By: Mark Brooks, Phil Lightstone.
The long-awaited Pickering Lands Aviation Sector Analysis (the “KPMG report”) has recently been released and pro airport supporters are celebrating. The report goes beyond just reaffirming the need for a new airport in Pickering to support the Greater Toronto Area. It clarifies when and in what form the new airport should be developed. While existing passenger capacity in the GTA could be enough to handle projected growth to 2036, it was found to be desirable to start the development of a smaller industrial/specialty passenger airport now, rather than waiting to build a larger airport later. The new Pickering airport could then be expanded to meet future needs as required. This is an evolution of an approach suggested by an all-privately-funded not-for-profit group, Pickering Airpark, back in 2011. Although still a political decision, the Minister of Transport, the Honourable Marc Garneau, is expected follow KPMG’s recommendations.
The KPMG report is more than just an update of the aviation sector analysis for southern Ontario. The primary goal of this analysis was to produce a comprehensive report that summarizes when, and in what form, the Pickering Airport should be built. It has answered these questions. When is now, and the initial form will be a specialty airport that can grow as needed into a much larger passenger hub airport.
The report is broken into three main parts with a fourth “bridge” section. This includes capacity and multiple financial scenarios. The section, “Revenue Generation and Economic Impact Report” appears to be the long-requested business case for the Pickering Airport. Together it is a comprehensive look at how Pickering will fit into the airport network in Southern Ontario. It examines the five major roles Pickering Airport could play and confirmstwo and rejects three out of five as not yet needed. The five roles are: Industrial/ General Aviation Airport; Specialty Passenger Airport; Primary Passenger Hub Airport; Passengerfeeder airport; and Major Cargo Airport.
The role and financial viability of the two needed roles are then explored in detail including six proposed scenarios for the new airport all of which pass the financial viability test. The report is written by KPMG and WSP with input from Transport Canada experts. KPMG is globally one of the big four accounting firms, specializing in accounting, taxation and advisory professional services, delivers an analytical approach to the Pickering questions.The report utilizes a set of well researched assumptions include a conservative rate of economic growth and passenger growth well below the GTA and regional historic average.
Within the “Revenue Generation and Economic Impact Report” six specific development scenarios are presented covering small and large Industrial Aviation, Specialty Passengers service and combinations of these. All scenarios identify construction starting in 2026, with Industrial Aviation entering service in no later than 2029, Specialty Passenger service following in as early as 2030 but not later than 2035.
This timeline provides five years for environmental assessments, airport design and a RFP process. The report charts a path forward by building an industrial airport now which could then grow into a passenger airport. This plan will enable the efficient deployment of private capital and give the region time to build out the services in smaller more manageable increments. This approach provides the flexibility and robustness needed to adapt to changing passenger capacity demands and economic conditions.
A number of assumptions made in the capacity component of the report (completed in July 2017) have already changed. For instance, high-speed rail has been cancelled and air passenger growth rates continue to exceed the conservative numbers used in the report. A conservative growth scenario of only 2.3% was used as an average, but the Greater Toronto Airport Authority (GTAA) is using 3.1% and actual passenger growth has averaged 5% from 2013-2018 at the Lester B Pearson International Airport (CYYZ).
Although not explicitly stated, passenger numbers used for Billy Bishop Airport (in downtown Toronto) seem to imply infrastructure improvements. Should we expect a reversal to the decision to block the runway extension at Billy Bishop? The report assumes not, but the extension is needed to enable Porter to upgrade its fleet of turboprop aircraft to quieter, more fuel-efficient A220 jets. Will the federal government strike a deal with the City of Oshawa to reverse its decision to not extend its airport runway? An interesting question.
Below is the complete set of conclusions from all sections of the KPMG report that advise the most appropriate option is the development of a utility/ specialty airport now that could evolve as needed.
Time is now of the essence. The timing and content of an announcement by the Federal government on how it plans to fulfill the reports recommendations should be forthcoming. Ultimately the citizens of the Greater Toronto Area can look forward to a new airport in Pickering opening sometime in 2028-2029. The Pickering Airport will be a carbon neutral airport which will reduce congestion, reinvigorate aviation competition, act as an Air and Space centre of innovation, and help Canada meet its Paris accord emissions commitments.
Ultimately the new airport will harness private investment to create 50,000 new jobs, $13 billion in annual economic activity and $500 million in new tax revenue.