2018-03-20 14:55:35 Business Insights English Learn about what might happen if the Canadian government opts for privatization of the country's major airports, and how it could impact... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/Traveling-professional-discuss-business-impacts-of-airport-privitization.jpg https://quickbooks.intuit.com/ca/resources/business-insights/canadian-airports-privitization-business-impact/ Possible Impacts on Business Travel If Canada Privatizes Its Airports

Possible Impacts on Business Travel If Canada Privatizes Its Airports

2 min read

Most of Canada’s major airports are owned by the government and run by non-profit airport authorities. As the Canadian government looks for ways to bring in extra revenue, one option it’s considering, as of February 2018, is selling some of its biggest airports to private owners. If you or your employees travel frequently for work, these sales could have big implications for your comfort and your company’s bottom line.

Better Airport Services

Under the government-owned scheme, Canadian airport authorities lease land from the government. The lease amounts are based on a percentage of the revenue an airport brings in, rather than the profits. [That means that the more money an airport takes in, the more it pays in rent, even if profits are very low. Because of this, airports don’t have much reason to add low-margin services that might make your business trips more comfortable, such as bookstores and clothing stores.

If airports are privatized, the new owners wouldn’t need to worry about paying rent. Instead, they would pay taxes on profits just like other Canadian businesses. That means that they could add in low-profit services that make customers happy, all without driving up their tax bill. If you spend a lot of time in airports for business travel, this change could make a big difference. After all, great shopping and food options can go a long way toward a comfortable trip.

Improved Customer Service

If Canada’s airports transition to separate private owners, it would automatically increase competition. Instead of working for one owner — the government — airports would need to compete with each other for travellers. What does that mean for you? Airports are likely to step up their game to create a better experience. You might notice that customer service improves, or that security lines get faster. This could also mean better convenience options, such as free wifi, or more comfortable terminals.

Increased Fees

Canada’s airport authorities are non-profits. So although they use successful business models, they don’t need to worry about hitting specific profit levels to make investors happy. If a private company were to take over ownership, that would all change. Since the airport is a business investment, the new owner would be very concerned with finding ways to bring in more money. People who oppose privatization worry that in order to make that extra money, airports would start charging passengers extra fees. If you travel through Canada’s airports, you know that costs are already high; if you land at Toronto’s Pearson International Airport, as of February 2018, you pay 25 dollars for "airport improvement." When fees rise, your business ticket prices also rise.

Poorer Infrastructure

When Canada’s airports bring in a profit, the money goes right back into the airport for improvements. This means that airport authorities can use the funds to renovate old spaces, expand terminals, and fix problems. If the airports were to go private, a part of the profits would have to go to investors — leaving less money for improvements. As a result, you might notice a lower-quality travel experience. Worse, if the new owners are slow to solve problems with security or facilities, your business trips could be more dangerous.

If business travel is a big part of your company, it’s a good idea to keep an eye on the fate of Canada’s airports via updates from the Canadian Airports Council. By staying in the loop, you can adjust your travel plans or find alternate transportation options to keep costs and comfort under control.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Inventory Valuation: An Overview of Costing Methods

The way you value your inventory has a direct impact on a…

Read more

Improve Your Profit With Value Pricing

Pricing of your products affects your profits and your sales volume. One…

Read more

Decision-Making Skills for Effective Business Leaders

Perhaps the most vital leadership quality is being a good decision-maker. This…

Read more