Ottawa should establish legally binding rules governing airport fees before seeking bids for long-term operating concessions at Canada's four largest airports, a University of Calgary researcher says, warning that the order of the process could affect what travellers pay for decades.
A paper from the university's Research Program in Competition and Regulation argues that selling the rights to operate Toronto Pearson, Vancouver, Montréal-Trudeau and Calgary airports before establishing an economic regulatory framework could leave passengers facing higher charges and weaker service while making it difficult for the federal government to assess the value of the deals.
The debate follows a Sept. 15 announcement by the prime minister that the government would seek long-term concessions for the four airports and use the proceeds to fund other infrastructure. Five days later, the transport minister said airport fees would be “partially regulated,” but did not guarantee that prices would not rise.
The paper, titled Holding Pattern: The Case for Regulating Canada's Airports Before Sale, was written by Aidan Hollis, a professor of economics at the University of Calgary. It argues that the regulator, fee rules and treatment of federal rent should be established in law before the bidding process begins.
“The price a bidder will pay depends on what the rules will let it charge,” said Hollis, author of the paper. “If the rules come after the price, the government will have sold the right to raise charges at airports travellers can rarely avoid. Flyers will pay for that every time they book.”
Airport charges and consumer costs
The paper says passengers have limited alternatives when flying to major Canadian cities because airlines generally cannot bypass the main airport serving a city. Higher airport charges can be reflected in ticket prices or lead to fewer flights, leaving passengers to pay more for the seats available.
The effects could extend beyond passenger travel, according to the paper, which says higher airport charges could also increase air-cargo costs and the prices of goods transported by air.
Airport improvement fees already account for 32 to 42 per cent of revenue at the four airports, the paper says. It adds that no independent body reviews those fees or airport capital spending, and that airports remain the only part of the federal transportation system without a legislated economic framework.
The report argues that establishing rules only after a sale would create two problems: passengers could face higher prices and weaker service, while the government would have difficulty determining whether the proceeds reflected efficient airport operations or the value of charges that future owners could collect from travellers.
The timing of regulation is central to the paper's concerns because the rules governing airport fees could influence how much prospective operators are willing to pay for the concessions. Without a framework in place before bids are submitted, the government would not have a settled set of conditions against which to assess the offers, the paper argues.
International examples cited
The paper points to Heathrow Airport in the United Kingdom as an example of a privately operated airport that remains subject to price controls. Heathrow has been privately operated since 1987 and continues to operate under a licence that caps prices.
Australia provides a contrasting example in the report. The country opted for monitoring rather than direct price controls, selecting that approach weeks before selling Sydney Airport. The paper says Australia's regulator now acknowledges that monitoring does not impose a meaningful constraint on airport charges.
Sydney Airport earned a 20.8 per cent return on aeronautical assets in 2024-25, according to the paper.
The examples are used to support the argument that the regulatory framework should be settled before the government transfers long-term operating rights. The paper does not rule out private-sector participation, but says the outcome would depend on whether a for-profit operator could deliver genuine operational efficiencies rather than simply increase prices to generate returns for its owners.
“A for-profit operator could still make sense if it can achieve real efficiencies, for example by reducing costs or improving services. But there is a real risk that all that happens is increased prices to generate profits for new owners,” the paper says.
It concludes that the government should not open the bidding process until the regulator, fee rules and treatment of federal rent are established in law.