Privatizing Canadian airports would be a costly mistake

Privatizing Canadian airports risks trading away long-term public assets for a short-term cash infusion tied to a debt-backed sovereign wealth fund

The federal government is considering privatizing Canada’s airports, in part to help finance a new sovereign wealth fund. Both ideas deserve a closer, critical look. Taken together, they risk turning public assets into vehicles for private profit, while offering Canadians little in return.

If the idea of a sovereign wealth fund is new to Canadians, Norway provides a clear example. Thirty years ago, it began investing oil revenues into a national fund designed to benefit its citizens directly. This fund now has US$2.2 trillion—the equivalent of over US$300,000 for each Norwegian—and is the largest of its kind in the world.

Canada has managed its petroleum wealth differently. Provinces control natural resources and have largely used oil revenues to lower taxes and reduce deficits. Meanwhile, the federal government supports the oil and gas sector through funding, tax breaks and financing worth tens of billions of dollars.

Now Ottawa proposes a “sovereign wealth fund” financed not by public resource profits, but by $25 billion of public debt—money backed by Canadians. This is not a vehicle to build shared public wealth; it socializes risk while privatizing gains.

That brings us to airports. One proposal is to sell these public assets to private investors and funnel the profits into the new fund. But that would mean taking a revenue-generating public asset and turning it into a one-time cash infusion, and then reinvesting that money in an untested project whose gains will benefit private investors more than the public. This is not a formula for enriching Canadians.

Canadians already own their airports. Through Transport Canada, 26 airports are publicly owned and managed by private, not-for-profit local airport authorities. They are essential services that connect communities and support Canada’s economy.

Privatization would change their purpose, from a public service for Canadians to a profit-maximizing opportunity for private investors. When the United Kingdom privatized its airports in 1987, the result was higher costs for travellers. Airports are natural monopolies; travellers have limited alternatives, and private operators can charge accordingly.

Workers also bear the impact. Privatization often brings in layers of subcontracting, with each company taking a share of profits. Existing contracts and collective agreements can be weakened or cancelled as companies seek lower costs, typically resulting in lower pay and reduced protections for workers.

Proponents argue that privatization shifts costs to the private sector and encourages investment. But airport profitability is not guaranteed. During the COVID-19 pandemic, air travel collapsed and revenues fell sharply. As essential infrastructure, airports still require support, meaning the public ultimately bears the risk even when the ownership is private.

The deeper risk is the loss of public control. Public assets are often sold too cheaply. The Ontario government’s sale of Highway 407 is a stark example. Built with public money, it was leased for $3.1 billion in 1999. Today, it generates about $2 billion annually in tolls for its private owners. Meanwhile, the non-tolled Highway 401 is congested while the 407 remains accessible for those who can afford it. What was once a public asset now delivers ongoing private profit at public expense.

Canada should not repeat that mistake with airports. Once sold, public assets are costly to reclaim. Private owners can raise fees, reduce services or make decisions based on profit rather than public need, including in smaller communities where air access is vital.

If the goal is to invest in infrastructure, Canada does not need to sell what it already owns. As a sovereign country, Canada’s federal government can finance infrastructure directly, at a lower cost, due to its ability to tax. A better approach would be to reinvest in public assets and reconsider subsidies to the oil and gas sector.

Selling airports to pay for a debt-financed “sovereign wealth fund” is not nation building. It is a transfer of public wealth into private hands. Airports are essential infrastructure. They should remain public, accountable and focused on serving Canadians, not private investors.

Peggy Nash, C.M., is the executive director of the Canadian Centre for Policy Alternatives, a former Member of Parliament and Official Opposition Finance Critic, and a member of the Order of Canada.