Parks not Planes letter to City of Toronto Economic and Community Development Committee regarding the Toronto Island Airport Lands. January 4, 2022
On December 1, you had the opportunity to hear from the Island Airport’s terminal owner, Nieuport Aviation, on the purported economic benefits of the Airport.
We thought they were overblown, but we aren’t economists. So we were pleased to see that an independent observer, University of Toronto economist Sandford Borins, has weighed in, in a blog post entitled:
Prof. Borins, who has previously studied the economic benefits of the (still) proposed Pickering Airport v. an expanded Pearson[1], finds Nieuport’s forecast 2.3M passengers through the Airport in 2023 entirely ignores
the impact of COVID, which has caused a drastic decline in air travel
the continued popularity of Zoom meetings as an efficient and vastly cheaper way for business meetings, and
the likelihood that governmental carbon pricing policies will result in a substantial long-term increase in the price of jet fuel, and hence higher ticket prices and fewer trips.
We’d note too, that growth in passenger numbers at the Island Airport essentially halted in 2012, as documented in our letter to your Committee on December 1. That would explain Porter’s estimated 2019 losses, before COVID of $35M[2].
While those omissions entirely undermine Nieuport’s study’s credibility, Prof. Borins has more.
He notes how the Nieuport report’s authors apply a number of multipliers to reach their presumed economic impact:
doubling presumed GNP per employee, to capture indirect impact
multiplying that by “another factor of approximately 4 to account for the ‘wider economic impact’ of the airport”
Says Prof. Borins: “I find these multipliers confusing, unconvincing, and rife with double-counting.”
On the central question of whether any presumed economic benefit would simply be generated at Pearson if the Island Airport ceased to operate, the Nieuport study ducks the question. It concedes that “it is difficult to say ‘a priori’ how much displacement will occur in any case and the analysis of these effects is potentially complex.”, and then fails to carry out that analysis. Instead it applies an arbitrary 25% reduction. Prof. Borins:
“If someone did the complex analysis and found out that much more traffic was displaced from Pearson to BBTCA, the multipliers would shrink accordingly”.
Overall, Nieuport’s efforts to find economic benefit from the Island Airport are “weak and unconvincing”, concludes Prof. Borins.
We submit that, if this is the best case Nieuport can put forward to justify the continues existence of the Island Airport and get at least some value for the $750M it paid to Porter for its terminal before the Airport lease expires in just over 11 years from now it has failed miserably.
Brian Iler, for Parks not Planes
[1] Pricing and Investment in a Transportation Network: the Case of Toronto Airport, published in the Canadian Journal of Economics in 1978.
[2] See Porter Airlines warned of losses Globe & Mail June 2, 2021