The Toronto region’s rapid growth is creating a demand for new infrastructure. Any land development project will have its supporters and its detractors. The latter are typically individuals or small groups concerned about development impacts like traffic congestion. They want to maintain the status quo fearing a reduced quality of life. A few people are opposed to development of any kind for ideological reasons. However, one group that is opposed to certain developments stands out: corporations.
It is normal to hear the concerns of citizens and NIMBY (Not In My Back Yard) groups through various forms of stakeholder engagement. However, these engagements will not address those motivated by the belief that they can Profit from Scarcity. Nor will it counter the direct investment in social media propaganda and stakeholder lobbying made by corporations looking to profit from stopping a specific development. It will not stop their support of other groups similarly opposed to those developments for their own separate reasons.
What is “Scarcity for Profit”, also known as Artificial Scarcity?
To obtain maximum profits, producers may restrict production rather than ensure the maximum utilization of resources. This is a strategy of restricting production or access to services by these enterprises to obtain maximum profits in a capitalist system. It typically works best in a monopoly or non-free (politically restricted) marketplace. Aviation, with heavy government regulations and a high cost of entry, can be vulnerable to this type of profit-taking.
Toronto’s downtown Billy Bishop Airport’s fight to expand its runway has shown the challenge corporations looking to Profit from Scarcity represent. When the Toronto Ports Authority first attempted to expand its runway, one of the surprises was the opposition of Air Canada.
In a public letter in 2015, Air Canada opposed extending the runway at Billy Bishop. It stated that a longer runway was not needed for the turboprop aircraft it was flying out of the airport.
Their reasoning was technically incorrect and self-focused.
To understand why, simply examine the waste and added risk inherent in a maneuver called a go-around. In aviation, a go-around is an aborted landing of an aircraft that is on final approach or may have already touched down. A go-around is initiated by the pilot flying by applying full power to the engines to abort a landing. It can be done for various reasons, such as an unstable approach but is primarily done due to a risk that there is not enough runway remaining at the point of touch down to safely stop.
Billy Bishop Airport has one of the highest number of go-arounds in North America because of its short runway. A longer runway will improve the efficiency of airline operations by reducing the number of go-arounds. This in turn will reduce aviation noise heard in the surrounding communities. Along with the space to update runway overrun areas, a longer runway will improve aviation safety.
In hindsight, the move neatly cut off its rival, Porter Airlines, from expanding and competing with Air Canada. Porter had planned to switch from turboprops to the quieter more efficient CSeries jets from Bombardier. But to fly these jets out of Billy Bishop the airport would require a longer runway.
Despite requiring no financial input from the federal government, and with the CSeries jets expected to be quieter than existing Turbo Props, the runway extension was cancelled. Without explanation, then-Federal Transportation, Minister Marc Garneau, used his authority to block the runway expansion.
The cancellation of Billy Bishop’s runway expansion may have hurt more than just Porter Airlines and airport safety. Bombardier lost Porter Airlines as a flagship customer. Ultimately, Bombardier was forced to sell the CSeries project to Airbus at a fire sale price. Were Billions of dollars of Quebec and Canadian government investment as well as Bombardier shareholder value put in jeopardy by Air Canada’s opposition to extending a runway?
Air Canada’s fixation with the status quo of Toronto area airports is about to be tested once more. Plans are in motion to finally build an industrial airport just East of Toronto in North Pickering, Durham region. A new airport that can host new low-cost competition. Even the runway extension project at Billy Bishop Airport could soon be rebooted to address the above-mentioned safety requirements.
Air Canada will not be alone in opposing this new aviation infrastructure. Scarcity for Profit motivated opposition can be expected from a diverse group of corporations. Some of this opposition is expected, such as from the five farm corporations now leasing most of the Federal land set aside for the new airport in Durham. Some might surprise you, such as other Airlines and Fix Base Operators (FBOs) who wish to maximize the profitability of their investments in Toronto Pearson International Airport (TPIA).
How will the majority of Canadian airlines controlling most of the airport’s slots and resources at TPIA react to the construction of more capacity at a new airport? Capacity that creates an opportunity for the more than 100 smaller airlines operating in Canada? They should be focused on maximizing profitability for their shareholders. Will a new airport help or hurt this goal? The answer will be found in the mindset of these corporate leaders. Will they take a defensive “status quo” mindset or will they embrace a growth path?
When businesses feel a competitive threat, they naturally become defensive and want to protect what they have. This insecurity leads to a zero-sum mindset, where every gain by another is seen as a potential loss to oneself.
This zero-sum thinking is dangerous for corporate policymaking, and potentially negatively impacts consumers and local communities. It creates a political environment where short-term protectionism is favoured over long-term growth and passenger safety. Policies that focus on preserving the status quo rather than addressing long-term market needs are often a dead end.
In a Scarcity for Profit context, if a person living in the Toronto region wants/needs to travel by air today, many corporations expect them to travel through TPIA. It means that they want an individual to travel using their services at a time and at a price the corporation sets.
Further, in the future, if the capacity of TPIA is constrained at certain times of the year or becomes so as regional demand grows, the airlines can increase profitability by raising their ticket prices with few consequences. This is a basic Supply-Demand relationship.
A commercial airport in Durham compromises the efforts of the Scarcity for Profit adherents. It answers the market needs by giving the flying public choices and flexibility. There will be more flights at prime times available regionally to choose from. A new airport in the Durham Region will bring ticket price competition.
TPIA-invested airlines may not want to operate at a new airport. Doing so increases their costs, introduces competition and operating complexity, and reduces their profits in the short term.
The Greater Toronto Airports Authority (GTAA) is not a Scarcity for Profit adherent but does benefit from the actions of companies that are. As a Not-for-Profit entity, the GTAA funds its operation through airport fees such as landing fees, per passenger fees, and revenue from concessions including retail, restaurants and aircraft fueling. The GTAA is vulnerable to a scarcity mindset. A way of thinking that will fuel division and protectionism. It could make consensus decision-making impossible.
How will our political leaders respond to the messages that will be advanced by the Scarcity for Profit companies? Elected decision-makers must address the root causes of scarcity and ensure that economic opportunities created by aviation are widely accessible. When a corporation spends time and money lobbying against something, we must have the courage to ask them why.
Canadian political and corporate leaders face a challenging landscape. They need to see past the fears and insecurities promoted by some to support inclusive, forward-thinking policies. The Toronto region is growing. The population is forecasted to increase by more than 50 percent by 2051. It will need more airport capacity before 2036. The development of new airport capacity will create billions of dollars in regional economic prosperity and create tens of thousands of good-paying jobs.
Canadian consumers expect our elected leaders to understand the need to grow capacity in step with demand. Working together, we can overcome a Scarcity for Profit mindset.
References:
Air Canada opposes Porter’s jet plans for Billy Bishop airport | CBC News
Artificial scarcity – Wikipedia
https://www.toronto.ca/legdocs/mmis/2024/ex/bgrd/backgroundfile-248778.pdf
Why Do Planes Abort Landings? | FlightDeckFriend.com
Billy Bishop airport needs more runway space to comply with regulations: PortsToronto | CTV News