Sunday reader: How privatizing CATSA became the only choice

Ottawa has announced plans to replace CATSA. We take an in-depth look to explain why.

Buried deep within Tuesday’s federal budget was a small announcement, no more than a few lines buried 300 pages deep, that Ottawa would privatize one of the key pieces of Canada’s response to the 9/11 terror attacks on the United States: the Canadian Air Transport Security Agency.

Compared to the huge attention given to the agency’s creation in 2002, its end is signalled by a whimper; no more than a terse paragraph announcing: “The Government proposes to introduce legislation that would enable CATSA to transition to an independent, not-for-profit entity and to establish this entity.”

So why now?

To answer the question, let’s go back to the beginning. CATSA was announced in December 2001, after the terror attacks as the country looked to tighten airport security and re-establish a sense of safety in the air. It was to replace a patchwork of security services across the country, where airport authorities hired private firms to screen passengers, and controlled who had access to the airport. It all gave the impression of inconsistent standards, and raised fears that corners may have been cut.

CATSA was given the mandate to screen passengers, bags, and employees, and given control over who was allowed a pass onto airport property, called RAICs. It was all to be a professional operation, and backed by the power and authority of the federal government. Canadians were promised, “rigorous new national Transport Canada standards,” read a budget bill in December 2001.

“To ensure that these standards are met, the Government will create a new federal air security authority.” There would be armed guards on planes, new rigorous training for passenger screeners, state of the art explosive detection, more police, and enhanced security zones for baggage handling and near aircraft.

The idea was a winner, reassuring a travelling public whose faith in air travel was badly shaken when planes were used as weapons of mass destruction in September of that year. “These measures,” said the finance minister, “will be funded by a new Air Travellers Security Charge to be paid by air travellers starting April 1, 2002.” Note the language: it was to be a charge going to a specific program, and not a tax flowing into government coffers.

And therein were sown the seeds of CATSA’s demise, more than 17 years later.

CATSA’s troubles have little to do with CATSA.

CATSA screened more than 66 million passengers in 2017-18, according to its latest annual report. It operates 112 checkpoints at 89 airports across the country, from the very largest – Toronto Pearson – to some of the country’s smallest. While screeners wear the CATSA uniform, the actual services are contracted out to private security firms, who have their own procedures and financial pressures.

The problem, as it often is when governments are involved, is money. CATSA gets most of its money from Parliamentary appropriations – for the current year, that amounts to a planned $586 million in operating and capital expenditures.

In just five years, passenger volumes have ballooned by 30% in Canada, straining passenger services, and leading to lineups that, at times, could stretch more than an hour. With little extra money and no extra staff, pressure mounts to keep the lines moving.

To raise those funds, Ottawa collects an “Air Travellers Security Charge” on every ticket which varies depending on the distance. For example, on a flight from Vancouver to Calgary, the charge is $7.12, while longer flights cost more. Those fees add up. The National Airlines Council of Canada estimates that, between 2010 and 2016, Ottawa reaped a half-billion dollar windfall by taking in more from the ATSC than it paid for security services.

And the problem only seems to be getting worse. Between April and December 2018, CATSA spent $589 million on securing Canada’s airports, but only took in $572 million from the federal government.

Baggage awaits screening at Toronto Pearson International Airport (photo: CATSA).

In its submission for the 2018 budget, the Greater Toronto Airports Authority told the Commons finance committee: “Security screening is [a] major cause of passenger dissatisfaction at Toronto Pearson, when wait times are significantly longer than at other international airports. For example, at London Heathrow and Hong Kong International Airport, 95 per cent of passengers are screened in less than 5 minutes. At Paris Charles DeGaulle, 95 per cent of passengers are screened in less than 10 minutes.”

CATSA says last year, 88% of all passengers were screened within 15 minutes, a result the agency says exceeds service targets. But those target are nowhere near living up to the aspirations of the airline industry. The country’s airlines and airports want 95% of all passengers screened within 10 minutes, with no passenger waiting more than 20 minutes.

To remedy the situation, some airport authorities started paying for more screeners out of their own pockets. CATSA records suggest between April and December 2018, the GTAA spent $9 million for extra screening – in effect subsidizing a service that was already paid for through taxes. “Even with GTAA funding,” reads the GTAA budget submission, “in 2016, CATSA service declined below 2015 levels.”

Vancouver International Airport had a similar arrangement, but dropped the program in 2018 after two years of subsidization, as new technology and procedures helped to speed passenger screening to more satisfactory levels. At other airports, either unwilling or unable to offer their own subsidies, lines have grown and airport managers have taken to social media to ask passengers to get to the airport at least two hours ahead of their flights.

At the same time, indications are costs are escalating. Data from the National Airlines Council suggests Ottawa provided an extra $33 million in 2015 to cover budget shortfalls, and $142 million the next year. “It is important to note the evolution of trend lines in ATSC revenues and CATSA spending beginning 2015 as this may help explain the government’s interest in the privatization of CATSA.”

Privatization is not a natural Liberal Party buzzword, but it has been used successfully in other parts of Canada’s aviation industry. The highest profile remains, of course, the privatization of Air Canada starting in 1985 under a Conservative administration. But quietly, another privatization, this one done by the Liberals in 1996, is quietly paying dividends today, and serves as a likely model for CATSA.

NAV Canada was responsibility for managing the country’s air traffic control, flight information, weather briefings, airport advisories, aeronautical information, and navigation aids. It operates as a private not-for-profit company, and gets its money by charging airlines and private operators for using the airspace.

Even though it’s a private company, by law NAV Canada cannot charge more in fees than it costs to operate the air system. In other words, it can’t make a profit. And though few details are available, it’s the likely model for the private organization that will replace CATSA.

From humble beginnings, NAV Canada has branched out.

While it started small with a simple not-for-profit company, NAV Canada has since added four fully-owned subsidiaries and has a stake in two more, including Aireon, a partnership that is building a space-based tracking system for all aircraft around the world, which is being deployed in Edmonton and Gander, and will help monitor vast swaths of the Arctic and North Atlantic, where radar facilities are sparse or non-existent.

The result of these investments is that NAV Canada rates charged to airlines have barely budged in years, or, in some cases have actually declined. The company principally charges for using an airport, using the airspace, and flying the North Atlantic. Since 2006, Terminal charges at airports, have increased by 20%, much less than the rate of inflation. At the same time, base airspace fees have dropped 18%, and charges for crossing the North Atlantic have dropped almost 15%.

What airports and airlines really want is for Ottawa to stop using CATSA as a cash cow. The National Airlines Council, in its 2019 budget submission, recommends that Ottawa “Revisit aviation security funding to create a direct and transparent correlation between ATSC revenue and funding for screening services and acknowledging the role of that aviation security plays in Canada’s overall national security.”

“We were pleased to see that the recent budget acknowledges a plan to address airport security screening,” said Vancouver International Airport spokesperson Tess Messmer in an e-mail. “We look forward to working with our partners to ensure we continue to offer an exceptional passenger experience while upholding the utmost safety standards.”

In signalling its intention to privatize CATSA, the government is showing a willingness to listen. Few details are available, but Ottawa is promising to spend upwards of $500 million to help ease the transition, which will be led by Transport Canada. The goal is to get people through security faster.

In an e-mail, a government spokesperson says, “Transitioning the security screening of air travellers and workers at airports to such an entity will give stakeholders, including airlines and airports, a greater say in the new entity’s operations. This is expected to promote better responses to fluctuating passenger volumes and further innovation in order to increase the effectiveness of the air traveller system while maintaining its security.”

Details are sketchy, and there are risks, to be sure. Not every privatization goes well, and it’s doubtful, for example, that security charges will go down under a new company.

So while chance are you won’t even notice any difference the next time you go to the airport, expect those pesky add-ons to remain on your ticket, though you may finally get on your flight without getting to the airport ages ahead of time.

Categories: Safety, Sunday wrap

2 replies »

  1. Great summary of the file!