MIAMI — Toronto Pearson International Airport is pursuing $136 million in funding from the Canadian government to repurpose an underutilized office complex for cargo operations, part of an effort to increase non-passenger revenue streams.
Deborah Flint, the president and CEO of the Greater Toronto Airports Authority, told FreightWaves at an industry event here last week that the 11-acre parcel was “not performing to its maximum potential” and that its proximity to other cargo and airline operations made it a good candidate for a cargo facility.
The airport authority has applied for a grant under the National Trade Corridors Fund, an infrastructure program aimed at improving the fluidity of cross-border trade and making Canada more competitive. Transport Canada is expected to issue several project awards as soon as this week.
“If that comes to pass, we’ll be able to put that out into the market in the next year or two,” Flint said.
Airports were brought to their knees during the pandemic when passenger airlines stopped flying and revenues dried up. A surge in cargo traffic to compensate for supply chain disruptions was a silver lining. It made many airports recognize the importance of having more diversified business and the multiplier effect of cargo on the regional economy.
“Every airport learned how vulnerable the business is to swings in volatility across all segments of the environment. So there is a focus on being more creative,” said Flint during a panel discussion at The International Air Cargo Association’s trade show.
The office complex would have required major investment without the necessary returns, so Toronto Pearson officials reimagined converting the property to an airside cargo complex on the south end of the airport. It is expected to create 150 direct jobs and millions of dollars in economic impact, Flint said.
Flint understands better than many colleagues the importance of cargo because FedEx was the biggest airline customer when she was aviation director at the Port of Oakland in California.
She and two other airport chiefs in Canada penned an op-ed in The Globe and Mail in which they argued Canada has neglected airport infrastructure investments. Canadian airports have had to pile up debt and postpone all but the most critical infrastructure work because the Canadian government didn’t provide the same type of COVID relief that U.S. airports received.
In the September issue of the Airports Council International newsletter, Flint said Canadian airports should be allowed to reinvest rent they pay to the government into strategic projects. For Toronto Pearson airport, 10 years of ground rent could provide about $1 billion for infrastructure, decarbonization efforts and technology upgrades to improve the passenger experience.
Toronto Pearson last year moved $31.5 billion worth of exports, according to its annual report. Cargo played a larger revenue role in 2021. Average daily freighter activity more than doubled from 2019 from 18 to 44 flights per day. Increased freighter volumes were offset by the decline in bellyhold cargo related to the severe reduction in passenger traffic. Cargo revenues, which are included in aeronautical revenues such as landing fees, increased 147% to $32 million during 2021 compared to 2020.
The airport authority said it expects e-commerce growth to continue and that it is planning to have the right facilities in place to meet that demand.
Air Canada (OTCUS: ACDVF) is making major cargo investments, including at its Toronto hub. In March, the airline completed the first-phase expansion of its cold chain facility with various temperature capabilities for medicines, fresh food and other perishable goods. It launched an all-cargo division late last year and now operates three Boeing 767 converted cargo jets.