WestJet CEO Calls for Overhaul of Canadian Airport
In a recent critique of the federal government’s air travel fees, WestJet’s CEO, Alexis von Hoensbroech, has urged for significant changes to how Canadian airports are funded and operated. His proposals, if adopted, could lead to a major transformation in the country’s air travel industry, potentially involving partial or full private ownership of airports.
Von Hoensbroech’s comments highlight the high cost of air travel in Canada compared to other countries. With mandatory fees for an average one-way domestic ticket reaching $88, up from $76 in 2019, the executive argues that these costs hinder the ability to offer competitive, low-priced tickets, as demonstrated by the recent closure of WestJet’s discount brand, Swoop.
WestJet is advocating for the federal government to freeze air travel fees, cease collecting rent from airports, and conduct a comprehensive review of airport funding and operations.
Von Hoensbroech believes that exploring different operational models could lead to a more efficient and cost-effective system.
The federal government, through Transport Minister Pablo Rodriguez’s office, has expressed willingness to consider new investments in Canadian airports. The recent federal budget hints at potential private investments from pension funds or sovereign wealth funds. John Gradek, an aviation analyst at McGill University, supports the idea of a new governance structure for airports, suggesting that government rethinking is underway.
Since the 1990s, medium and large airports in Canada have operated as not-for-profit entities on a user-pay model, paying rent to the federal government. This rent, which can amount to 12% of an airport’s revenue, poses a significant financial burden. For example, Calgary’s airport paid approximately $50 million last year in rent, which could instead be used to manage its $3.3 billion debt.
Chris Dinsdale, CEO of the Calgary Airport Authority, acknowledges the challenges of reducing fees while maintaining high service levels. Drawing on his experience from managing Budapest’s privately owned airport, Dinsdale points out the complexities of comparing Canadian airports to international counterparts due to Canada’s unique geography and population distribution.
The Competition Bureau’s recent announcement of a study into the airline industry, spurred by rising ticket prices and customer complaints, underscores the urgency of addressing these issues. As airlines and airport authorities push for reforms, the conversation around privatization and new funding models gains momentum.
WestJet’s call for a review of Canadian airport funding and operations could mark the beginning of significant changes in the air travel industry. While experts caution that fare reductions might be minimal, the proposed reforms aim to enhance efficiency and service quality, ultimately benefiting travelers across the country.