SMALL AIRPORTS AND THE AIRPORT CAPITAL ASSISTANCE PROGRAM (ACAP) (2005)

 

Small airports are vital to the economic vitality of the province and to communities across BC.  A healthy system of small airports increases the mobility of people and goods outside major centres, gives business opportunities to smaller air carriers and plays a key role in providing strong transportation infrastructure.  With this in mind government has a critical role to play providing support of the infrastructure critical to small airports along with support for the delivery of public safety.

 

With over 55% of the traffic at small airports being business related and almost half of all aircraft movements being cargo flights small airports are the lifeblood of communities.  Small airports are also integral to the well being of their local communities by supporting programs such as fire-fighting and many essential health services such as organ transportation.  Small airports also play a vital role for the larger international system as essential feeder routes to these international links.

 

BC and Canada’s geography presented us with a huge challenge as we strive to allow communities to access the opportunities and economic benefits that derive from access to air services.  While The Chamber believes that market forces should be the primary determinant for the provision of air services this approach often punishes communities where the market may be too small to generate sufficient revenues to cover the cost of the services.  Combined with this are the recent challenges that have faced the aviation industry as a whole, from 9/11, SARS to airline restructuring have led to significant reductions in traffic and revenue which has placed further financial strains on many small airports already struggling to survive financially. 

 

Despite these challenges small airports across BC have shown their ability to be managed effectively, in a fiscally responsible manner and to respond to the needs of their community. 

 

Airport Capital Assistance Program (ACAP)

Since transfer to local control small airports have invested heavily to maintain and improve the facilities they inherited from Transport Canada.  Prior to transfer not one of these airports were self sufficient.  Small airports have demonstrated their ability to replace and upgrade badly neglected facilities in a responsible and often innovative way.  Small airports are especially sensitive to issues of affordability and as such require adequate and predictable funding for essential, safety related capital investment.  In many ways small airports are unable to raise the necessary funding through capital markets due to less stable traffic, fewer, les valuable assets and less favorable balance sheets.  As a result many airports are reliant on the Airports Capital Assistance Program (ACAP) as their primary, and in many cases only, source of capital funding.

 

The ACAP was created through the 1994 NAP and was originally intended to be funded from the revenue generated from the airports in the National Airport System.  Despite the fact that Transport Canada has seen a significant increase in revenue from airports there has been no corresponding increase in capital assistance to small airports.  Since 1992 the total amount dispersed through the ACAP fund accounts for only 13% of Transport Canada’s accumulated revenues from airports.

 

This shortfall in funding has resulted in a significant over subscription to the fund.  As a result only projects which fall into the top two priority classes have been given funding.  The full impact of this situation is difficult to gauge as no analysis of the impact on operations of not funding lower category projects has been undertaken.  In addition Transport Canada does not track the number of projects that are rejected at the regional level, which further underestimates the actual need.

 

This serious funding deficit has not been addressed by Transport Canada through an increase in funding levels for the program from the government.  Contrary to this, renewal of the program in 2005 includes an increase in the contribution rates airports are required to pay in an attempt to address the program deficit.

 

This new funding formula will essentially double, and in some cases triple, the amount of monies that these small and regional airports will have to contribute to safety related capital projects. This dramatic increase in contribution requirements will result in sharp increases to fees and charges to airlines and passengers in order to ensure airport capital reserves will be sufficient to meet the new rules of ACAP.

 

THE CHAMBER RECOMMENDS

 

That the federal government work with the provincial government to establish an adequate and predictable ACAP to ensure that small airports are able to plan and invest in the essential safety related capital projects vital for continued operation.