Canadian travellers could face higher airfares for decades if Ottawa proceeds with plans to sell operating rights at the country's four largest airports without first imposing limits on passenger fees, warns a University of Calgary economist.A new paper from the university's Research Program in Competition and Regulation says the federal government risks handing private operators the ability to increase airport charges without adequate oversight.The warning comes after Prime Minister Mark Carney announced September 15 that Ottawa would seek long-term operating concessions for Toronto Pearson, Vancouver, Montréal-Trudeau and Calgary international airports.The federal government plans to use proceeds from the proposed deals to spend on other infrastructure projects.However, University of Calgary economics professor Aidan Hollis says taxpayers and airline passengers could ultimately pay the price if regulations are not established before the airports are offered to private operators.“The price a bidder will pay depends on what the rules will let it charge,” Hollis said in a statement Thursday.“If the rules come after the price, the government will have sold the right to raise charges at airports travellers can rarely avoid. Flyers will pay for that every time they book.”Hollis, author of the paper Holding Pattern: The Case for Regulating Canada’s Airports Before Sale, argues the government must establish legally binding restrictions on airport fees before accepting bids.Five days after the prime minister's announcement, the federal transport minister said airport fees would be “partially regulated” under the proposed arrangement.However, the minister declined to guarantee that passenger charges would not increase..Questions also remain about which agency would regulate the airports, what restrictions would apply and whether those regulations would be established before the bidding process begins.Hollis argues major Canadian airports effectively operate as monopolies because airlines serving large cities generally have little choice but to use their principal airports.Higher airport charges could be passed directly to passengers through increased ticket prices or indirectly through reduced flight availability.The researcher also warns increased fees could raise air cargo transportation costs, potentially driving up prices for goods shipped by air.According to the University of Calgary paper, airport improvement fees already account for between 32% and 42% of revenue at the four airports targeted by Ottawa.Despite those substantial charges, no independent regulator currently reviews airport improvement fees or capital spending decisions.The study notes airports are the only component of Canada's federal transportation system operating without a legislated economic regulatory framework.Hollis warns selling airport operating rights before establishing oversight could create two problems for Canadians.Passengers could face higher prices and reduced service, while Ottawa would have difficulty determining whether the proceeds from a sale reflect genuine operating efficiencies or the ability of private operators to collect higher fees from travellers.The paper points to international examples where governments have taken different approaches to airport privatization.London's Heathrow Airport has been privately operated since 1987 but remains subject to a regulatory licence that limits the prices it can charge.Australia took a different approach, choosing to monitor airport charges rather than impose direct price controls shortly before selling Sydney Airport.The Australian regulator has since concluded that monitoring alone does not provide an effective constraint on airport pricing.According to the study, Sydney Airport recorded a 20.8% return on aeronautical assets during the 2024-25 financial year..Hollis acknowledges private airport operators could deliver benefits if they reduce operating costs, improve efficiency or provide better services.However, he warns those potential improvements should not be confused with profits generated simply by increasing charges on passengers and airlines.The research argues that Ottawa should establish an independent regulator, legally binding fee restrictions and clear rules governing federal airport rent before inviting private companies to submit bids.Without those safeguards, the study warns, Canadians could be locked into higher travel costs for years while private operators benefit from their control of airports that passengers and airlines have limited ability to avoid.The Research Program in Competition and Regulation, based in the University of Calgary's Department of Economics, studies competition policy, market regulation and economic efficiency.Its latest paper urges Ottawa to settle the rules governing airport charges before proceeding with the proposed concessions, arguing that any financial benefits to the federal government should not come at the expense of Canadian travellers.
