Canada to contribute $100 million to airport rail link, matching a provincial contribution. The money will allow an airport station – whose future was threatened by the pandemic – to be built

The governments of Canada and Quebec have come to the rescue of a rail link at Montreal International Airport whose future was put in doubt by the pandemic.

The Réseau Express Métropolitain is an ambitious rail network under construction in Montreal. One of its legs connects the airport to downtown. Trains are expected to run every 10 minutes in peak hours and will take 26 minutes from airport to downtown. It will replace a non-stop bus service.

In all, governments will contribute $100 million in a direct subsidy to the $600 million project. The federal government contributes $100 million. The province of Quebec is providing a $100 million loan, five-year loan. The Canadian Infrastructure Bank – a federal Crown corporation – will provide another $300 million loan. Aéroports de Montréal, the non-profit agency that runs both of Montreal’s major airports – will invest $100 million directly into the project and be expected to repay the $400 million in loans.

“This is excellent news for us,” said Philippe Rainville, the President and Chief Executive Officer Montreal Airports. “Future generations of travellers will recognize your important contribution.”

The announcement fulfills the original plan for the REM, said Montreal mayor Valérie Plante, to link the airport to downtown.

“Seamless access between the airport, and Montreal transit system will benefit the region of Montreal, but also all users,” Transport Minister Omar Alghabra told a news conference Thursday. “Montreal Trudeau International Airport plays an important role in Montreal’s economy and the lives of Montrealers. And as we look ahead to economic recovery, transportation and tourism will be vital to building back better.”

Going into debt

The original plan was for Montreal to pay for its own train station, linked directly to the terminal. It was a natural extension of Canada’s user-pay aviation model.

Before the pandemic, Canada’s airports carried $15 billion in debt as they racked up loans to expand outdated terminals and runways. By the end of 2021, that debt is expected to exceed $18 billion.

The airport authority has already spent $60 million on the link. But Rainville warned in June the airport would not be able to pay for the station. Canadian airports earn the majority of their revenues from passengers and passenger fees. And the pandemic had an outsized impact on aviation. Montreal reported $243 million in losses in 2020, all but wiping out its ability to pay for new projects.

“For sure our revenues have been affected,” said Rainville, “but we’ll be open to serve passengers.”

“Our loan is $300 million,” said Canada Infrastructure Bank CEO Ehren Cory. “It’s a fixed amount. If the project were to experience overruns, our loan doesn’t change. But the bottom line is our loan is for a fixed amount, it will be paid back over time. It’s structured in a way to allow the airport the flexibility to get and REM, to get operating get traffic moving to get people flying again and then to pay back over time.”

Cory said the federal loan carries a “fairly hefty” interest rate.

Growing rail links

The REM will make Montreal the third Canadian airport with a rail link. Vancouver is linked to downtown through a rapid transit line built in time for the 2010 Olympics. The airport contributed $300 million to its construction and collects a surcharge on fares bought at the airport. Toronto is linked to downtown through a premium rail service called UP Express.

In its last fiscal update, Ottawa set aside $500 million to fund ground transportation projects at airports. Finance Minister Chrystia Freeland singled out the Montreal train station as an example. This one project will eat up 20% of that amount.

Ottawa is also building a rail terminal. And Toronto-Pearson is pitching a major ground transportation hub at the airport. The project, called Union Station West, is a massive transit and rail plan the airport hopes to build by the late 2020s. The government has not made any announcement for the Ontario airports.

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