Carney government begins complex negotiations to privatize Canada's four largest airports

OTTAWA — Prime Minister Mark Carney has green-lit the privatization of Canada's four largest airports, launching high-stakes negotiations with institutional investors for long-term concession agreements.

"I don't know that we can so easily just take best practices from around the world and dump them into Canada," said Andrea Sepinwall, a lawyer at McMillan LLP who specializes in aviation law.

The airports in Toronto, Vancouver, Montreal and Calgary are currently owned by the federal government but run as not-for-profit businesses, charging user fees to airlines and travellers to pay rent to the government.

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Carney has argued that private capital is needed to revitalize Canada's infrastructure, with the tens of billions of dollars from investors to be reinvested in that transformation.

Ottawa will keep equity ownership of the land and facilities, signing operational contracts with investment partners, a common model for transportation and large infrastructure assets.

Federal Transport Minister Steven MacKinnon has said fares and fees at the four airports will be subject to partial regulation.

Among the details to be finalized are the structure and length of the contract, the form of payment, and rules to protect travellers from tactics such as price gouging.

Concession agreements can last for decades, sometimes up to a total of 99 years, but a shorter term would require negotiating an end-of-term transition to prevent underinvestment.

Payment models often include an upfront payment plus revenue-sharing, but investors may offer a discounted price on upfront cash if returns are uncertain.

"I don't think there's any one model investors are asking for," said lawyer Catherine Doyle, who specializes in major projects and public-private financings at McMillan.

Regulatory options include imposing a user price cap monitored by an independent regulator, permitting a preset rate of return on investment, or setting out fee and service requirements in contracts from the outset.

The current airport model, established in the 1990s, leaves facilities with little money for upgrades, forcing expansions to be funded with debt.

Toronto's Pearson International Airport owed $6.7-billion at the end of 2025, while Calgary airport's long-term debt stood at $3.3-billion, according to financial statements.

Fresh capital could be used to upgrade terminals, attract better shops and restaurants or build new e-commerce warehouses adjacent to runways, said John Gradek, who teaches aviation leadership at McGill University.

Institutional investors view airports as long-term, low-risk investments supported by strong travel demand and a near monopoly on services.

A 2016 federal review recommended selling airport shares to large institutional investors, but the idea has been politically dormant until now.

The review noted the current structure was supposed to be a stepping stone toward broader privatization.

Airports in Europe, Britain and Australia are often studied for their privatization models, but lawyers say Canada will likely need a bespoke contract.

"There's a panoply of options," said Sepinwall.

The process was announced at Canada's first-ever investment summit in Toronto in mid-September.

Investors are drawn to airports as an asset class, with Sydney Airport in Australia earning a 66-per-cent operating profit margin on parking in fiscal 2024-25.

A consortium of private investors bought Sydney Airport for 23.6-billion Australian dollars in 2022, roughly $21-billion.

With files from The Globe and Mail