Just back from Ottawa, Canada, where I attended the biannual Airports Canada Conference and Exhibition sponsored by the Canadian Airports Council. More than 200 people gathered to discuss and debate some key issues, including the Canadian airport financial model, traffic leakage to the U.S., the overall economic context within which airports operate and security.
Canada’s airports are run by some of the most impressive people in our industry. Many come from outside the airport industry and have brought some needed fresh thinking. Canadian airports are searching for a new economic model, even though they enjoy a level of economic freedom that is the envy of many American airports. We will be working closely together on these economic issues across borders in the coming months and years as U.S. airports also consider new economic models to replace the current broken approach.
While up there I saw an article in the Toronto Globe and Mail (a great paper by the way, they cover U.S. politics better than most American papers) describing a study by the Canadian Finance Department. The study found that every dollar in corporate tax cuts created 20 cents in economic activity while every dollar in infrastructure investment created $1.50 in economic activity.
These results are not a surprise to me and they comport with what I saw in state government many years ago. Companies didn’t want tax cuts (though they do want a sane and predictable tax regime). They wanted world-class infrastructure and world-class education. That’s how they made their decisions.
A friend of mine who worked in the electronics industry was with a group of corporate leaders from that industry once, touring a southern state and considering an investment. The local officials kept asking what kind of tax relief the corporate executives wanted. They kept replying they didn’t want that; they wanted great transportation and great education. The local officials kept coming back to tax cuts. The investment went elsewhere.
Airport leaders on both sides of the U.S.-Canada border are looking for new, better and different models. They want to build needed infrastructure in a cost-effective manner, one that meets the needs of travelers, shippers and airlines. As I have said before, governments and airlines on both sides of the border (but especially in the U.S.) are pushing in the opposite direction. Here’s a tug of war we all need to hope the airport community wins.