Pearson gets low marks in Transport Canada ranking
Last Updated: Monday, March 17, 2008 | 8:29 AM ET
The Canadian Press
Toronto's Pearson airport gets low marks for efficiency and fee levels in an internal "scorecard" created by Transport Canada to monitor the financial health of Canada's major airports.
The rankings help confirm Pearson's global reputation as a high-cost facility for both airlines and passengers.
The draft scorecards, created for all 21 airports that Transport Canada has transferred to local management groups in the last two decades, were obtained by the Canadian Press under the Access to Information Act.
They measure the productivity and efficiency of the facilities between 2002 and 2006 based on 29 categories, such as the number of passengers processed daily for each airport employee.
Transport 2000, a non-partisan lobby group, analyzed the numbers, specifically ranking Pearson's performance against two other comparable airports in size and growth, Calgary and Vancouver.
"For all measures of cost efficiency … Toronto was significantly poorer than either Vancouver or Calgary," says the report by the non-profit agency.
Higher fees
"Operating expense per passenger is significantly higher for Toronto than either Vancouver or Calgary."
The analysis showed Toronto processed just 79 passengers daily for each airport employee over the five-year period, compared with 131 for Vancouver and 173 for Calgary.
The report also confirmed what many airlines and passengers know well: landing fees, terminal fees, parking fees and other revenue generators are much higher at Toronto.
Parking revenue over the five years averaged $3.12 for every passenger that passed through Pearson, twice as much as at Calgary and Vancouver.
"This area is a very profitable one for Toronto," says the report by Transport 2000's Gerry Einarsson.
A spokesman for the Greater Toronto Airports Authority, which runs Pearson, said the analysis needs context.
"It is important to remember that during this time (2002-2006) Toronto Pearson was being rebuilt, which explains the additional expenses and debt that other airports did not incur during the same time frame," Scott Armstrong said in an e-mail.
Landing fees trimmed
"The construction program was completed in early 2007, and the GTAA has been able to increase revenue and decrease expenses since the variable of construction and terminal changes has stabilized."
He noted that landing fees were trimmed by 3.1 per cent on Jan. 1.
The president of Transport 2000 says Pearson's ambitious $4-billion construction program may be a financial albatross for years to come.
"The airport itself greatly exceeds the capacity that's required right now," said David Jeanes. "They've built for future growth that may not materialize" because increasing fuel costs may curtail air travel.
"We may find … that Pearson ends up being a white elephant. It may be overbuilt and have built-in costs that in the long term won't be sustainable."
An industry spokesman laid much of the blame for Pearson's financial performance at the door of the federal government, which leases the property to the GTAA.
Rent burden 'way too high'
"The overall rent burden is way too high," said Fred Gaspar of the Air Transport Association of Canada.
Gaspar said the current GTAA administration is squeezed between debt-servicing for its massive construction program and a demanding landlord, Transport Canada. Those two factors make it much tougher to be cost-competitive and efficient.
Nevertheless, "we think they're headed in the right direction," Gaspar said, citing the recent cuts in landing fees and terminal charges for airlines.
Transport Canada created its airport scorecards under pressure from the federal auditor general, who in a 2005 report criticized the department for failing to properly monitor the impact of its airport policies.
Department spokesman Patrick Charette said the scorecard categories are being modified and shouldn't be used to rank one airport against another.
"For now, it's still an internal document," he said.
A recent global comparison by an expert at the University of British Columbia determined that Pearson is the world's most expensive airport to land an aircraft, far more expensive than the previous highest-cost facility, Tokyo's Narita International.
http://www.cbc.ca/canada/toronto/story/2008/03/17/pearson-efficiency.html
Toronto Pearson airport erased from critical report after complaint from CEO
Published: Sunday, March 23, 2008 | 1:16 PM ET
Canadian Press: Dean Beeby, THE CANADIAN PRESS
OTTAWA - Toronto's Pearson airport is being dropped from a global review of airport efficiency after a complaint about its embarrassingly low ranking.
The president and CEO of the Greater Toronto Airports Authority demanded the removal of Pearson from the annual survey of more than 150 major airports in a toughly worded letter last August.
"Should you decline this request, I see no other recourse than to pursue all means at our disposal to receive fair treatment," Lloyd McCoomb warned the lead researcher at the University of British Columbia.
McCoomb cited a "total lack of academic rigor" and "unsupported findings" in the survey, saying the research was "threatening potential harm to our reputation."
The 2007 edition of the report found that Pearson was among the least efficient airports in the world, and that its cost competitiveness was low. The survey noted that aircraft landing fees at Pearson - Canada's largest airport - are the highest in the world.
The survey is published by an international research group of 13 academics, headed by Tae Oum, a business professor at UBC. Detailed results are available for a fee of US$500, to help underwrite research costs, though a free summary is posted on the Internet (www.atrsworld.org/publications.html).
Oum said McCoomb's "intimidating" letter rattled him and, fearing legal action, he consulted the university's lawyer and others. In the end, the research group agreed to cut Pearson from the efficiency analysis in the 2008 edition of the survey, due in late May.
"I have to protect myself," Oum said in an interview.
The 2008 survey, however, will continue to rank Pearson's landing fees and other factual information that is generally available from public sources.
Oum declined to comment on his latest internal findings about Pearson's efficiency, citing McCoomb's letter, but said the airport's ranking has been relatively low for several years.
A spokesman for McCoomb said the president was not threatening legal action but, as a former professor of civil engineering at the University of Toronto, was simply speaking "academic to academic."
"There's no attempt to shut down research," Scott Armstrong said in an interview. "Academic freedom is not an issue.
"What's at issue is we're simply asking that if someone is going to go around making accusations about our company, as any business would be, we're concerned about that, so we want to know where they're coming from."
McCoomb challenged Oum's methodology and asked for access to the raw data so that a third party, hired by the GTAA, could make an independent assessment, Armstrong said. "That request was not honoured."
Oum says the research group decided "to keep the (international) data in house for competitive reasons," but offered to provide McCoomb all the raw data about Pearson, most of which the GTAA itself supplied last summer.
He acknowledged that the group's methodology - well-known among economists - is not the only one applicable, but said even when other analyses of efficiency are used, Pearson's results are similar.
"Basically, your airport needs to improve operating efficiency by benchmarking with more efficient airports," Oum told McCoomb in a written exchange last summer.
...http://www.cbc.ca/cp/national/080323/n032304A.html
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