbish airport terminals and lands.

Canada’s airports rely on passengers for two-thirds of their revenues on average. The largest airports handled almost 153 million passengers in 2019, up 3.7% from the previous year. Most airports are not-for-profit corporations, required to plow their excess revenues back into airport operations and improvements.

(To see our 2018 analysis, click here)

The most profitable airport in the country was also its busiest. Toronto brought in $140 million more than it spent last year, down almost four per cent from the previous year. Montreal and Vancouver were the next most profitable, followed by Kelowna ($23 million) and Halifax ($11.5 million). Three airports – Regina, Ft. McMurray, and Calgary – reported losses last year, with Calgary losing almost $60 million.

Combined, Canada’s four hub airports – Toronto, Vancouver, Montreal, and Calgary – handed 75% of all passengers and took in 77% of all receipts across the country. When Edmonton’s 8 million passengers are included, the five largest airports handed 80% of all national traffic.

RankAirportPassengersRevenue (millions)Profit/loss (millions)% change
1.Toronto50,500,000$1,521.3$139.8-3.6
2.Montreal20,305,106$707.0$97.843.6
3.Vancouver26,379,870$571.8$75.6-25.7
4.Calgary17,957,780$432.0$-59.658.8
5. Edmonton8,150,000$231.7$1.812.5

Those revenues are projected to collapse by $2.2 billion this year as a result of the COVID-19 pandemic, and may not recover for four years or more.

Across the country, Canada’s airports collected an average of $10 in fees and sales for every passenger who boarded an aircraft. Departing passengers are worth more to airports since they pay Airport Improvement Fees (usually in the range of $20-$30 per person), park their cars, and buy services from airport tenants, which generates rental income.

Calculated per departing passenger, a different picture emerges. Winnipeg generated $21.78 per departing passenger, followed by Regina ($19.83), and Montreal ($11.99).

To make up the difference, airports earn what are called non-aeronautical revenues. Concession revenues, hangar rentals, and parking fall into this category. Canada’s airports earned $1.5 billion in non-aeronautical revenues in 2019, up only slightly from the year before, accounting for a little more than a third of all their income on average.

“While the situation has changed within just a few weeks, it is clear that we’re in a better position to meet the challenges of this pandemic”, wrote Quebec International Airport’s President and CEO Stéphane Poirier in his Annual Report. “In fact, the diversification of our activities and revenue streams—an objective to which we are deeply committed—has become more important than ever. We are working hard to regain our momentum through a clear vision and projects that can accelerate recovery.”

While Canada’s four largest airports collected the most in non-aeronautical revenues, as a percentage of revenue, the picture changes. These revenues help reduce the fees charged to airlines and ultimately ticket prices.

RankAirportNon-aeronautical revenues (millions)Percentage of all revenues
1.Ft. McMurray$10.255.7%
2.Victoria$17.544.6%
3.Vancouver$171.044.5%
4.London$5.442.5%
5.Regina$11.741.6%

The data include all airports in the National Airports System except Gander and Thunder Bay, which had not yet published their annual reports, and those run by territorial governments in Canada’s Arctic. They show why the pandemic is hitting airports hard.

Airports spent a record $3.9 billion in 2019, an 18% increase from the year before. As might be expected, the busiest airports spent the most money. Expressed as expenses per enplaned passenger, however, airports ranged from a high of $34.82 in Regina to a low of just $4.31 in Kelowna.

With airports expecting to see as little as half the passengers in 2020 thanks to the pandemic, and with most airport expenses fixed, expenses per departing passenger will climb to scary levels in 2020. Because they operate in a highly regulated environment, airports have very little wiggle room to cut expenses. Many have responded to the pandemic by cutting construction projects, trimming salaries, and laying off staff.

Last year, airports spent on average 14.6% of their budgets – just more than half a billion dollars – on salaries while they spent $664 million, or 17% of their budgets on debt service. Their third-largest expense was sent directly to the federal government in the form of lease payments. Ottawa owns the land and charges airports rent as a percentage of their income. Together, airports spent $415 million in lease payments last year.

Those lease charges have been forgiven for the rest of 2020. Airports are pushing for long-term relief as a way of helping them recover from the pandemic.

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