Air Canada Secures New Deal with Greater Toronto Airports Authority

Greater Toronto Airports Authority (GTAA) and Air Canada have announced an enhanced commercial relationship which will support the development of Toronto’s Lester B Pearson International Airport as a global hub. The new commercial agreement has also been designed to deliver continued improvements to customer service, offering Canadians greater flight frequencies to existing markets and opening up access to more global destinations.

"As Canada's largest airport, it is important to work with our air carriers to further develop Toronto Pearson as North America's premier gateway. This agreement with Air Canada will allow us to continue to support our local and national economy, improve service levels for all of our passengers, and help Canada to compete globally," said Howard Eng, president and chief executive officer of GTAA.

GTAA continues to maintain rate setting autonomy for all air carriers and business partners operating at Toronto Pearson, including its aeronautical charges, the Airport Improvement Fee and other commercial fees for airport tenants and air carriers. This non-exclusive agreement provides Air Canada the opportunity to earn rebates based on substantial incremental passenger volumes in excess of certain growth targets.

The agreement, which takes effect on January 1, 2014, is for an initial five year term and includes annual fixed aeronautical fees for Air Canada, representing its share of aeronautical costs in relation to landing fees, general terminal charges and apron fees. The fixed annual fees may be adjusted in certain circumstances, including instances when fees for all other carriers operating at Toronto Pearson are adjusted.

The initial five year term will be extended for a further five years, if agreed passenger volumes are met, while the agreement also commits both Air Canada and the GTAA to continued passenger service improvements, including baggage delivery and aircraft de-icing wait times.

"This agreement provides momentum to our strategy to develop Toronto Pearson into an even stronger North American gateway and a truly global airline hub. It will transform our relationship with the GTAA, enabling us to better work together to enhance the Toronto Pearson experience and position Air Canada to capture a larger share of growing international traffic flows on a more cost effective basis," said Ben Smith, executive vice president and chief commercial officer of Air Canada.

Toronto has the potential to become a preferred global routing because it offers some of the best elapsed travel times between the US and major centres in Europe and Asia. Air Canada is currently the largest operator at Toronto Pearson with a 55.9 cent share (including operations of regional partners under the ‘AC’ flight code) of the available seat capacity this month.

In the table below we highlight the largest operating carriers at the Canadian airport based on 2013 calendar year schedules and how this compares with the previous year. Air Canada’s mainline business is by far the largest operator at Toronto Pearson with more than double the capacity of its largest rival. Its share of traffic has declined since 2012, due in part to an realignment of its flying activities and the debut of new regional operation Sky Regional Airlines, as low-cost carrier WestJet Airlines has boosted its own schedules, increasing capacity 11.6 per cent and its marketshar 1.6 percentage points.