During this time of economic uncertainty, the aviation industry is facing very challenging times. Global passenger traffic is down and is projected to take a further downturn throughout 2009. Transport Canada’s passenger volume forecasts are now anticipating a 5.8 per cent reduction, which translates to roughly 1.8 million fewer trips through Toronto Pearson this year.

As the GTAA is a not for profit authority and runs Toronto Pearson with the goal of breaking even on budget each year, there is a need to make adjustments to account for the difference between the approved budget and the new passenger forecasts. The GTAA has reduced and managed expenses in line with the authority’s strategic plan.

Lloyd McCoomb, President and CEO of the GTAA said “our response to this challenging situation was not taken lightly, but we feel this is the responsible course of action to take to manage Toronto Pearson today. We must ensure that the organization is well positioned to take advantage of growth opportunities when the economy improves.”

The following four major steps have been undertaken by the GTAA in response to these economic challenges:

1. Cost reduction and containment: Because two-thirds of the GTAA’s costs are fixed, including rent paid to the federal government which amounted to $140 million in 2008, there are limits to where financial cuts can be made. Despite this challenge, many expenditure reductions have been highlighted for 2009. Examples of where these reductions will be made include: the closure of certain airside and groundside facilities, consolidation of contracted services, a hiring freeze and a freeze in management salaries.

2. Deferral of capital programs: All but the most critical capital projects have been deferred. Deferred projects include: Pier G planning and design, Terminal 1 parking garage expansion, Terminal 3 Master Plan, and the Terminal 2 parking garage demolition.

3. Introduction of an incentive program to airlines: A major factor in driving the economy in a positive direction will be to stimulate air traffic at Toronto Pearson. This incentive program will offer landing fee rebates of up to 50 per cent for a 12-month introductory period to air carriers that are introducing new services at Toronto Pearson.

4. Increase to the Airport Improvement Fee (AIF): The AIF, a concept seen at all other major Canadian airports, was brought into effect at Toronto Pearson on June 1, 2001. At that time, the GTAA was in the midst of a $4.4 billion redevelopment of the airport and the AIF was initiated to help fund the redevelopment and the associated debt servicing, which continues today. As a result of this development, Toronto has the necessary airport infrastructure in place to be a strong catalyst for economic growth in this region.