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Ports Toronto flees from debate on Island Airport future – twice

Letter sent to:

Hon. Pablo Rodriguez, Minister of Transport,Government of Canada.

20 November, 2023


You should be aware of the actions of your port authority in Toronto, Ports Toronto.


Twice recently, it has, after agreeing to speak at an event, refused to do so when it apprehended that opposing views might be expressed.


We ask that Ports Toronto be instructed by your government to engage constructively in the debate of the future uses of the Toronto Island Airport lands.

We also suggest that, given the currently precarious existence of the Island Airport, any disbursement of the $30M promised by your government for customs pre‑clearance be suspended until it is clear that those funds would not be wasted should the Airport close because it cannot comply with Runway End Safety Area (RESA) requirements in time, because Porter has abandoned the Airport, or because its lease from the City has not be renewed.


As you will know, Ports Toronto’s Island Airport is facing three existential challenges:

  1. First, can it obtain the permissions and the necessary capital [1] to comply with the forthcoming RESA requirement [2] in time [3]?

  2. Second, can it obtain a renewal of its lease [4] from the City prior to its expiry on June 30, 2033?

  3. And third, Porter Airlines, which has a near‑monopoly at the Airport, has admitted it has been losing serious money [5], and has drastically reduced its use of the Island Airport, opting to pursue growth at Pearson. Will it abandon the Island Airport?

To meet those challenges, Ports Toronto must persuade the City that construction of the RESAs and a lease renewal are in the City’s best interests, plus that the Airport has reasonable prospect of financial success.


Recognizing that the Airport lands are in an extremely attractive location for desperately needed parkland, the City will need to adopt an extensive process, involving intensive community engagement, before any decision can be made. A smart community engagement process was set out in the presentation by Nicole Swerhun last year entitled How do we talk about the future of the Island Airport?”


Why is Ports Toronto ducking debate in the community?

Last September, recognizing that the debate on the best uses of the Airport lands post‑2033 should begin sooner than later, The Toronto Island Community Association invited a representative of Ports Toronto to present their perspective. They accepted, and it was scheduled for September 26.


However, upon hearing that a community perspective would also be presented, Ports Toronto bailed, stating that, “as it owns 78% [7] of the Airport land, it is not up to the community to debate how its land is used”.


That struck us as arrogant, and wrong.


Again, this month, after agreeing to speak in Waterfront for All’s highly regarded Speaker Series to be held on November 7, it refused to participate, writing, on November 6:

… in light of the white-paper that was written by the chair of Waterfront for All, Ed Hore and published on October 24, 2023, on the Waterfront for All website entitled “Do We Need Two Airports,” we are concerned that the purpose of the discussion may have changed, and is instead geared towards the Tripartite Agreement and the future of the airport.

I am sure you will agree that it is not up to Ports Toronto to determine how the debate on the future uses of the Island Airport lands should be conducted.


And it not its call as to when and where the debate should occur.


It appears to us that Ports Toronto will need to be dragged kicking and screaming into a fulsome debate on the Airport’s future. Your assistance is clearly required.


We think some preconditions to that debate are appropriate. They are set out in the Appendix to this letter, below.


In conclusion, we ask that you instruct Ports Toronto to engage constructively in the debate of the future uses of the Toronto Island Airport lands and accept and comply with those preconditions.


We also urge that, given the precarious current existence of the Island Airport and its uncertain future, any disbursement of the $30M promised by your government for customs pre-clearance be suspended.

Those considerable funds would be wasted should the Airport close because it cannot comply with RESA requirements in time, because it is no longer viable, should Porter essentially abandon the Airport, or because its lease from the City has not been renewed.


We look forward to hearing from you.


Yours truly,


Brian Iler

for Parks not Planes



Toronto Island Airport


Appendix: Preconditions

Before embarking upon any discussion with Ports Toronto about what to do upon expiry of the City’s lease, we advocate these preconditions:


Given the extremely valuable land on which the airport is located, rent should be paid for the City’s land.

a. on the Island side, as well as

b. the Stadium Road parking lot lands, and

c. the Eireann Quay queuing lanes lands,


that reflects market value, not the nominal rent paid now, and not calculated as if constrained by airport uses (which doesn’t amount to much at all, as Ports Toronto has argued in property tax litigation).


Ports Toronto’s tenants have derived immense benefit from their advantageous location (though still not, as its major user, Porter Airlines admits [7], enough to be financially successful), and don’t pay any premium for that benefit. That must change.


Same for property taxes - enough with their preferential per passenger charge, that no other property owner gets. And it’s contrary [8] to the requirements of the Payments in Lieu of Taxes Act.


As the Federal Court of Canada stated [9]

“The Island Airport’s proposed per passenger fee] … is not sustainable as a matter of jurisdiction nor as a matter of reasonableness.”


The noise and resulting slot constraints in the Tripartite Agreement have been demonstrably ineffective and need to be beefed up considerably to further constrain the impact of the Airport on the (now) dominant recreational and residential uses of the waterfront.


The enforcement provisions in the Tripartite Agreement are useless and have allowed Ports Toronto to breach its constraints with impunity


Starting with use of the Q400, which is not a permitted aircraft and violates the noise maximums specified. They must be fixed.

If the lease is not renewed, Ports Toronto must commit to handing over the airport lands it owns to the City for a nominal amount.


Tripartite agreement compliance

Comparison of Q400 to limits in Tripartite

Q402

Tripartite

Flyover

78

84

Lateral

84

83.5

Approach

93.1

92

From a February 2009 presentation by the TPA (now Ports Toronto)



Those land were originally the City’s and became Ports Toronto’s only through the restructuring of harbour commissions to port authorities. The City can then, in conjunction with the federal government, consider what use of those lands is in the public interest.


Before it will consider a lease extension or renewal, the City should make clear it will require full disclosure of not only Ports Toronto’s financials and long-term business outlook [10], but also of Ports Toronto’s tenants’ financial situation and business strategies. That would include Porter.


That is, one of the City’s main questions going into any negotiation on entering into a new lease for the City’s lands after 2033, must be:

“Is the island airport financially viable in the long run, or will it eventually turn into an expensive white elephant?”


Ports Toronto’s main tenant, Porter, says it’s cheaper to operate out of Pearson, has moved significant operations to Pearson, and has threatened to leave the island airport together. Many airlines operating at the airport historically have failed [11]. Save for its recent disclosures, and its failed 2010 Initial Public Offering, Porter’s finances have always been a black box because it is private.


Connect Air has been promoted by the Airport’s terminal operator as the Airport’s saviour, as Porter reduces its Airport operation. It has just been denied permission to operate in the US as it “did not provide the required information necessary to support a positive financial fitness finding, or independent verification of its funding, including verification that it has completed its Series B funding or otherwise obtained comparable US citizen capital contributions” [12]. Don’t count on them to save the Airport.


That disclosure should be sufficient enable independent business consultants to do a full analysis of viability, including a deep probe into the numbers, much as a venture capitalist or merchant bank would do due diligence on a company or business sector before investing in it.


If those aren’t agreed upon as starting points, there’s no sense having further discussions. It would be time and effort wasted.



Footnotes

[1] Estimated by Ports Toronto in 2021 to be $50‑130M

[2] Once the total of the number of passengers that are emplaned and the number of passengers that are deplaned at the airport is at least 325,000 per year during a period of two consecutive calendar years.

[3] Assuming 2023 volumes match 2022’s, they will be published some time in 2024, and the requirement must be met three years later – in 2027.

[4] Called the Tripartite Agreement, it leased a key portion of the Airport lands for 50 years at nominal rent.

[5] Per Porter, it has been losing serious money even pre COVID: $18,910,000 in 2017, a projected $40M in 2018, and $30M in 2019

[6] All of the Airport lands are publicly owned. Most of the lands now owned by Ports Toronto were City property, transferred by the City of Toronto in 1911 for nominal consideration, we understand, to the Toronto Harbour Commission for port use.


It was only by the enactment of the Canada Marine Act, that converted harbour commissions to port authorities, that Ports Toronto acquired ownership – again, without payment.


That ownership can be as readily converted to parkland use by the federal government as it was converted to Ports Toronto ownership from the City-controlled Toronto Harbour Commission.


[7] See footnote 5 above.


“a payment made by a corporation [i.e. Ports Toronto] in lieu of a real property tax for a taxation year shall be not less than [our emphasis] the product of

  • the corporation effective rate in the taxation year applicable to the corporation property in respect of which the payment may be made; and

  • the corporation property value in the taxation year of that corporation property.”


[10] The Airport’s business is in serious decline. On a representative day (October 16) flights by Porter and Air Canada Jazz totalled 112, a reduction of 46% from the peak of 202.


Porter has revealed it was incurring serious losses pre COVID: see note 5.


[11] Otonabee Airlines offered service from the Island to Montreal for a few years.


In 1981 Voyageur Airlines flew to North Bay and later Sudbury. It failed.


The feds offered a company called Canaviere a loan guarantee of $20 million in 1983 but it never operated out of the Island.


  • In 1986 Trillium offered service to St Catharine’s. It failed.

  • In 1986 Skywalker was flying from the Island to Buffalo and Rochester. It failed.

  • Victor Pappalardo purchased Otonabee Airlines and renamed it City Express. The company purchased Dash 7 planes and flew from the Island to Montreal, Ottawa and Newark N.J. In February 1991 City Express ended in bankruptcy. Pappalardo admitted it was never profitable.

  • Air Ontario, which eventually became owned by Air Canada, flew out of the Island Airport from 1990 to 2006. In 2006 the company’s business had dwindled to just 22,321 passengers when it was evicted by Porter.


[12] See the Flight Global article: Connect Airlines vows to appeal DOT decision to revoke certificate. Connect plans to use only 3,386 slots (landings plus takeoffs) at the Airport, or just over nine per day. The Airport has current stated capacity of 202 slots per day.




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