Canada Reconsiders Opening up its Airports to Long-term Private Investment

Kevin Rozario

London

March 12, 2025

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© Eric Prouzet / Unsplash

The Canadian Government moved a step nearer to establishing wide-ranging opportunities for the private sector—and pensions funds in particular—by issuing a new policy statement last week.

Referring to the National Airport System (NAS) which comprises of the country’s 22 largest airports, Transport Canada said that numerous opportunities exist for infusing private sector investment into these gateways. They are currently all owned by the department and operated on federal land through long-term ground leases, by airport authorities that are private, not-for-profit, non-share-capital corporations.

This system has allowed NAS to grow over the past three decades with the help of private-sector investment, mostly in the form of long-term debt from Canadian sources. With traffic hitting 150.7 million passengers in 2023, and set to rise quickly, expansion plans will need stronger, long-term private partnerships with, for example, pension funds.

Acknowledging this, Transport Canada’s policy statement said that investors would have new options such as:

  • working with NAS airport authorities to enter into subleases that will develop airport lands
  • provide subcontracted services for certain aspects of airport operations
  • work with airport authority subsidiaries to take advantage of private investment opportunities.

The statement added: “Investment from institutional investors like Canadian pension funds could diversify NAS airport authorities’ funding sources and enhance their financial flexibility, which could help reduce risk and make the Canadian air transportation system more resilient.

“The Government intends to explore negotiating extensions to airport authority ground leases that would provide more certainty to investors, facilitate more development, and incentivize investment on airport lands.”

Such amendments, especially changes to the ground leases, could make it easier for NAS airport authorities to enter into joint ventures, or arrangements like limited partnerships, where the risks and rewards of land and infrastructure development projects can be shared.

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A Welcome Move

Canadian Airports Council (CAC) said that the policy statement clarified the investment tools currently available for NAS airports and was generally supportive of the move.

“Airports have long advocated for greater financial flexibility in their ground leases and extensions to unlock investment opportunities that could benefit both the community and travelers,” said Monette Pasher, President of the CAC. “We are pleased to see this policy statement that will allow airports to explore the extension of airport ground leases. This would provide the long-term stability needed for significant capital projects and infrastructure development on airport lands and business parks.”

According to the CAC, the state-owned but arms-length ‘privatized’ model in operation at Canada’s airports was established in the early 1990s, “Since that time, airports have invested over CAD30 billion (USD20.8 billion) in growing, improving, and expanding infrastructure to meet the evolving needs of air travel,” stated the organization.

The CAC added: “Canada chose this self-funding model instead of a taxpayer model to ensure that these national infrastructure assets could meet the growing demand for air travel and capitalize on trade opportunities. In the decade ahead, Canadian airports plan to invest CAD28 billion (USD19.4 billion) to accommodate growing passenger demand and diversify trade markets, which will support both local and national growth.”

Given that larger NAS airports already have extensive experience working with private partners, Transport Canada’s liberalization plans should attract more private investment partners, especially Canadian pension funds and other institutional investors. There may also be a greater commitment to large-scale projects that will be future economic growth drivers.

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The upcoming GAD Americas event will devote a timely panel session to the future of airports in Canada.

The topic will also be a focus of discussion at GAD Americas in Grand Cayman in early April when a renowned panel will explore the future of airports in Canada. Taking part are Pasher from the CAC, as well as some very high-level counterparts including panel moderator Jody Aldcorn, Partner at law firm McCarthy Tétrault; Toronto Pearson International Airport’s CEO Deborah Flint; Johanne Gallant, President and CEO at Fredericton International Airport Authority; and Joyce Carter, President and CEO at Halifax Stanfield Airport.

In a final comment on the new policy statement, Pasher said: “It is just good business to have more financial tools in the toolbox and access to longer investment terms is part of that,” added. “It’ll be up to each airport to look at their opportunities and assess what is needed to accelerate growth and trade for their respective communities.”