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2000 October Report of the Auditor General of Canada

October 2000 Report—Chapter 10

Exhibit 10.1—About Airport Authorities

The first round of airport transfers were those to local airport authorities (LAAs) in 1992. The second round of airport transfers, to Canadian airport authorities (CAAs), was intended to follow the 1994 National Airports Policy and the Public Accountability Principles. Both LAAs and CAAs are constituted, for the most part, under the Canada Corporations Act and pursuant to by-laws approved by the Minister of Transport. An airport authority is intended to be a not-for-profit business entity created under federal/provincial legislation, as required, to manage and operate a local airport system and associated business enterprises. Local municipalities and various groups nominate members to the boards of directors of LAAs and CAAs. Virtually all authorities include two or three federal government representatives, who do not report to the federal government.

Airport authorities are responsible for all airport operations and for capital projects such as expanding terminal buildings and improving runways. Among other things, they are also responsible for providing emergency services, developing airport lands for various uses (for example, hotels and other commercial activity) and for renting space used for shops, restaurants and the many other businesses that serve the travelling public.

Airport authorities - LAAs and CAAs - are largely monopolies and enjoy a captive market. They can, without regulation, set fees (for example, landing fees) to fund capital works and operations at airports, make any type of investment, and accumulate large reserves, tax-free. Thus, many large airports in the NAS have been given a financial position that enables them to carry out very large projects in a short period of time.

Source: Transport Canada