2016 was a year of growth renewal for the Ottawa International Airport. We served 4,743,091 passengers, which is 1.9% higher than 2015, and the highest in the history of the airport. Revenues also grew by 3.1%, thanks in large part to growth in ground transportation and concession revenues. Our goal of increasing non-aeronautical revenues has been a success, allowing us to keep aeronautical fees as low as possible.
Throughout the Year in Review pages, you will read about a great deal of activity and project work that was undertaken during the year as we fulfilled commitments made in our Strategic Plan and our 2016 Action Plan. While all noteworthy, one in particular stands out.
The Baggage Handling System Upgrade, which began in 2013, was completed in late summer. Arguably one of the most complex in the past decade, the new state-of-the-art Beumer system added a baggage carrousel in domestic arrivals, more than doubles the size and throughput of the old system (up to 2,000 bags per hour domestic and 1,000 bags per hour transborder), uses far less power, and accommodates new screening requirements from both the Canadian Air Transport Security Authority (CATSA) and U.S. Customs and Border Protection (U.S. CBP). From a customer service point of view, passengers who are transferring from a domestic to a U.S. bound flight are no longer required to reclaim their checked bags for connection because the new system processes them right through to their destination.
Remarkably, the new system was completely assembled and installed while the old system was still operational, and in a very constricted space. The project has been compared to changing the tires on a vehicle while it’s moving at 100 km per hour.
If I were to ask our passengers if they knew that this $60 million project had been ongoing for the better part of three years, most would have said no. That, in my estimation, is one of the greatest indications of the success of this project; maximum scope with minimal disruption. It goes without saying that the results are impressive.
Much thanks and credit go to the entire Authority team, campus and construction partners who worked hard to bring the system on-line so efficiently, and with no customer impact. To learn more about the BHS upgrade project, have a look at the video we created.
There were a few high priority files that we focused on in 2016, both of which will have a major impact on the airport, the Authority and the community, for years to come.
The first is the City of Ottawa’s Light Rail Transit (LRT) plan. The Authority has been a vocal advocate for an airport link in LRT Stage 2 (Trillium Line) for the benefit of the entire region. An effective multimodal transit system that includes the airport will make Ottawa-Gatineau an even better destination for conferences, the hospitality sector, and general tourism. And tackling the airport link in Stage 2 is the right time in order to take advantage of the economies of scale and cost savings associated with the larger project.
Our advocacy efforts were successful, and the City has indeed included the airport in its Stage 2 plans. Further, the Province of Ontario has committed funding to the project. We anxiously await the federal government’s commitment so that the project can move to the detailed design and procurement phases. The Authority also stands by its commitment to fund the terminal station portion of the link. It is worth noting again that an airport link does not provide financial benefit to the Airport Authority, but it will benefit the City and the Region.
With respect to the current plan for a spur line that requires a transfer at South Keys, we trust that in time, ridership will merit direct access. Like other commuters on the Trillium Line, business and leisure travellers going to and from the airport need predictability, reliability and frequency, if they are going to use the link to and from the downtown area. In the meantime, we look forward to the first day of operation, as well as to the train extending to the City of Gatineau in the near future.
The second, and perhaps most important file in the history of the Authority pertains to the Canadian Transportation Act Review, and a report entitled Pathways: Connecting Canada’s Transportation System to the World that was released by former Member of Parliament, David Emerson, in February 2016. The report contained a series of recommendations for the aviation sector, most of which make sense. One, however, causes me grave concern. It involves selling Canada’s major airports to private, for-profit enterprises in order to raise funds for an infrastructure bank that would fund major non-aviation related projects across the country. The recommendation also claims that greater competitiveness in the Canadian aviation sector would result.
The Authority has studied the recommendation intensively, and concluded that the promises of greater cost competitiveness and better service for passengers simply cannot be kept if the current not-for-profit model becomes a for-profit capital share corporation. We have also studied similar airport sell-offs in places like the United Kingdom and Australia where proponents of the model anticipated significant tax revenues that did not materialize. In fact, the staunchest supporter of privatization in Australia, Rod Sims, Australian Competition and Consumer Commission Chairman, has since declared that it has been severely damaging to their economy. In his experience, costs rose and service levels fell, and we have every reason to believe the same would happen in Canada’s case.
We have been very vocal in our support of the current governance model for Canada’s airports. With the full support of the Authority’s Board of Directors, we collaborated with the Calgary and Vancouver airport authorities to launch a campaign to educate Canadians about the success of the current model and the risks associated with selling airports to organizations that will be solely focused on shareholder return rather than reinvestment in airport operations or local economic development and community interests. We are pleased to have received support for the current model from the major carriers and many elected officials from all orders of government.
We anticipate gaining clearer understanding of the government’s intention in time and will continue to speak out and intensify our activity on the file as needed. For more information about the campaign, please visit www.noairportselloff.ca.
As we look forward to 2017, we will undertake our fourth Five-year Review per a requirement in our Ground Lease with Transport Canada. The exercise is a high-level management, governance, operational and financial performance review covering the period of February 1st, 2012 to January 31st, 2017 and includes a third-party assessment of the extent to which, and how well, the Authority fulfilled the objects set out in the Lease.
We will also be preparing a new Airport Master Plan which is updated every 10 years to ensure continued operational and service excellence in the management of the airport. Planning involves anticipating future transportation conditions, needs and opportunities and strategic thinking about future directions and options. These activities are also done in accordance with our Ground Lease which stipulates timing and prescribed analytics, along with the requirement for public and stakeholder consultation. We will finalize and submit our plan to Transport Canada in 2018 for approval and report back.
We could not have accomplished what we did throughout the year without the unwavering support of the Board of Directors. I would like to thank them for their engagement in some very critical files, and their trust in my team to take measured but appropriate action as we fulfill the Strategic Plan and tackle other issues and projects as they arise.
Ensuring that these projects are completed on-time, on-budget, and with minimal disruption to our clients is a credit to the entire Airport Authority team and all of our partners. Their collective dedication to the success of the organization, to our passengers, and to the community we serve is second to none, and it is why we continue to receive recognition and Airport Service Quality Awards as our Chair mentioned in her remarks.
Everyone has an airport story to tell, and as you peruse through this report, you will read a few that stood out to us. As we celebrate Canada’s 150th birthday, I hope you will have the opportunity to travel through our airport, to join in the festivities, and to create some wonderful stories of your own.
President and CEO