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An airport management method for Canada in the 1990's : lessons from the Canadian and American experience Brennan, Robert Gerald Lewis 1988

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AN AIRPORT MANAGEMENT METHOD FOR CANADA IN THE 1990'S: LESSONS FROM THE CANADIAN AND AMERICAN EXPERIENCE BY ROBERT GERALD LEWIS BRENNAN B.A., Carleton University, 1983 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in THE FACULTY OF GRADUATE STUDIES (School of Community and Regional Planning) We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA MAY 1988 Copyright, ROBERT GERALD LEWIS BRENNAN, 1988 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department The University of British Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 DE-6(3/81) i i ABSTRACT During the last forty years metropolitan airports in Canada have been controlled by a federal authority and managed with a minimum of input from local sources. The situation under which this control was f i r s t initiated has changed radically since that time; a shrinking world combined with greatly increased traffic means that airports require more efficient planning and management of resources than in the past when they were not effectively integrated into an urban planning scheme. The thesis examines the effectiveness of airport management using five criteria: the implementation of a national aviation policy, the adrninistration of technology and aviation growth, the acquisition of funds for airport development, the effect of political suasion on airport management and the balancing of airport management goals and community goals. Several models of airport management from both Canada and the United States are used. The main aim is to show how decentralization of airport management is necessary to meet late-twentieth century and future demands. The research method for the thesis is a comparative analysis of airport management's effectiveness in Canada and the United States using the five criteria. The airports chosen for the thesis for both Canada and the United States represent the centres for moving seventy to eighty percent of the passenger traffic in these countries. It is concluded that the present Canadian federal ministerial management i i i method has been unsuasessful in: implementing fully national aviation policies, responding effectively to the process of deregulation, reducing the political nature of development decisions at the airports, and providing funds for airport development where required. While American methods of airport management furnish useful insights they can not be applied in the same way in Canada because of different political structures. Airports under municipal control risk domination by local political issues and ineffective integration into a national and international network. The airport authority as an autonomous body offers the best structure for responding to the changing needs of a wide variety of users. The less partisan nature of the decision-making process of the airport authority would be a vast improvement over the ministerial approach for: implementation of a national aviation policy, the management of the process of deregulation, the elimination of unnecessary political intervention with airport decisions, and increased access to funds for airport development. i v TABLE OF CONTENTS TITLE i ABSTRACT i i CHAPTER ONE: CURRENT ISSUES IN AIRPORT MANAGEMENT 1 1.1 Management of airports, aviation & the cxxnunity 1 1.2 Purpose and Scope 6 1.3 Method of Research 7 1.4 Research Airports: Defintion 8 1.5 Thesis Organization 11 CHAPTER TWO: CANADA'S EXPERIENCE IN AIRPORT MANAGEMENT 12 2.1 Canadian Aviation History 1900-1960 12 2.1.0 Constitutional Jurisdiction 12 2.1.1 Canada 1900-1919: The Formative Years 13 2.1.2 Canada 1920-1929: Governments First Steps 15 2.1.3 Canada 1930-1939: The Depression Years 17 2.1.4 Canada 1939-1945: World War II 19 2.1.5 Canada 1950-1960: Airport Development & Surburbanization 21 2.2 Canadian Aviation Policy 1960-1986 23 2.2.0 Traditional Role of Government 23 2.2.1 Royal Commission on Transportation Policy 1961 23 2.2.2 Task Force on Transportation 1979 25 2.2.3 Airport Development & Environmental Concerns 28 2.2.4 Alberta Land Use Policy & Airports 1978 29 2.2.5 Liberalization of Airline Regulations 1984 30 2.2.6 Government Spending Reviews 1985 32 2.3 Canadian Airport Management Structure 34 2.3.0 Canadian Federal Ministerial Management Structure 34 2.3.1 Restructuring of Department of Transport 1969 34 2.3.2 Airport Authority Group 1985 37 2.4 Canadian Aviation Growth & Technological Change 39 2.4.0 Impact of Technological Advancement on Airports 39 2.4.1 Aviation Growth: Passenger Trends 1968-1984 44 TABLE I Canadian Eastern Airport Passenger Movements 45 TABLE II Canadian Western Airport Passenger Movements 47 2.4.2 Mega-Carriers and Canadian Airports 49 2.4.3 Hub-&-Spoke Operations and Canadian Airports 50 V 2.5 Canadian Airport Financing 53 2.5.0 Traditional Financial Sources 53 2.5.1 Approval Process (1986): Step One - Approval in Principle 53 2.5.2 Approval Process (1986): Step Two - Project Approval 55 2.5.3 Airport Financial Management (1986): Bottlenecks 57 2.6 Effects of Political Suasion on Airport Management in Canada .. 59 2.6.0 Political Suasion and the Ministrial Structure 59 2.6.1 Intention of Ministerial Decisions 60 2.6.2 Implementation Ministerial Decisions 60 FLOWCHART 1 Ministry of Transport Management Structure 61 2.6.3 Flexibility of Ministerial Decisions 62 2.6.4 The Hidden Agenda of the Ministerial Decisions 63 2.6.5 Symbolic Ministerial Decisions 64 2.6.6 Ideological Content of Ministerial Decisions 65 2.6.7 Financial Accountability of Ministerial Decisions 65 2.6.8 Social Costs of Ministerial Decisions 66 2.7 Canadian Airports: Balancing Ccflffliunity & Management Goals . 67 2.7.0 Airport Development and Community Input 67 2.7.1 Solution One: The Environmental Airport 69 2.7.2 Solution Two: Expansion of Airports 73 2.7.3 Solution Three: The "No-Build" Option 74 2.8 Conclusions: lessons Learned from Canadian Experiences .. 76 2.8.1 Early Canadian Aviation 1900-1960 76 2.8.2 Government Aviation Policy 1960-1986 76 2.8.3 Canadian Airport Management Structure 77 2.8.4 Canadian Aviation Growth & Technological Change 77 2.8.5 Financing Canadian Airports 78 2.8.6 Impacts of Political Suasion on Canadian Airports 78 2.8.7 Canadian Airports: Balancing Community & Management Goals 79 CHAPTER THREE: AMERICA'S EXPERIENCE IN AIRPORT MANAGEMENT 81 3.1 American Aviation Early History 1900-1960 81 3.1.0 United States 1900-1930: Early Beginnings 81 3.1.1 United States 1930-1939: The Depression Years 82 3.1.2 United States 1939-1945: World War II 83 3.1.3 United States 1950-1959: Airports & Suburbanization 84 3.2 American Federal Policy 1960-1986 86 3.2.0 Department of Transportation Act 1966 86 3.2.1 Airport and Airway Development Act 1970 (AADA) 87 3.2.2 Airport and Airway Development Revenue Act 1970 (AADRA) 87 3.2.3 American Airport Development & Environmental Concerns 88 3.2.4 American Domestic Airline Deregulation 1978 90 3.2.5 Airport and Airway Improvement Act 1982 (AAIA) 92 v i 3.3 American Airport Management Structures 93 3.3.0 Historical Choices 93 3.3.1 The Municipal Department and the Municipal Gsmmission 94 3.3.2 The American Airport Authority 96 3.3.3 The Federal Component of American Airport Management 100 3.4 American Airport Growth & Technological Change 101 3.4.0 American Airports and Technological Advancements 101 3.4.1 American Passenger Trends 1960-1984 107 TABLE III American Eastern Airport Passenger Movements 109 TABLE IV American Western Airport Passenger Movements 112 3.4.2 Mega-Carriers and American Airports 113 3.4.3 Hub-&-Spoke Operations and American Airports 114 3.5 American Airport Financing 120 3.5.0 Approaches to Financial Management 120 3.5.1 The Use of Majority-in-Interest Clauses 121 3.5.2 Types of Bond Issues 123 3.5.3 Impact of Airline Deregulation on Airport Financing 123 3.5.4 The Future of the Airport & Airways Trust Fund (AATF) 125 3.6 Effects of Political Suasion on Airport Management in America . 127 3.6.0 Political Suasion and American Airport Management 127 FLOWCHART 2 Municipal Department Management Structure 128 FLOWCHART 3 Municipal Commission Management Structure 129 FLOWCHART 4 Airport Authority Management Structure 130 3.6.1 Accountability of Political Suasion 132 3.6.2 Flexibility of Political Decisions 133 3.6.3 Hidden Agenda of Political Decisions 134 3.6.4 Speed of Implementation of Political Decisions 136 3.6.5 Social Costs of Political Decisions 137 3.7 American Airports: Balancing Qxmunity & Management Goals .. 139 3.7.0 Airport Development and OOTnunity Input 139 3.7.1 Solution One: The Environmental Airport 142 3.7.2 Solution Two: Expansion of Airports 143 3.7.3 Solution Three: The "No-Build" Option 144 3.8 Conclusions: Lessons Learned from the American Experience .. 146 3.8.1 American Early Aviation 1900-1960 146 3.8.2 American Government Policy 1960-1986 147 3.8.3 American Airport Management Structures 147 3.8.4 American Aviation Growth & Technological Change 148 3.8.5 Financing American Airports 149 3.8.6 American Airports: Impacts of Political Decisions 150 3.8.7 American Airports: Balancing Community & Management Goals 150 v i i CHAPTER FOUR: AIRPORT MANAGEMENT IN CANADA: BEYOND 1990 152 4.0 Conclusions 152 4.1 Method of Management: Airport Authority 152 TABLE V Evaluation of Airport Management Methods 153 4.2 Method of Management: Municipal Commission 155 4.3 Method of Management: Municipal Department 157 4.4 Method of Management: Federal Ministry (CANADA) 159 4.5 Recommnedations: Airport Management in Canada in the 1990s .. 162 4.6 Implications of Airport Management Restructuring 165 BIBLIOGRAPHY 169 APPENDICES 188 Appendix 1 Canada 188 Appendix 2 United States 206 Appendix 3 Definitions 211 v i i i APPENDIX 1: CANADA 188 Table 1. Canada and United States Airport & Cities Statistics 188 2. Aircraft Statistics 190 Figure 1. Persons Years as a Percentage of Annual Transport Program Resources 1985-^ 86 193 2. Net Costs as a Percentage of Annual Transport Program Resources 1985-86 194 3. Appros^-in-Prinicple Process 195 4. Project Approval Processes 196 Hap 1. Total Deplaned Plus Enplaned Passengers on Scheduled Services at Major Canadian Airports, 1984 197 2. Montreal and i t s airports 198 3. Toronto and i t s airports 198 Chart 1. Organizational Chart 1 The Canadian Air Transportation Admi m* stration 1978 199 2. Organization Chart 2 The Canadian Air Transportation Administration (Regional Level) 1972 200 Diagram 1. Schematic of Airline Route Structures Operation 201 Graph 1. Canada Airports - East Enplaned & Deplaned Passenger Volumes 1964-80 202 2. Canada Airports - East Enplaned & Deplaned Passenger Volumes 1981-84 202 3. Canada Airports - West Enplaned & Deplaned Passenger Volumes 1964-80 203 4. Canada Airports - West Enplaned & Deplaned Passenger Volumes 1981-84 203 5. Canada Airports - East Total C i v i l Aircraft Movements 1964-80 204 6. Canada Airports - East Total C i v i l Aircraft Movements 1981-B4 204 7. Canada Airports - West Total C i v i l Aircraft Movements 1964-80 205 8. Canada Airports - West Total C i v i l Aircraft Movements 1981-84 205 ix APPENDIX 2: UNITED STATES 206 Chart 1. Organizational Chart 1 Port Authority of New York & New Jersey 206 Graph 1. U.S. Airports - East Enplaned & Deplaned Passenger Volumes 1950-80 207 2. U.S. Airports - East Enplaned & Deplaned Passenger Volumes 1981-84 207 3. U.S. Airports - West Enplaned & Deplaned Passenger Volumes 195O-80 208 4. U.S. Airports - West Enplaned & Deplaned Passenger Volumes 1981-84 208 5. U.S. Airports - East Aircraft Movements By Airport 1950-80 209 6. U.S. Airports - East Aircraft Movements By Airport 1981-84 209 7. U.S. Airports - West Aircraft Movements By Airport 1950-60 210 8. U.S. Airports - West Aircraft Movements By Airport 1981-84 210 APPENDIX 3: DEFINITIONS 211 ACKNOWLEDGEMENT The author wishes to express his sincere appreciation to Dr. S. Pendakur and Dr. G. Hodge for their overall assistance. Their co-operation was instrumental in the completion of this thesis. A special note of thanks goes to family and friends who were there in rough times to encourage me to continue to completion. 1 CHAPTER ONE: CURRENT ISSUES IN AIRPORT MANAGEMENT 1.1 Management of Airports. Aviation and the Community Over the last forty years, Canadian airports have been confronted with increasing demands on them. At the same time, they have been restricted in their respond to these demands by dwindling funds. In the 1980s, the two public bodies reviewing government operations (Nielsen Task Force 1983 and Macdonald Commission 1986) have reached important conclusions regarding the future of Canadian airports. The Nielsen Task Force recommended a system of deregulation that would bring airports under local control with the exception of those essential to Canadian sovereignty. It strongly recommended that the federal government pursue opportunities for "divestiture of local management of federal airports" 1. The two main reasons for this recammendation were; first, to decrease the government's expenditures on airport development, and second, to promote a more economical, self-sufficient, air transportation system. Three years later the Macdonald Commission on the economy also recommended the federal government make substantial changes to the structure and management of airports. The deregulation of the domestic airline industry in the U.S. since 1978 has resulted in less regulation for airlines worldwide. As a result of deregulation airlines have lost guaranteed fare increases in the 1980s and must focus on being more cost effective. This change in 1 Canada, Parliament, Nielsen Task Force: Vol. 6, Economic Growth  & Transportation. A Study Team Report to the Task Force on Program Review, Ottawa, September 1985, p. 15. 2 airline management's focus has had direct effects on airport operations. For example, the airlines are creating very different route structures from those existing prior to 1978. Most airlines in the U.S. and in Canada are creating route configurations in a "hub-and-spoke" pattern as opposed to the earlier "point to point" non-stop routes. The importance of this change is that the new hub-and-spoke system creates enormous demands on the hub airports for gates, runway capacity, parking, and concessions. At the same time, this system reduces demands or eliminate the need for other airports. Airline operators and consumers suggest that the present centralized airport management system in Canada has not responded effectively to these changes. This has led to congested terminals and runways at major airports. Centralization of management also hinders the availability of funds for airport development at major metropolitan airports. Airports are the largest land users on the urban periphery.2 The surface area of Dallas/Ft.Worth Regional Airport is as large as the city of Dallas itself. Mirabel International Airport at 88,000 acres is more than twice the size of the entire city of Montreal (Appendix 1 Table 1). In addition, the impacts of airports do not end at their physical borders. In Seattle, the Port Authority is in the process of spending $150 million dollars over the next 15 years on their Noise Remedy Program (NRP), to mitigate the negative environmental impacts on 2 Ashford, Douglas E., National Resources & Urban Policy, 1980, p. 216. 3 Remedy Program (NRP), to mitigate the negative environmental impacts on residents in the vicinity of Seattle/Tacoma Airport. 3 In Chicago, the Department of Aviation is being persuaded by a coalition of suburban municipalities to decrease the noise created by hubbing operations at O'Hare airport which affect over 300,000 people. Current federal airport management in Canada has been criticized for not recognizing these land use issues when developing an airport. 4 The Ashford study, National Resources and Urban Policy, concluded that airports invariably alter the character of adjacent communities, largely because of the costs related to aircraft noise, safety concerns, and increased ground traffic flows.5 The Canadian federal government has exclusive control over airport management at large metropolitan airports. Airport management must be ready to anticipate and act upon changing consumer demands, while maintaining security and safety standards. Transport Canada makes a l l decisions for an airport's location, size, access, and growth under the J Guest Speaker, CANADIAN INSTITUTE OF PLANNERS CONFERENCE, July, 22 1986. 4. Documented in Feldman E. & Jermone Milch. "Options on the Metropolitan Fringe: Strategies of Airport Development", National  Resources and Urban Policy, New York 1980; Smith J.J. "Consideration in Local Administration of Airports in Canada", Annuals of Air & Space Law v.3, pp. 237-260, Montreal 1979; Varty David, "The Re-Organization of Airport Administration in Canada1, Annuals of Air & Space Law v.4, pp. 359-364 Montreal 1979; Baldwin Blair C. The Management Structure of  Airport Operations in Canada and the U.S.. Vancouver 1980; Feldman & Milch, The Politics of Canadian Airport Development: Lessons from  Federalism, Durham 1983; and Langford John W., Transport in Transition:  The Reorganization of the Federal Transport Portfolio. Montreal 1976. Ashford, Douglas, Op.cit, p. 218. 4 Aeronautics Act 1923 and the National Transportation Act 1967. This arrangement has been criticized by municipal administrations and community groups for not effectively including them in decisions made by airport management about airport development.6 This thesis describes how airport management and community goals can be balanced for Canadian airport development. Federal government expenditures on transportation have increased greatly since Confederation. In 1986, Transport Canada and the Canadian Transport Commission (CTC) accounted for over 22,000 employees and spent about $5.5 b i l l i o n . 7 They also generated approximately $700 million in federal revenues. The expenditures on Air Transport Operations accounted for slightly more than 53% of total person-years and 20 % of the net funds ($1.1 Billion) for Transport Canada (see Appendix 1:Figures 1 & 2). The above sums do not include other federal expenditures on transportation, such as those for northern development, or those by various crown corporations; ie. Air Canada, Canadian 6. Documented in Feldman Elliot & J. Milch. "Options in the Metropolitan Fringe: Strategies of Airport Development", National  Resources & Urban Policy, p. 218, New York 1980; Smith J.J. "Consideration in Local Administration of Airports in Canada", Annuals  of Air & Space Law v.3, pp. 250, Montreal 1979; Firk Frederic Jr., Ottawa International Airport Management Project. Final Report submitted to Ottawa-Carleton Economic Development Corporation. Ottawa June 1985; Feldman & Milch. The Politics of Canadian Airport Development: Lessons  from Federalism. Durham N.C., 1983; St. Pierre Paul Robert, Public  Participation in an Inter-Agency Committee: The Airport Planning  Committee in Vancouver. Globe and Mail, "Family wins expropriation battle, Will get back land on Sea Island", Toronto 1986; Globe and Mail, Gary Webb-Proctor. "Maiton in revolt against noise from low-flying jets at airport", Toronto 1986. 7 Canada, Parliament, Nielsen Task Force: Vol. 6, Economic Growth &  Transportation, A Study Team Report to the Task Force on Program Review, Ottawa, September 1985, p. 25. 5 National, VIA Rail, and CN Marine. In recent years, the federal spending on transportation and conmunication as a percentage of total federal expenditure has steadily declined from 7.3% in 1974 to 5.3% in 1982.8 Deregulation and privatization are also part of the government's plan to reduce expenditures on transportation. Other countries, Australia, U.K., U.S., and India, in an effort to reduce their government expenditures on transportation, have also adopted deregulation and privatization legislation in recent years. If the current airport management framework in Canada is to be changed, what should be the new structure? Should i t be a federal crown corporation, a provincial crown corporation, a municipal department of aviation or an airport authority? How can these alternatives be weighed one against the other? These discussions and observations lead to the following proposition: to determine whether management of metropolitan airports in Canada requires a less or more centralized structure in order to succeed in operating these airports effectively. Ibid, p. 26. 6 1.2 Purpose and Scope The purpose of this thesis is to examine the effectiveness of airport management structures using the following five variables: 1. effective implementation of national aviation policy, 2. managing aviation growth cycles St technological change, 3. securing funds for development, 4. minimizing the influence of political suasion and, 5. balancing airport management and comtunity goals. The thesis will examine in detail the following four airport management structures: 1. as a Federal Ministry (using Transport Canada as the example), 2. as a municipal department (using American examples), 3. as a municipal commission (using American examples), and 4. as an airport authority model (using the American example). This thesis i s , in effect, a comparison of Canadian and U.S. approaches to airport management. It examines the Canadian experience through the management of the Self-Sufficient Airports (SSA) as defined in Section 1.4. Eleven airports in eight U.S. metropolitan areas are also included. They were chosen to reflect different airport structures as defined in Section 1.4. The period of 1960 to 1986 is the focus of this study. A condensed historical overview of aviation development from 1900 until 1960 will be included. The overview provides a summary of information for the reader who is unfamiliar with aviation history. Finally, lessons and options for the planning and managing of Canadian airports in the future will be derived from this thesis. The method of analysis is explained in 7 Section 1.3. 1.3 Method of Research The research method is a comparative analysis of Canadian and American airport management experiences. The historical information for Canada, and the U.S. is derived primarily from aviation journals, books, articles and academic studies. The recent developments in airport management in Canada and the U.S. are difficult to obtain from written sources. A recent work term for the author with Transport Canada (Air Division - Vancouver International Airport, May-Sept 1985), and attendance at several recent conferences on airport management, provided additional information on discussions and views of aviation and government officials. 8 The Canadian and American experiences of airport management are measured vising the five variables identified in Section 1.2 in the following manner: 1. the implementation of government policy appraises how well airport management complied with specific policies and what impacts these policies had on airport operations, 2. the management of passenger growth cycles and  technological change measures management's ability to anticipate, plan and administer these cycles, 3. the acquisition of funds reflects the success of different processes of management methods to obtain funds as required, 4. the degree of influence of political suasion on airport management decisions is measured using the nine factors defined by Stanbury and Fulton. 9 and, 5. the balancing of airport goals and cxammunity goals i s measured by the timing and variety of options presented by management for development that were proven acceptable to both. 1.4 Research Airports: Definition This thesis focusses on passenger traffic at major metropolitan airports. Cargo developments though an important and growing activity at major airports are not included because of time and resource limitations. y. This idea is derived from Stanbury and Fulton in their work titled "Suasion as a Governing Instrument" which is contained in Alan Maslove's book, How Ottawa Spends Money 1984: The New Agenda, pp. 282-324, Methuen: Toronto 1984. The authors used a set of elements; targetability, speed of implementation, flexibility, the fog factor, symbolism in action, ideological content, accountability, social costs, and the organizational goals of different actors, as indicators of suasion to examine governments use of suasion to alter the behaviour of the private sector. In this study of airports the same set of elements are useful in examining how the government uses suasion within government to obtain certain decisions and actions. 9 In Canada only the federal airport management structure of the Canadian Air Transport Administration (CATA) is examined. It was renamed the Airport Authority Group (AAG) after October 1985. The AAG as of October 1986 was responsible for the following nine federally owned and operated Self-Sufficient Airports (SSA) group: CITY AIRPORTS MANAGEMENT HALIFAX Halifax Transport Canada MONTREAL Mirabel " TORONTO Pearson " WINNIPEG Winnipeg " EDMONTON Edmonton 11 CALGARY Calgary " VANCOUVER Vancouver " MONTREAL Dorval " OTTAWA Ottawa " In 1985, the SSA group handled 80% (37 million) of the air passengers in Canada and produced 81% of the total revenue. They also collectively produced a cash surplus of $87 million (see Appendix 1, Map 1 and Appendix 3 for details). In 1984, out of 15,000 airports in the United States only 3203 airports were open to the public. 1 0 Of the 3203 public airports only 560 (17%) have scheduled airline service, commuters or taxi operations. This thesis concentrates on one category of the four category system of publicly-owned airports; the Air Carrier Airports. The Air Carrier Airports are those served by certified carriers. These airports are some of the busiest in the United States (ie. Atlanta & Chicago—0' Hare) to medium levels of activity (ie. Seattle). 1 0 Congressional Budget Office, Financing U.S. Airports in the  1980's. Congressional Budget Office, Washington D.C., 1984, p. 9. 10 This thesis will review three of the American airport management methods (City Department, City Commission and the Airport Authority model) in eight different U.S. metropolitan areas: CITY AIRPORTS MANAGEMENT SYSTEM ATLANTA CHICAGO DALLAS DENVER LOS ANGELES NEW YORK SEATTLE WASHINGTON DC Hartfield O'Hare Airport Dallas-Ft. Worth Stapleton Los Angeles International JFK/LaGuardia/Newark Seattle-Tacoma Intl National and Dulles City-Department City-Department Joint City-Dept City/County-Dept City-Commission Airport Authority Airport Authority Airport Authority In 1984, these eleven airports handled approximately 279 million passengers which accounted for 70% of the total 400 million passengers moved in the United States. 1 1 If their current relative role remains unchanged, these eleven airports will handle 490 million passengers of the 700 million passengers forecast by the FAA to be moved through American airports by 1997. This would represent a 75% increase in usage and may be even higher for airports such as Denver, Atlanta, Dallas and Chicago as major airlines (United, Continental, American, Delta & Eastern) are increasing their hubbing activities at these locations. Appendix 1 Table 1 provides further statistical information on these airports and the cities they serve. 1.5 Thesis Organization 1 1 Feldman Joan M., "No fresh start seen for Airport & Airways Trust Fund", Air Transport World. Washington D.C., February 1987, p. 20. 11 The organization of the thesis is as follows: Chapter Two details the development of airports and aviation policy in Canada from the early 1900s up until 1986. This chapter also outlines the ministerial method of airport management in Canada. The success of the management structure is evaluated with respect to the five criteria outlined in Section 1.3. Chapter Three presents the development of airports and aviation policy in the United States from the 1920s up until 1986. This chapter analyzes the three American airport management methods outlined in section 1.3. The success of each of these methods is also evaluated with respect to the five criteria outlined in section 1.3. Chapter Four summarizes the success of the four methods into a comparative matrix, draws conclusions on how airport management should operate in the future based on this information and makes recommendations based on the preceding material. This chapter will also provide a brief discussion on the implications of implementing the recommended method of airport management for Canada. 12 CHAPTER TWO: CANADA'S EXPERIENCE IN AIRPORT MANAGEMENT 2.1 Canadian Aviation Hist-ory 1900-1960 2.1.0 Constitutional Jurisdiction. The British North American Act (BNA) does not place jurisdiction for transportation or ccOTnunications directly with either the Federal parliament or Provincial legislatures. 1 Federal jurisdiction of transportation and communication is based primarily on subsections 92(10) and 91(29) of the BNA, and on the preamble of Section 91 of that Act to make laws for the "peace, order and good government of Canada".2 These residual powers of the BNA have been interpreted by the courts as granting the Parliament of Canada exclusive jurisdiction over the development of air transportation. The Supreme Court of Canada ruled in Johannesson v. West St. Paul (1957) that aeronautics was a matter "... beyond local or provincial concern or interests and must from its inherent nature be the concern of the dominion as a whole".3 Exclusive federal jurisdiction in aeronautics has resulted in a single level of government regulating the development of a national system of air services. 1 Dal fen Charles M. & Laurence J.E. Dunbar, "Transportation & Cammunications The Constitution and the Canadian Economic Union", part of Volume 62, Case Studies in the Division of Powers, The Royal  Commission on the Economic Union & Development Prospects for Canada, University of Toronto Press, Toronto, 1986, p. 140. 2 Ibid, p.140. 3 Ibid, p. 149. 13 The constitutional position for federal control over airports has been made clear by several court decisions. It i s clear from the Unemployment Insurance Reference A.G. Can, v. A.G. Ont. [1973] A.C. 355, that the permenant delegation of powers from the federal to the provincial government is unconstitutional. This decision was affirmed in 1950 in A.G. Nova Scotia v. A.G. Can [1951] SCR 31. The court held that the permenant decentralization of power would disturb the distribution of powers set down in the SNA Act and since decentralization was not expressly provided for none would be implied. The Federal Government is reluctant to create a true airport authority similar to the American example because of its concern for exposure to constitutional challenges. Any attempt to delegate to the provinces any of these powers would likely be faced with this challenge. That i s not to say that an authority that allows local municipal participation could not be created but rather in doing so great care must be taken in structuring the commission. Proper legislation must be implemented in compliance with the Constitutional reform formula for the new management strucuture to be created. 2.1.1 Canada 1900-1919: The Formative Years. Early aviation in Canada could exist without airport facilities. Douglas McCurdy designed, built and flew his own aircraft in Baddeck Bay, Nova Scotia February 23 1909.4 The aviation industry grew very 4 Smith Donald J. et al., Airport Planning and Management, Wadsworth Publishing Company, Belmont Ca., 1982, p. 17. 14 slowly in the early 1900s as there was no perceived social or economic value to the activity. The elementary nature of equipment also required very l i t t l e in the sense of airports since they utilized either water or grassy fields for landing and taking off. World War I stimulated the growth of aviation in Canada. Part of this grew out of the activities of the training schools established by the British Royal Flying Corps across Canada. Public funds through the military assisted major advancements in aircraft technology to improve their reliability and safety. There was a corresponding increase in airport construction for training centers through 1915-1917. In 1918, with the end of World War I, there were many trained pilots who could turn their skills to commercial aviation and the development of northern Canada. As this industry expanded with the country's needs for exploring remote areas for mineral deposits, the federal government realized that regulation was needed. The Air Board Act of, June 9 19195, established an Air Board with broad-based powers of regulation over a l l forms of aeronautics. The Board originally had four distinct branches; b Smith Donald J. et al., Airport Planning; and Management. Wadsworth Publishing Company, Belmont Ca., 1982, p. 17. 15 1) A secretary's branch, which dealt with organizational, financial, staff, and departmental duties. 2) A certificates branch, which dealt with the licensing of aircraft & personnel. 3) A flying operations branch, which conducted any flying operations required for other government services. 4) A technical branch.6 Note that in none of these branches was any consideration given to airports. The reason for this, since most aircraft s t i l l only required a grassy field or body of water to land and take off from, there was no need for regulation of how airports should be constructed. The few existing airports from World War I became the responsibility of the Air Board and were to be utilized as training centers under its certifications and technical branches. 2.1.2 Canada 1920-1929: Governments First Steps. In 1923 the Air Board Act was replaced by the Aeronautics Act. 7 The new act placed the responsibility for aviation with the Minister of Militia and Defense. Through the 1920s, as more uses for the aviation industry became apparent (ie. mapping, forest protection, and increasing mineral exploration), there was a corresponding increased need for airports. The establishment of regional air services in the 1920s by provincial governments also required airport development. Joint cooperation between, federal, provincial, and municipal 5 Smith Donald J. et al., Airport Planning and Management, Wadsworth Publishing Company, Belmont Ca., 1982, p. 19. Ibid, p. 20. / 16 governments helped to develop and establish airports across the country to meet these needs. However, these facilities did not represent a system of airports because they were built to different standards and only in areas where various projects required an airport. Major government funds were required by the Civil Aviation Branch of the Aeronautics Board in 1927 to overcome two major problems; standardizing airport facilities and creating a safe airway. Interest in supplying these facilities had grown amoungest Chambers of Commerce, flying clubs, and fledgling airlines, because of the growing success of intercity mail services in the United States provided by the terms of the american Airmail Act 1925. The federal government decided that they could not afford to build airports in every city but knew they had to take action or the american airlines would apply for moving mail via the american airway system. In 1927, the federal government passed the Flying Club Policy Act to prevent American domination of the Canadian airways, and as part of the solution for providing airports. 8 This policy was a capital incentive program for the development of airports. The federal government would provide two biplanes to every ccmmuniry that provided the services of an instructor, an air engineer, a licensed aerodrome, and a hanger for maintenance & storage. If any of these flying clubs in subsequent years purchased one aircraft (of an approved type) from i t s own resources, the federal government would provide an additional aircraft. Sixteen 8 Smith Donald J. et al., Airport Planning and Management. Wadsworth Publishing Company, Belmont Ca., 1982, p. 21. 17 private flying clubs were formed in 1928 and seven more in 1929, which substantially boosting the inventory of airports in Canada.9 In 1928, as a response to the second problem of creating a safe and reliable airway, the federal government enacted the Trans-Canada Airway  Act. 1 0 This was the fi r s t major specific legislation with respect to airport development because the plan called for the construction of airports at 100 mile intervals. These airports would be equipped with runway lights, lighted beacons (for night navigation), radio range cortmunications, hangers and maintenance facilities. In addition to these expenditures, to enhance safety, emergency landing strips were constructed at 30 mile intervals between the main airports. 1 1 2.1.3 Canada 1930 - 1939: The Depression Years. Although many airlines experienced losses or bankruptcies during the Depression years, airport development increased. Between 1932-36 the federal government built f i f t y new airports through "make work" projects. In the 1930s, the federal government reevaluated which department should be responsible for aviation matters. The responsibilities for airways and airport regulations were removed from the Militia and Defense department and placed under a new separate c i v i l department. On November 1 1936, Parliament established the Department of Transport 9 Ibid, p. 21. 1 0 Ibid, p. 22. 1 1 Ibid, p. 22. 18 with the task of administering aviation, railways, canals, marine, and highway services. 1 2 A l l modes of transportation were included to enable consistent policy development ensuring complementary modal development that would contribute to a national system of transportation. A brief examination of the aviation industry in the 1930s shows that not a l l was going to plan. Even with the standing offer granted by the federal governments Flying Club Policy Act, by 1936 the Trans-Canada Airway was s t i l l uncompleted because, many municipalities could not justify the expenditures required. As a result of this the federal government decided to build and operate several airports to ensure the completion of the Trans Canada Airway. In conjunction with this development, the Minister of Transport in 1936 saw the necessity for a transcontinental air carrier to coordinate air services. The minister's f i r s t proposal offered a private company, Canadian Airways Limited, the opportunity to become that airline. Canadian Airways Limited was owned by the Canadian Pacific Railway. This proposal was unsuccessful because Canadian Pacific refused to contribute 50% of the capital required unless i t was made an equal partners in the new airline company, something which the federal government refused to do. 1 3 On the Minister's recommendation in 1937 Parliament past the Trans-1 2 Ibid, p. 23. 1 3 Smith Donald J. et al., Airport Plarinincr and Management. Wadsworth Publishing Company, Belmont Ca., 1984, p. 24. 19 Canada Airlines Act, and created a public transcontinental air carrier called Trans-Canada Airlines (TCA). The Trans-Canada Airlines Act gave Trans-Canada Airlines a monopoly on transcontinental air services in Canada between 1937 and 1967.14 2.1.4 Canada 1939 - 1945: World War II. The outbreak of World War II created a tremendous growth in airport construction in Canada. There were over eighty airports constructed in a period of two and half years. 1 5 Most of these airports were for military use since Canada was the base for the British Commonwealth Air Training Plan and a major participant in military projects with the United States. Canada assisted the U.S. with the Crimson Route (Europe via the Arctic) and the Northwest Staging Route (via Alaska) by developing airports on these routes. 1 6 Several major government decisions during the war years set the stage for postwar development of airports; 1) A large amount of land was purchased and set aside for future aerodrome development. 2) Air traffic control within a radius of twenty miles of major aerodromes began in 1940. 3) Airways air traffic control came into operations in 1942. 4) The Air Transport Board, created in 1944, was made responsible to the Minister of Transport. Its function was to review, 1 4 Ibid, p. 24. 1 5 Ibid, p. 25. ' 1 6 Smith Donald J. et al, Airport Planning and Management. Wadsworth Publishing Company, Belmont Ca., 1984, p. 25. 20 approve or refuse licenses for commercial air services. 1 7 A l l of these factors displayed the federal government's ccamitment for postwar c i v i l aviation development. A policy decision by the federal government for large expenditures on airports was announced by the Prime Minister of Canada at the closing of World War II; The Canadian Government strongly favors a policy of international collaboration and cooperation in air transport and is prepared to support in international air transport policy can be demonstrated as being best calculated to serve not only the immediate national interest of Canada but also our overriding interest in the establish-ment of international order which will prevent the outbreak of another world war.18 This statement committed Canada to upgrade its airports to an international standard. In November 1944 the Western allies held a conference in Chicago and created the International Civi l Aviation Organization (ICAO) to establish international standards for aviation development. Since Montreal was chosen as the headquarters for ICAO, access to Canada by modern air services was essential and this required Canada to live up to the standards set by ICAO. 2.1.5 Canada 1950 - 1960: Airport Development & Suburbanization. The suburbanization of Canada in the 1950s was an important trend in 1 7 Smith Donald J. et al, Airport Planning and Management, Wadsworth Publishing Company, Belmont Ca., 1984, p. 26. Ibid, p. 26. 21 determining land use patterns in urban areas. This trend sparked a tremendous growth in infrastructures systems (ie. Roads, transit, sewage, electricity, telephone services, schools, hospitals, etc.) in Canadian cities. The financial commitment for infrastructure development of the suburbs prevented many municipalities from updating airports to the international service levels required by the federal government committment to the ICAO standards. To achieve the ICAO standards, the federal government purchased several municipal airports across Canada to upgrade to these standards. Many of these airports required extensive work (ie. Customs, Health & Immigration, Agriculture officers) to f u l f i l l their international role. The federal government's Minister of Transport was responsible for the planning, designing and developing of these airports. Gander International Airport in Newfoundland was the f i r s t major Canadian international airport, however a change in aircraft technology made i t technologically obsolete. The change from the DC-7 and other turboprop driven aircraft to the DC-8 and Boeing 707 jet-engine technology (1958), gave the airlines increased range without the need for fuel stops in Gander (Appendix 1 Table 2). The f i r s t planned international airport in Canada specifically designed for jet technology was Montreal Dorval International Airport opened in I960.1 9 The federal government's airport development program continued into the 1 9 Smith Donald J. et al., Airport Planning; and Management, Wadsworth Publishing Company, Belmont Ca., 1984, p. 24. 22 1960s. Malton Airport (present day Pearson International) was built by the City of Toronto in the late 1930s but was purchased by the federal government in 1955. In the late 1950s the Ministry of Transport expropriated an additional 3,000 acres of farm land adjacent to Pearson International and spent $20 million on runway and terminal improvements. Vancouver's original airport was also built by the city in the 1930s but was purchased by the Ministry of Transport in 1962 when faced with the major financial commitments required to upgrade the facility to ICAO and jet aircraft standards. Advancements in the aviation industry in the f i f t y years between 1910-1960 created many technological and administrative changes in airport operations. Even greater technological and administrative reforms for both airlines and airport operations would occur between 1960-1985. Section 2.2 summarizes the major reforms between 1960-1985. 23 2.2 Canadian Aviation Policy 1960-1986. 2.2.0 Traditional Role of Government & Airport Development. Traditionally the nationwide system of Canadian airports was operated by the Ministry of Transport with the main objective of being responsive to the aviation needs and interests of the public and private sectors in the economy. There is no specific "Canadian Airport Act" such as exists in the United States with the Airport and Airway Development Act (1982) and the Airport and Airway Revenue Act (1982) and in Australia with the Federal Airports Corporation Act (March 1986), or as exists in the United Kingdom with the British Airports Authority legislation (1965). Instead, in Canada, there are several pieces of federal legislation which apply to airports. The major ones are; the Aeronautics Act &  Amendments 1977. the National Transportation Act 1967. and the Financial  Administration Act, amended in 1977.20 Sections 2.1.0 to 2.1.6 of this thesis outline several other government policies and actions which impact on airport development in Canada. 2.2.1 Royal Commission on Transportation Policy - 1961. In 1961 Parliament established a Royal Commission to carry out a detailed review of transportation policy in Canada. During the early 1960s as a result of this review, there were several major policy and 2 0 Baldwin Blair C., The Management Structure of Airport Operations  in Canada and the United States. Centre for Transportation Studies, UBC, Vancouver, 1980, p. 5. legislative changes which affected air transportation: 24 1) The new National Transportation Act (NTA) became law in 1967. This act was designed to regulate a l l modes of transportation within federal jurisdiction and identified as i t s objectives; 'An economic. efficient, and adequate transportation  system making the best use of a l l available modes of transportation modes at the lowest total cost is essential to protect the interests of users of transportation and to maintain the economic well-being and growth of Canada and that these objectives are most likely to be achieved when a l l modes of transport are able to compete.1 2) The Cost Recovery Policy (users pay) announced by the Minister of Transport, which in broad terms stated; 'Airport and en-route costs will be fully recovered, except for costs to be assumed by the Government for the implementation of a particular Government policy requiring departure from the objective of commercial viability.• 3) The Air Canada Act of 1964 incorporated the airline and changed the name from Trans-Canada Airlines to Air Canada. 4) The Regional Air Carrier Policy of 1966 provided the five regional air carriers with regular route operations to supplement the two domestic mainline carriers, Air Canada and CP A i r . 2 1 There were several direct and indirect effects of these policy changes on airport development. The NTA called for major reforms in a l l modes of transportation with a focus on economic objectives because of the federal government's concern 2 1 Smith Donald J. et al., Airport Planning & Management, Wadsworth Publishing Company, Belmont Ca., 1984, p. 28. 25 over providing funds to so many areas of transportation. This was a major departure from government aviation policies and actions of the 1930-1967 era, when the government was increasing program funds to provide airport and airway facilities (see Section 2.1). The Cost Recovery Policy directive made i t clear to CATA that users of the air mode should pay for the use of the facilities and that the airports shoud operate debt free. This directive, for the f i r s t time in nearly f i f t y years of government operation, was requiring the government to make airports financially self-sufficient. The Air Canada Act and the Regional Air Carrier Policy redefined the areas of operation of the major and regional air carriers. The 1960s witnessed the beginning of major charter operations (ie. Wardair-Europe and Florida, Nordair - Florida & Caribbean). The Regional Air  Carrier Policy allowed the regional carriers to purchase new jet equipment (ie. 737s and 727s) to operate on new routes. These changes in airline operations increased the demands on airport capacity to process more flights and the larger aircraft for both the major and regional air carriers. 2.2.2 Task Force - Hagglund Report 1979. Between 1975-80 a l l the forecasts by the Ministry of Transport predicted large increases in passenger traffic well into the twenty-first century. These forecasts were the rationale for new and larger facilities to be constructed across the country. 26 In the early 1970s the federal government continued an airport expansion program, as a continued cotmitment to the development of international airports in Canada, and to meet the increasing demands for airport services. In Toronto by 1975, 18,000 acres were expropriated at a cost of $146 million for a planned new international airport at Pickering. 2 2 In Quebec in 1969/70, at a cost of $400 million, Montreal's second international airport was located at Mirabel on an 88,000 acre site thirty-four miles from downtown Montreal (opened in November 1975).23 Smaller expenditures were also incurred in Winnipeg and Vancouver for new terminals and airside improvements. By the late 1970s, the federal government was concerned with i t s growing expenditures to create a system of international airports. In 1979 the federal government formed a Task Force to review government airport management policies and goals. As a major outcome of this Task Force, the Airport Revolving Fund was expanded from its original two airports to include twenty-three airports in total. The airports included were: 2 2 Feldman Elliot J. & Jerome Milch, The Politics of Canadian  Airport Development, 1983, p. 103. 2 3 Smith J.J., "Considerations in Local Adininistration of Airports in Canada", Annuals of Air & Space Law V. 3. 1978, p. 246. 27 Charlottetown Fredericton Gander Halifax Moncton Saint John St. John's Sydney Dorval Mirabel Quebec London Ottawa Toronto Windsor Regina Saskatoon Thunder Bay Winnipeg Calgary Edmonton Vancouver Victoria This restructuring of the Airport Revolving Fund was done in an attempt to cover costs of more airports by creating a pool for lending money from the more profitable airports to others. This new source of funds for airport operations would reduce expenditures from the federal government's treasury which was the only other source for funds. The Task Force (1979) also found that, the Minister of Transport, and CATA were being criticized on their abilities to manage Canadian airports. The users of airports (airlines and the travelling public) plus local governments had complained that airport administration was unresponsive to their needs or concerns. The centralization of decision-making authority in the headquarters of CATA in Ottawa had made the system cumbersome, and inefficient, necessitating the approval from Ottawa for any major managerial decisions at the local airport. 2 4 The problem of centralized decision-making can be illustrated in the following example discussed in David Varty's article (1979).25 When 2 4 Varty David, "The Re-Organization of Airport Administration in Canada", Annuals of Air & Space Law. Vol. 4. 1979, McGill, Montreal, p. 360. 2 5 Ibid, pg. 360, interview with Lome Howell, General Manager, Vancouver International Airport. 28 there is a ministerial change in Ottawa or when there is a change in government, important projects at the airports may be halted until the new political staff i s familiar with the particular decision. For example, when the Clark government was elected, i t initiated a freeze on spending until i t had made an assessment of the direction in which i t intended to go. This meant that Vancouver airport had to stop when half finished a $34 million renovation to await the government release of frozen funds. This occurred while the airport was experiencing a 15% increase in passenger volumes. 2.2.3 Airport Development & Environmental Concerns - 1975-80. The late 1970s and early 1980s was a period of increased environmental awareness in our urban regions over; air, water and noise pollution. The concerns over noise pollution focussed heavily on aircraft noise as oppose to highway or industrial noise, thereby creating a negative sterotype of an airports proximity to other land uses especially residential areas. In fact this environmental movement in, Canada, Australia and the U.S., was a major cause for the banning of the supersonic aircraft, Concorde, from many of the airports in these countries. A program response to the noise pollution issue in Canada was the establishment of new airports with "buffer zones" around them or to locate new airports in isolation from other urbanized areas of a city. These airports are also referred to as "environmental airports". Examples of this program are, the large purchase of land around Mirabel and the isolated location of the new Edmonton International airport 29 from the urban center (Table 1 gives location of airports relative to the city centre). 2.2.4 Alberta Land Use Policy & Airport Development - 1978. There is only one province in Canada to have taken action to reduce land use conflicts from developing in communities and cities served by an airport. The province of Alberta in 1978 enacted the Airport Vicinity Protection Area Program (AVPA), as part of the Alberta Planning Act (Section 147). The goals of the AVPA Program are two fold: 1) to ininimize the adverse impact of aircraft operations, especially aircraft noise, on communities developing around airports, and 2) to maintain the continued viability of the airport facility at its optimum efficiency. 2 6 The provincial government of Alberta has laid out an important process through the AVPA in coordinating airport development, municipal growth and environmental protection. Although the planning and management of metropolitan airports s t i l l remains an exclusive federal responsibility, the provincial governments are responsible for other land use activities which service the airports (ie. road construction and infrastructure connections) and developments in the surrounding area (ie. municipal zoning). 2.2.5 Liberalization of Airline Regulations - 1984. 2 6 Guffi Ross (Senior Planner Municipal Affairs Alberta), lecture on the AVPA Guideline Process, CANADIAN INSTITUTE OF PLANNERS (CIP) CONFERENCE, July 22 1986, Vancouver 1986. 30 In 1984 the Minister of Transport released a discussion paper on the liberalization of airline regulation. This was in response to the deregulation of the U.S. airlines in 1978, and to curb the rising expenditures by the federal government on transportation infrastructure. In that discussion paper the Minister expressed key changes in regulatory measures by the federal government over the airline industry: It demonstrates the government1 s confidence in the maturity of Canada's airline industry to respond to the challenges of increased competition. This policy discards the concept that the airline industry i s a public u t i l i t y . 2 7 (emphasis added by author) For the f i r s t time in the f i f t y year history of regulation of the airline industry, the government had decided the industry no longer needed government protection as an "infant" industry and that i t was no longer a public ut i l i t y . i 2 7 Canada Parliament, "Notes for Remarks by the Honourable Lloyd Axworthy", Minister of Transport to the House of Commons, Standing Committee on Transport, Ottawa, May 10 1984, p. 4. 31 The minister also commented on the role of Canadian airports: The heavy public investment we make in airports each year means we must make the most productive use possible of our infrastructure. There i s an undeniable case for an initiative to promote increased services at our underutilized airports. 2 8 (emphasis added by author) In 1984, the Liberal government was defeated but the new Conservative government was committed to similar reforms and took further action to reduce airline regulation and increase airport utilization. In 1985, the Conservative government released i t s objectives with respect to a l l modes of transportation regulation in a white paper called 'Freedom to Move; a framework for transportation reform'. Within this document the government was calling for substantially reduced regulation of the transportation industry, inter and intra-modal competition, and increased self-sufficiency. As a result of the above white paper, deregulation of the airlines has occurred in Canada, not by a change in legislation but simply by the federal government not enforcing the regulatory powers i t was entitled to. The lack of enforcement of airline regulations has resulted in Canadian airlines rapidly building hub-Sc-spoke systems similar to their American counterparts. Ibid, p. 8. 32 The airports are caught in this deregulation and subsequent competition amoungest the airlines with a management system which; has failed to streamline quick enough to response to the changing airline operations, and has had no substantial increases in their budget to keep pace with the demands to acxxmmodate the airlines. 2.2.6 Government Spending Review - 1985. In fact, in addition to the Conservative government1s interest in transportation reform in the private sector, a series of studies were established to review a l l government program expenditures in an attempt to reform the public sector. The "Royal Commission on the Economic Union and Development Prospects for Canada" document (Macdonald Commission 1985) and the "Nielsen Task Force on Program Review" (Sept 1985) both recxammended the Federal government pursue opportunities for "divestiture or local management of federal airports". 2 9 These reviews revealed that airline and concessionaire fees did not cover anywhere near the cost of providing these services. According to the Minister of Transport, in 1985 the government' s cost recovery of maintaining and operating the airport transportation system, and air navigation system, was only slightly above 40%.30 In 1985 CATA was carrying a $777 million deficit for the air navigation network, 2 9 Canada, Parliament, Nielsen Task Force; Vol. 6 Economic Growth &  Transportation, A Study Team Report to the Task Force on Program Review, Ottawa, September 1985, p. 150. 3 0 Ralph Wayne, "Canadians Ponder Deregulation at Vancouver ATAC Meeting", Air Transport World. Washington D.C., December 1985, p. 32. 33 therefore the government taxes on passengers and fuel are increasing.3-1 In 1985 also as an outcome of these reviews and in an attempt for the Self-Sufficient Airport Group (SSA) to achieve their goal of reaching self-sufficiency, the federal government reduced the number in the Revolving Fund mechanism from twenty-three to nine. The nine airports s t i l l in the Revolving Fund mechanism of the Self-sufficiency Airport Group are; Vancouver, Edmonton, Calgary, Winnipeg, Toronto, Mirabel, Dorval, Ottawa and Halifax. In addition to the above reviews, a new Task Force on Airport Management was formed in 1985 by the Minister of Transport to examine alternative methods for operating airports in a more economic, self-sufficient manner. The task force results were delivered in 1986 with major changes recommended to the structure of airport management in Canada but not offering methods or instructions as to how to achieve these changes. The next section of this study will examine the reporting chain of the management structure of the Ministry of Transport's air division between 1960 and 1985. ibid, p. 32. 34 2.3 Canadian Airport; Management Structures. 2.3.0 Canadian Government Transportation Management Structures. In Canada a ministerial method of management has been used for the management of major airports in Canada. The Canadian Air Transportation Administration (CATA) and the Airports Authority Group (AAG) have been the major bureaucratic bodies responsible for the planning, regulating, and operating airports. The Department of Transport was reorganized in 1969, for the f i r s t time since i t s establishment in 1937, as the Ministry of Transport. 3 2 The new ministry was organized into three administrative branches: air, surface and marine. The air administration was given the t i t l e ; Canadian Air Transportation Administration (CATA). The new ministerial method of management was to increase accountability and improve performance. The AAG was created in October 1985 to replace CATA but has not resulted in any substantial change in operation from the CATA system. However, this action has given the Conservative government the image of creating change. Details of these systems will be outlined in this section. 2.3.1 Restructuring of Department of Transport - 1969. CATA was responsible, up to 1985, for the provision of standards, licensing actions, procedures and regulations for the convenient, safe and efficient conduct of aeronautics in Canada. CATA was also 3 2 Langford John W., Transportation in Transition The  Reorganization of the Federal Transport Portfolio, The Institute of Public Administration of Canada, Mogill-Oueen's University Press, Montreal, 1976 p. 234. 35 responsible for the provision, operation and maintenance of many airports, navigational aids, airway systems, and other related facilities and services in support of aeronautics. CATA's primary objective was "to develop and operate a safe and efficient national c i v i l air transportation system that contributed to the achievement of government objectives, and to specific elements of this system."33 CATA was headed by the Air Adndnistrator who reported to the Deputy Minister (Appendix 1 Organization Chart 1). CATA consisted of three levels of management; headquarters, regional offices (six in total), and local airport acMinistration. The headquarters branch, consisted of six director generals, and was responsible for: 1) policy development and planning, 2) financial and personnel administration, 3) development and enforcement of aeronautics legislation, and 4) construction, operation and maintenance of federally owned airports. The six regional offices, as the second level of management, were responsible for (Appendix 1 Organizational Chart 2); 1) directing administration of airports within their region, 2) directing future development plans (formulated at headquarters), 3) administering and controlling allotted financial resources, 4) directing personnel utilization, and 5) developing effective management of airport properties. Local airport acmiinistrat ion, as the third level of management, consisted of an airport manager and staff which handled the functional Ibid, p. 5. 36 consisted of an airport manager and staff which handled the functional areas of technical, operational and administrative services. 3 4 There were exceptions to the above noted reporting scheme, some of the managers of principal airports reported directly to the Regional Administrator (ie. Toronto, Mirabel & Dorval), rather than through the Regional Manager of Airports and Properties (Appendix 1 Organization Chart 1). The CATA management method had no formal mechanism for input from the airlines, provincial or municipal governments in determining how the airport should be developed. The regional and local levels of CATA that operated the SSA group, have requested opinions from the airport users in the past, but they are not required to do this. In fact, there are several documented cases of quite the opposite, of where CATA tried to do too much without soliciting support or input from local government and airport users. A case in point was, the expropriation of the land for Pickering. This example and others will be discussed in further detail in Section 2.7. The creation of the Airports Revolving Fund in 1969 was to increase the efficiency and operating methods of the two largest airports in Canada (Toronto and Montreal's Dorval). 3 5 The Airport Revolving Fund involves pooling the operations and maintenance budgets of these two airports 3 4 Ibid, p. 6. 3 5 Smith J.J., "Considerations in local Administration of Airports in Canada", Annuals of Air & space Law V. 3. 1978, MoGill, 1978, p. 240. 37 into a caramon fund. In 1979 CATA expanded the number of airports in the pool from two to twenty-three in an acmiinistrative effort to reduce the expanding demand on the government treasury for airport development funds by forcing cross-subsidization from the more profitable airports. It is not possible for profitable airports in the Revolving Fund to use their profits to retire their own debts until the entire pool showed a profit. With twenty-three airports included in the Fund with a combined debt of $129,000,000 in 1978, i t is impossible for any profitable airport to get ahead. Up until April 1985, the SSA group was financed by the Airports Revolving Fund as part of the 23 largest airports. With the creation of the Airport Authority Group (AAG) and the Air Navigation and Safety Group (ANS) in 1985, the Self-Sufficient Airport group was removed from the Revolving Fund. 2.3.2 Airport Authority Group (AAG) - 1985. The growing inability of the CATA management structure to cope with growing traffic demands, deregulating airlines, and growing government expenditures, lead to the establishment of the Airport Authority Group (AAG) and the Air Navigation and Safety Group (ANS) in 1985. These two bodies divided the responsibility of the old CATA management structure. The ANS is responsible for the safe and efficient operation and maintenance of navigational aids, airways and runways. The overall mandate of the AAG is to "operate the existing airport system of major airports in the most efficient, secure and safe manner, to maximize revenue generation opportunities and to develop 38 sedf-sufficiency at airports. 1 , 3 6 i t s main objectives are to; "re-orient the organization from one structure to manage on a functional basis (CATA) to one structured on a line basis; place greater emphasis on commercial development; incorporate a means of maturing airports to promote managerial and financial self-sufficiency; and to aoxsmmodate down-sizing initiatives." 3 7 The AAG management method is quite different from the airport authorities in the United States or the United Kingdom. Unlike the American and British authorities, which have independence and enabling legislation, the AAG is not independent from the federal ministry nor is i t set up under enabling legislation of local government. The AAG is an attempt by the Ministry of Transport to streamline the ministerial management structure of airports in Canada while s t i l l operating as part of a federal bureaucracy. However, the AAG is s t i l l structured the same as the CATA adndnistration, i t has an Executive Director and five Director Generals in headquarters, six Regional Director Generals for the same six regions defined by CATA, and local airport admuTistration. No efficiency in management has been gained by this so-called changed in management. The only advantage appears to be political, in the sense that the Canadian federal government appears to be working on a solution to manage the airports more efficiently. 3 6 Transport Canada, Deputy Minister Circular 86-04701-103, Ottawa, 1985, p. 1. 3 7 Transport Canada, Communique No. 3. Vancouver Airport, 1985. 39 The creation of the AAG was intended to "allow for faster decisions, more efficient systems and procedures, and flexibility to respond to local needs and opportunities, resulting in lower unit cost of air transportation for the public." 3 8 The objective of the Headquarters branch of the AAG is to "consolidate like functions and activities, and to reflect clear lines of accountability throughout the organization." 3 9 This objective is not unlike that for headquarters branch of CATA. The reorganization of CATA into AAG has not resulted in these goals. In fact, the power for authorization has been even more centralized in the hands of the Director General at AAG Headquarters in Ottawa. The Director General's function is to serve as a focal point so that "this will centralize the airports planning and operating policy development ac t i v i t i e s . 4 0 Even with deregulation being approved for the airlines, the reduction in federal spending on air transportation, and the stated interest in making airport's local management more independent, the federal government has centralized the responsibility for key decision making areas to the Director General (ie. planning & operations policy). 2.4 Canadian Aviation Growth & Technology Changes. 2.4.0 Impact of Technological Advancement on Airports. 3 8 Ibid, p. 2. 3 9 Transport Canada, Circular. Vancouver International Airport, 1985, p. 2. 4 0 Ibid, p.3. 40 The primary user of the airport is the airline. This may seem obvious to most but i t is important to be aware of what types of equipment airlines vise and are contemplating so as to anticipate their demands on the airport. This section will show how successive changes in aircraft technology impacted on airport development. The 1940s and 1950s were significant decades for airport development because of the limited range of aircraft equipment (Table 2: DC6 & DC-7). These aircraft required several stops for fuel and maintenance, thereby utilizing many of the airports established in the 1930s and 1940s by the Canada Airways Act. The introduction of jet aircraft (Table 2: DCS, DCS, & 707) in the 1960s resulted in equipment with longer ranges which required fewer stops. Stops were more governed by government regulations as oppose to technological limitations. During the 1960s Air Canada as the national airline, implemented jet service to a l l of the major airports regardless of traffic demands. The heavier jet equipment required lengthened runways for take off and landing and upgraded loading bridges at a l l facilities. In the 1970s with the introduction of the wide-body or "jumbo" aircraft (Table 2: DC10, L1011, & 747) the airports had to aco^ mmodate aircraft with huge increased capacity for passengers (from 707s with a 180 passenger capacity, to the 747s 400 passenger capacity). Most Canadian cities saw the Vanguard and DC9s being replaced with DC8s and 727s and some wide-body L1011 and 747 service in the 1970s. For example the 41 large increases in both passenger and aircraft movements experienced at Edmonton International Airport were mainly due to the fact of the limitations of equipment size and traffic volumes at the Edmonton Municipal Airport. Edmonton Municipal located in downtown Edmonton is limited to equipment smaller than 737s due to i t s restricted runway length. The introduction of the newest Boeing 747-400 aircraft in 1985 with its "stretched" upper deck can acxsammodate up to 540 passengers. The 747-400 weighs over 850,000 lbs. and like past new generations of aircraft, will have definite impacts on Canadian airports. This new weight limit will require lengthening and strengthening of existing runways either immediately, or in the near future, depending on the runways present rating and how soon airlines plan to introduce the aircraft on Canadian routes. Several airlines serving Canada have purchased the 747-400 or have i t on order. They are: KLM Royal Dutch Airlines, Lufthansa, British Airways, Cathay Pacific Airways, and QANTAS. In addition to these, Singapore Airlines, CAAC, Korean Air, Northwest Orient, Swissair and UTA have placed orders. Several of these latter airline's host countries are either presently serving Canadian cities or are in negotiation with the federal government for landing rights in the near future. Boeing, the manufacturer of the 747, surveyed large airports (author could not confirm i f any Canadian cities included in this survey) and found that most could not accommodate an aircraft with a wingspan of 42 larger than 215 f t . for gate facilities. According to Jules Berger, the chief project engineer for the 747-400, at some airports gate, utilization will have to be carefully planned as two 747-400s may not f i t side-by-side. In the 1990s Boeing may introduce the 747-500 which would be a double-decker aircraft, having a crew of almost f i f t y and the upper deck stretched so that the two levels would accommodate 800 passengers. The 747-500 when constructed, will have a 253 f t . wing span and weigh over 1 million lbs. and therefore require gate space and runway modifications in future airport expansion plans. In this same decade the MD11 will enter service, which is the McDonnell Douglas wide-body replacement for the DC10. This equipment has kept i t s weight down, as well as its passenger capacity to within ranges presently accommodated at Canadian airports (see Table 2). In addition to accommodating larger aircraft at airports, the rapid growth in "feeder" or "commuter" airlines has increased use of turboprop equipment at Canadian airports. Aircraft such as the Twin Otter, Dash 7, Dash 8, Metroliners, and other 10-50 passenger size aircraft are used by Canadian commuter airlines such as; Air BC, City Express, Time Air and Air Nova to name a few. Their size and frequency of service do not converge with the terminal designs of a jet terminal. Expenditures are required on terminal modifications so passengers can reach the aircraft on the tarmac level because the loading bridges for the larger jets can not be used with the smaller aircraft. 43 The future developments of the UnDuct Fan (UDF) engine will also affect airport operations. This is an engine technology promising significant fuel savings (up to 40%) for the airline and therefore has generated a great deal of interest by the airlines. The UDF aircraft is presently being tested by both Boeing and McDonnell Douglas for aircraft of medium size (100-150 passengers). The major difference in design as discussed by Ken Remain is ; "the engine looks like large propeller type engines but are mounted backwards."42 The concern for an airport is, these engines at present are significantly noisier than the jet engines. A noisier aircraft will cause problems with the surrounding ccaratiunity which airport management must resolve. At the time of this study the UDF aircraft engine is only in the testing stage so i t is not possible to predict exactly when they may enter commercial use. Boeing is projecting the early 1990s as a possible production date for the UDF aircraft. As shown in the preceding examples, the development of aircraft technology has influenced airport development. In the 1970s most of the major metropolitan airports in Canada were s t i l l developing their facilities to aexxanmodate the jet aircraft of the 1960s (ie. DC-8s & 707s). Today, most of the SSA group are unable to easily integrate the 4 1 The Vancouver Sun. Cecil Foster. "Cornmuter carriers now most profitable in airline industry". Toronto, December 02 1985 B17 and The Financial Post. Mathew Horsman. "Quebecair sale to Nordair Metro leaves Air Canada out in the cold". Toronto, August 09 1986. 4 2 Globe & Mail. Ken Remain. "Refashioned propeller back in vogue". Toronto, October 18 1985. 44 commuter airlines or the new generation of 747s because of present runway weight limits and inadequate gate designs. Canadian airport management's lack of foresight in technological advancement has lead to current airport deficiency which reduce their abilities to response to the travelling public and airline needs. 2.4.1 Aviation Growth: Passenger Trends 1964 - 1984. Canadian air passenger movements at a l l the eastern airports, in this thesis, increased between 1964 and 1980 (Appendix 1 Graphs 1). These airports, with the exception of Dorval and Halifax, a l l experienced a continuous rise in aircraft movements as well (Appendix 1 Graphs 5). Table I presents a summary of the percentage changes at eastern airports between 1964 and 1984. Table I shows that the 1981-84 four-year average percentage changes for passenger traffic at Canadian airports has slowed tremendously from 45 TABLE I CANADIAN EASTERN AIRPORTS PASSENGER & AIRCRAFT MOVEMENTS AIRPORT PASSENGERS TORONTO MONTREAL (DORVAL) OTTAWA HALIFAX AIRCRAFT  MOVEMENTS TORONTO MONTREAL (DORVAL) OTTAWA HALIFAX VOLUME  TOTALS  1964 (MILLIONS) 2.856 2.325 0.383 0.324 PERCENTAGE 4-YEAR  CHANGE AVERAGE % 0.056 0.054 0.014 0.012 1964-1980 473 278 500 473 456 318 1420 686 CHANGE  1964-1980 119 70 125 119 114 80 355 172 PERCENTAGE CHANGE 1981-1984 - 3 -14 3 5 1 - 9 -16 -15 SOURCE: Aviation Statistics Centre, Transport Canada, Aircraft and Passenger Movement Statistics, various years. 46 previous four-year averages. In two cases (Pearson and Dorval) the airports are experiencing net losses in passenger traffic. Net losses occurred in aircraft movements at several eastern airports but with even larger negative growth rates than with passenger traffic. Montreal's Dorval airport was the only eastern airport suffering from both a drop in passenger and aircraft movements. This is a result of government policy requiring international airlines to use Mirabel to serve the Montreal region and therefore a l l international traffic at Dorval has now been transferred to Mirabel (except transborder flights to the U.S.). In comparison with American eastern airports (Table III Section 3.4.1), Canadian eastern airports experienced much smaller growth rates or negative growth rates in 1981-84. This trend is evident in both passenger and aircraft movements. The growth in passenger traffic at Canadian airports between 1964 and 1980 can be attributed to three main elements; the introduction of inexpensive airfares, increased popularity in long distance tourism, and a young population able to travel in the post war prosperity. Between 1964-1980 Canadian western airports experienced even larger percentage increase in passenger and aircraft movements than the eastern airports (Table II, Appendix 1 Graphs 3 & 7) . Most of the major 47 TABLE TT CANADIAN WESTERN AIRPORTS PASSENGER & AIRCRAFT MOVEMENTS AIRPORT VOLUME TOTALS 1964 (MILLIONS) PERCENTAGE CHANGE 1964-1980 4-YEAR AVERAGE % CHANGE 1964-1980 PERCENTAGE CHANGE 1981-1984 PASSENGERS VANCOUVER 0.962 705 176 -10 WINNIPEG 0.591 406 102 -14 CALGARY 0.465 866 217 -10 EDMONTON 0.300 780 195 -21 AIRCRAFT MOVEMENTS VANCOUVER 0.024 1136 284 -17 WINNIPEG 0.017 712 178 10 CALGARY 0.014 1591 398 -16 EDMONTON 0.010 958 240 -21 SOURCE: Aviation Statistics Centre, Transport Canada, Aircraft and Passenger Movement Statistics, various years (see Graphs in Appendix 1). 48 growth in passenger movements in the 1964-80 period can also be attributed to inexpensive fares which replaced r a i l travel, a large youth papulation able to travel and the increased business traffic related to the o i l and other primary industries situated in the West. The negative 4-year average growth rates for both passenger and aircraft movements at a l l western airports (Table II) reflect the economic downturn in the primary industries during 1981-84 (especially the o i l industry). In comparison with American western airports (Table IV Section 3.4.1) Canadian western airports have a l l experienced double digit losses in their 4-year average growth rates while the American airports have a l l experienced double digit gains in both passenger and aircraft movements. Even though the growth rates are not as strong in the most recent time period (1981-84), some of the present airport structures were not large enough to accomodate the expansion of the earlier years. This "breathing period" has given the AAG an opportunity to catch up and to assess what to do next with respect to funding and managing the present airport system. Airport congestion will become more severe at certain airports i f deregulation and the hub-&-spoke system are fully implemented before the AAG can restructure its management methods to be more efficient in responding to the demands of the airline industry. 2.4.2 Mega-Carriers and Canadian Airports. 49 The easing of government regulation on transportation in Canada has lead to an increase in merger activity leading to the creation of "mega-carriers" similar to practices in the United States (Section 3.4.2). The mega-carrier is the result of the merger of several airlines into a single company, which either operates as a single airline (ie. the purchase of the Canadian Pacific group by PWA to operated as Canadian Airlines International) or uses the separate logos and i s controlled by a parent company (ie. Air Canada's purchase of Air Ontario and Air BC). The creation of mega-carriers in the 1980s has lead to one or two airlines dominating the major Canadian airports for terminal facilities. These major carriers must be brought into airport management to make informed decisions with respect to airport development. Under the present AAG structure airlines are not part of the formal process. This means airport management is making investment decisions for airport expansions to accxammodate these carriers not knowing how these airlines plan to utilize the airport in the future. The development of mega-carriers in same cities has created virtual control of gate space at several U.S. airports by one or two airlines (ie. United & American Airlines in Chicago, Delta & Eastern in Atlanta, Texas Air in Newark and TWA at St. Louis) and will do the same in Canada (ie. Canadian Airlines International in Vancouver and Air Canada in Toronto). If this does happen, i t would be difficult, i f not 50 impossible, for new airlines to enter service into that c i t y . 4 3 This would be circumventing the government's policies of, increasing competition by removing regulation and, increasing utilization of our airports by trying to market these facilities to more airlines. 2.4.3 Impact of Hub-&-Spoke Operation on Airports. The creation of the hub-St-spoke system for airline operations, as a result of deregulation in the United States, has had an immense effect on airports. The airlines created the hub-&-spoke system to increase the u t i l i t y and yield factors of their equipment. Diagram 1 in Appendix 1 compares how this system works in comparison to the traditional point-to-point nonstop system of airline operations used prior to 1978. Using this method of operation the capacity of existing air traffic control, gate space, baggage handling and commercial services (ie. gift shops, restaurants, car rental, etc.) have a l l been put under serious strain. 4 4 Since 1984 under relaxed regulation and soon to be 4 3 Cybulski H. "PWA has that hungry look; Air Canada, CP or Wardair could be a takeover target", Western Report. Sept. 22 86 p. 13. and, Gallagher Tim. "One more shot in the air war; CP buys into Norcanair as two big airline 'families' emerge", Western Report. Oct. 20 86 p. 16. and, Globe & Mail. Gibbens Robert. "CP Air plans takeover of Nordair in bid to compete with Air Canada". Oct. 09 85 Bl. and, Globe & Mail. Doug Jansen. "CP Air gearing up to challenge Air Canada's domination". Dec. 02 85 B17. and, Globe & Mail Cecil Foster. "Nordair gets ready for new role as feeder line to CP Air". Dec. 05 85. and Globe & Mail Mathew Horsman. "Quebecair sale to Nordair Metro leaves Air Canada out in the cold". Aug. 09 86. 4 4 Globe & Mail. Simpson Jeffrey. "Terminal horror"; an open letter to the Minister of Transport John Crosbie. Aug. 12 86. 51 implemented deregulation of airlines, Canadian airlines have also been working towards establishing hub-&-spoke operations. Vancouver International Airport in western Canada and Toronto International Airport in central Canada are rapidly developing as the major hubs in Canada. Toronto and Vancouver airports are rapidly reaching major congestion levels as airlines try to add more flights and services (ie. feeder routes). 4 5 The airports are also falling behind in acxxtmmodating the boom of commuter airlines (ie. Air BC, Air Atlantic, City Express, Air Ontario, Time Air, MetroNordair, and Inter City Air). A l l of these carriers operate small turboprop equipment (Dash 7's or 8's, twin otters, DC-3, etc.) which airports do not have sufficient docking or gate space facilities to acxxmimodate them. Both, CATA in Canada and the FAA in the U.S. have documented that the hub-&-spoke system has resulted in a congestion producing method of operations for airports and also sparked a growing incidents of near mid-air and on-ground collisions at major hub airports. 4 6 There is a growing runway congestion problem as well. This has occurred because of 4 5 Globe & Mail. "Delays predicted at Toronto airport 1 1. Oct 30 85. and Globe & Mail. Letters to Travel. "Passenger hates returning to Pearson". Nov. 23 85. and Globe & Mail. Stewart-Patterson David. "Growth expected at most airports but Toronto to be busiest". Dec. 02 85 B20. and Globe & Mail. Burns Christopher. "Hub system lets travellers get from there to here, but not a l l that easily". May 05 87 B16. 4 6 The Vancouver Sun. Ludlow Rob. "Air traffic on the way up, controllers on way down". Aug. 30 86 B7. and Globe & Mail. "Rise in near misses reported by FAA1. Jan. 09 87. and Globe & Mail Tenszen. "Human mistakes cited as airplane accidents show increase of 8% (Canada)". May 28 87 A8. 52 the problem with safely mixing the jet aircraft of the main airline carriers and the turboprop aircraft of the growing commuter airlines. An additional problem adding to the congestion of the major airports is the overcapacity of services offered on several routes between major city pairs. 53 2.5 Canadian Airport Financing. 2.5.0 Traditional Financial Sources. Perhaps the crit i c a l problem with the AAG system of management is its method of financing airport development. No funding is permitted by the private sector. Airports compete against each other for the limited funds available from the federal government for expansion. In 1986, with a government focussed on reducing their debts i t becomes more difficult to convince them to spend the funds on airport development. The complexity of the process is increased by the fact that the airport system is tied directly to the political process of the Federal budgetary and financial planriing process. A funding decision at a Canadian airport must go through two procedures; fi r s t , the Approval-in-Principle process and second, the Project Approval Process. Within each stage there are several steps to be followed and persons to be notified. 2.5.1 Approval Process (1986): Step One - Approval in Principle. As outlined by the Ministry of Transport; The Approval-in-Principle process is the formal presentation of proposals to the appropriate level of management to seek the authority to proceed with the detailed analysis required to develop a specific solution to a problem or opportunity. 4 7 The document for this process is referred to as a Approval-in-Principle Document (APD) (see Appendix 3). The APD is expected to be short and 4 / "Financial Planning & Programming in Transport Canada, Approval-in-Principle Process", Transport Canada. Ottawa, 1982. 54 concise with respect to explaining, in broad terms, what the proposal is about. Appendix 1 Figure 3 illustrates the AFD process and will be used as a guide in explaining how the process operates. The APD can only present a single resource allocation proposal at a time (same exceptions ie. similar equipment for multi-sites can use an OMNIBUS APD). The f i r s t step is to identify a problem, opportunity, or idea that i s appropriate for the originators department to implement. Second, the question of the need for an APD is addressed. The major factor, for deciding i f the APD is required, is the monetary value of the project. If the project is under $250,000 the APD is optional but i s encouraged to provide the acmuxiistration with a clear and concise report on what the money i s being used for. If the project is between $250,000 and $3 million step three of the process is the preparation of the APD itself. The fourth step is Administrative approval at the Regional Office level, i f the project is under $3 million, and finally step five is the APD being placed in the Capital Program and the MultiYear Operations Plan (MYOP). If the project is over $3 million, then at step four the APD requires the additional approval of the Deputy Ministers (DM) because the amount required is larger than the approved levels of funds for the regional acmunstration to decide upon. This acts as a check on regional administration's spending of public funds. 55 2.5.2 Approval Process (1986): Step Two - Project Approval. The second stage of approval for funds, is the Project Approval process. A Project Approval Document (PAD) is required to; "present to the appropriate level of management, either departmental or Treasury Board depending on the cost of the project, detailed project proposals in order to obtain project approval." 4 8 The project approval process is divided into the Preliminary and Effective Project Approval processes. 4 9 Appendix 1 Figure 4 illustrates the processes for both Preliminary and Effective Project approval. The Preliminary Project Approval process is required for projects which class A or B estimates cannot be developed without expending capital resources. However, same activities can be done prior to seeking preliminary project approval: i) option analyses, i i ) feasibility studies, i i i ) sccio-economic studies, iv) market analyses, v) topographic surveys, vi) pricing & availability studies. 5 0 The Preliminary PAD represents the spending authority to proceed with the development of class A or B estimates for the entire project by entering into contracts subject to the allocation and availability of funds. Richard French's book, How Ottawa Decides. Planning and 4 8 "Financial Planning & Programming in Transport Canada, Approval-in-Principle Process", Transport Canada. Ottawa, 1982, pg. 3. 4 9 ibid., p. 3. 5 0 ibid, p. 5. 56 Industrial Policy-Making 1968-1980. provides a good summary of what Class A and B estimates are. The "A" estimates covers forecasts of expenditure to maintain current levels of service in programs which have already been approved and a part of the current expenditure budget. The "B" estimates cover forecasts of expenditures for new programs and/or expansion or improvements of existing programs.51 The Effective PAD represents a detailed resource allocation proposal for a total project based on Class A or B estimates which were developed in the Preliminary PAD procedure. The approval of the Effective PAD represents the spending authority to implement the project subject to  the allocation and availability of funds. This last point is important with respect to identifying when the decision for investing is made, and who makes that decision. The timing of both PAD and TBS (Treasury Board Submissions) documents should be submitted for final approval to the appropriate management level throughout the year. However, for inclusion of the proposal in either the Spring or Fall Update to the MYOP, as part of the larger federal budgetary/financial planning process, also referred to as the Expenditure Budget Process, they may have to be submitted for departmental approval (Regional Office) up to a year and a half before the beginning of the fiscal year that the project would be implemented.52 5 1 French Richard D., How Ottawa Decides, Planning and Industrial Policy-4teking 1968-1980. Toronto, 1980, p. 15. 5 2 ibid, p. 16. 57 2.5.3 Airport Financial Management: Bottlenecks. In an analysis of the funding decision-making processes at Canadian airports, i t can be stated that i t is a complex and a highly centralized task. If an APD project requires funds between $250,000-$3 million, the implementation of the APD is contained within the federal bureaucracy of the regional administrative offices. Over $3 million and the project requires the DM's approval before the administrative body can continue researching the proposal any further. The second stage of approval for acquiring funds, the PAD, is similar to the APD in that projects up to $3 million can be approved by the regional offices. However, above $3 million a TBS must be prepared and approvals must be received from the Minister and Treasury Board. Therefore, there is a clear division of control, accountability , and responsibility for how the PAD'S are approved. The $3 million level clearly delineates the point between being a regional adirdnistrative decision and a decision that becomes more centralized and political in nature. The expenditure of large sums of public funds i s out of the realm of bureaucratic decisions and into a political decision-making process. Therefore, i f the Ministry of Transport cannot fund this project within i t s ' existing budget then i t is up to the Minister, with the appropriate APD's and PAD'S provided by his Ministry, to present this problem or opportunity to Cabinet through the Treasury Board in an attempt to have the Department's budget increased. 58 Since a l l Ministers are in this same position, of trying to obtain a large part of the Federal budget, i t can be a long process, expending a great deal of time and resources of the Ministry, but may not always prove successful. This is usually only a problem at the PAD level of the process, since this is when the government must commit funds for the actual implementation of a project. This present method of requiring Treasury Board approval for PAD'S is effectively passing the decision-making ability of airport management to a slower and more involved political process which has funding demands cxaning from many other departments simultaneously. Once the decision passes up to the level of Cabinet ministers on the Treasury Board, i t is difficult to determine the exact process for the funding decision because, Cabinet documents and discussions are confidential and therefore, not readily available for analysis. Although the documentation (APDs & PADs) may prove airport funding is required now, i f the government has placed it s ' emphasis in some other sector that requires utilization of it s ' budget through a Ministry other than the Ministry of Transport than the investment opportunity is lost and the problem remains unresolved or grows more cri t i c a l for the airport. In conjunction with this highly centralized control of funding decisions i t should be emphasized that the airports have no options. They can only get funds through the Federal budget. Therefore, effective 59 control of implementing any large project is centralized in Ottawa in a political process leaving local airport management unable to plan its future with financial certainty. 2.6 Effects of Politiral Siwdinn on Airport- Management in Canada. 2.6.0 Political Suasion and the Ministerial Structure. This section analyzes to what extent ministerial airport management decisions are influenced by political suasion. The attributes of suasion are described by Stanbury and Fulton in their work titled "Suasion as a Governing Instrument" in Allan Maslove book, How Ottawa Spends Money  1984: The New Agenda. The study of suasion as a governing instrument on the private sector or even within the public sector i s relatively new. The more traditional instruments of governing, such as taxation, regulation and crown corporations have been more thoroughly dccumented. The analysis of suasion is not an exacting science at this time but the attributes or elements that suggest suasion to be operating, as described by Stanbury and Fulton, serve as useful indicators at this time. In the ministerial structure of CATA or AAG, the majority of authority resided with the politicians and headquarters branch of the bureaucracy (see Flowchart 1). Some authority is delegated downward, but the Regional Administrator's main function is to pass decisions from headquarters to the local airport administrations. The local airport manager carries out the headquarters branch directives and has l i t t l e discretionary authority to alter the policy decisions at headquarters or 60 at the regional level. 2.6.1 Intention of Ministerial Airport Decisions. The identification of the intention of the ministry as a governing instrument i s moderate to high. The Ministry of Transport is able to direct government spending on airports and confer benefits selectively because of i t s monopoly in ownership of major airports and their actainistration. The identification of costs are not as concise. Costs of airports are borne by the general public because the ministry's appropriations came out of; the general revenue from the Air Transportation Ticket Tax, and the airline's landing fees. The outcome of this method of identifying the intention of decisions is narrow benefits with diffuse costs. 2.6.2 Implementation of Ministerial Decisions. As a ministry, implementation of policy initiatives can be quite slow. Because of the ministry's three-tier management structure, both the public and the airlines had complained that i t i s unresponsive to their needs. There was no consultative body within CATA which local FLOWCHART 1 61 (CANADA) M IN ISTRY OF TRANSPORT METHOD OF MANAGEMENT PARLIAMENT i > i MINSTE TRANS R OF PORT _ 1 A TREASURY BOARD 2 F — « " i A •+2 — -^ R A I L MARINE ROAD A I R (AAG) M INSTRY OF TRANSPORT REGIONAL O F F I C E S ( 6 ) LOCAL A I R P O R T OPERATIONS F i n a l ' Decisions P o l i t i c a l A A F i n a l Decisions Administn V _ _ Route of Decisions Reports To 62 residents or local governments could access the policy-making process. Any policy change must come from the ministerial level down through the bureaucratic structure. The limited authority of the local airport adndnistration makes i t difficult for the airports to tailor any decisions to response to local issues and needs. In addition to this management structure, airlines have different goals to that of the ministry. Airlines are profit and cost efficiency oriented, the ministry is concerned with providing equitable services. This conflict often results in major delays in timing between airlines demands and the ministry deciding through the management system equitable solutions. 2.6.3 Flexibility of Ministerial Decisions. The flexibility of ministry actions for both costs and benefits is low. To significantly alter the scale of the ministry's actions, i t requires a change in i t s annual appropriation. To achieve an increase in appropriations, the minister will have to compete with other ministers in Cabinet for funds. Similarly, a reduction in spending programs to reduce the federal deficit will have political ramifications which require careful considerations by the Cabinet. The net effect is that changes are slow to develop. Once a decision has been made by the ministry, the probability of its reversibility i s low. The complexity and size of the bureaucracy, changes or modifications are slow to develop and to be implemented. The f u l l effect of a ministry decision may not be immediately known and by the time i t is known, the slow moving structure of the ministry may impede the public or the airlines from effectively reversing the action 63 for some time. The effect will be that the public, or airlines, will continue to bear the extra costs of ineffective decisions by the ministry. 2.6.4 The Hidden Agenda of Ministerial Decisions. The hidden agenda syndrome or "fog factor" refers to the ability of the ministry to disguise i t s true objectives and avoid criticism for otherwise "questionable" acts, is low. The actions of the Ministry of Transport are very visible because i t must obtain i t s authority for expenditures through public Estimates. Consequently, the Transport Minister, the politician responsible for the department, is very exposed politically. The general public will be concerned with costs while the politician's constituents will be concerned with direct benefits (airport improvements) or the lack of benefits which they feel entitled to. In light of potential public criticism over airport costs, the ministry is the governing instrument most susceptible to direct political control. The Minister is part of Cabinet and thus the executive of government. The political control of the minister in some cases may be dependent on the cooperation of the bureaucracy. When the minister threatens the authority or domain of the bureaucracy, the bureaucrats may act to thwart the effective control of the minister. The bureaucrats may have their own "constituents" who lobby the minister and thereby justify the existence of the bureaucracy in its present form. 64 2.6.5 Symbolic Ministerial Decisions. Symbolic acts of the Ministry are hard to make because of the need for appropriations and the resulting increased tax burden on the general public. Actions taken at airports tend to be tangible, measurable by the public and the airlines, and symbolic acts would be seen as such since no benefit would be detected. For example the announcement by Transport Minister John Crosbie on December 5 1986 that Mirabel and Dorval serving Montreal will be merged and operate as "Montreal International Airport - Terminals North and West"53 was basically condemned as a non-decision by the Opposition and aviation industry critics. This decision has been interpreted as a symbolic move to keep federal politicians popular in both Dorval and Mirabel ridings and to justify past federal Transport Ministers decisions to build Mirabel. In Montreal, local politicians (including Jean Dore - Mayor of Montreal), the Montreal Board of Trade, the Chambre de Caramerce de Montreal, Greater Montreal Convention and Tourism Bureau and the Montreal Urban Community support the closing of Mirabel and the build up of Dorval. The danger in the decision to continue building at Dorval i s , i t is hemmed in by residential and other urban developments which curtail development possibilities without creating a great number of noise and safety concerns for residents of Dorval. But the statement has a great b 3 Howard Ross, "Troubled Montreal Airports be Merged", Globe &  Mail, December 5 1986, A4. 65 deal of symbolic content for the local politicians since they are interpreted as saving and/or creating jobs in the city of Montreal as oppose to the Mirabel region. 2.6.6 Ideological Content of Ministerial Decisions. The ideological content of ministry actions can be very high. If the government believes that every person in Canada is entitled to safe and adequate air transportation, regardless of whether the person's particular locale can support an airport profitably, any action that the ministry takes toward establishing such an airport will have a very high ideological content. This was particularly important in the early development of aviation in Canada as outlined in Sections 2.1 and 2.2. 2.6.7 Financial Accountability of Ministerial Decisions. The degree of financial accountability of a ministry is, theoretically, high. The ministry's expenditures/appropriations must be submitted to annual public Estimates. Its actions may be investigated by a legislative committee, and its accounting books audited by the Auditor General. This high accountability is only in a formal sense, in a practical sense, the accountability of individual airports is very low. Auditor-General K. Dye reported in October 1985 that the method of accounting for individual airports was difficult to trace. Mr. Dye described CATA as an organization that was suppose to recover operating costs, but i t didn't know what its real costs were.54 The accounts of individual airports are lumped together under Transport in the Annual 5 4 Globe & Mail. October 30 1985. 66 Public Accounts of Canada.55 The effect i s that costs are spread over the entire airport system. 2.6.8 Social Costs of Ministerial Decisions. The social costs of political suasion to implement the policies of the ministry are very large. The Ministry of Transport endorsed the policy of providing airports whether they are profitable or not. Increased expenditures by the Ministry of Transport meant increased costs to the general public, the travelling public, and the airlines. The social costs of past CATA decisions were very large therefore, in 1969 the Ministry of Transport established the Airports Revolving Fund for the purpose of making the larger airports within the Fund financially self-sufficient. The number of airports in this Fund was reduced from twenty-three to nine in 1985 to try and make these top nine airports more self-sufficient. According to a recent business analysis, with the exception of Mirabel, Halifax, and Calgary, the remaining revolving fund airports are self-sufficient. 5 6 The enormous social costs of airport administration i s arguably the result of using a ministry as the management instrument. The efficacy of a ministry to achieve the substantive objective i s low. Traditionally, a ministry is not profit motivated or cost conscious. The f i r s t objective of a ministry is to provide a service in an 5 5 J.J. Smith, "Consideration in Local Administration of Airports in Canada", Annals of Air & Space Law V. 3. 1978, McGill. 5 6 Carleton University School of Business, Ottawa International  Airport Management Project, Final Report. Ottawa, Carleton University, 1985, p.11. 67 equitable manner to the entire population because of a policy decision by the political system. One of the objectives of this thesis is to show that an alternative management instrument may be better with respect to the operation of Canadian airports. A major criticism of the ministerial management method is the influence political suasion has on its bureaucratic structure. If the influence of political suasion on the structure were removed or reduced and the airport adndnistration more responsive to local needs, the Ministry of Transport would be more efficient, in social costs, in reaching its objectives. 2.7 Canadian Aii-pm-h Development: Community & Management Goals. 2.7.0 Airport Development & Community Input. A lack of meaningful local participation is a strong criticism of the present system of airport management in Canada.57 This problem has its roots in the division of powers in Canada under section 91 and 92 of the British North America Act. Provinces under section 92 have jurisdiction to regulate the use of land. This power in turn has been delegated by provincial legislatures to municipalities for acmiinistration. However, airports and aviation remain under federal jurisdiction through section 91 of the BNA Act. There has been l i t t l e evidence of cooperation in the past f i f t y years between levels of government concerning land-use 5 7 Varty David, The Reorganization of Airport acmunistration in  Canada: Annals of Air and Space Law. V. 4, McGill, 1979, p. 363. 68 development siarrounding the airports or on airport property i t s e l f . 5 8 As shown in Appendix 1 Table 1 the physical size of the airports, in relation to each city's size, is substantial. Airports are large properties operated outside of local planning jurisdiction and in many cases their spatial influence on residential, commercial, industrial and recreational planning strategies are cr i t i c a l . It i s argued that a change in management methods would assist in facilitating greater cooperation in land-use planning surrounding airports. The following example at Vancouver airport is a typical problem that occurred with airport development in Canada under the CATA method of management. Provincial & municipal officials are responsible for managing the impact of aviation facilities on surface transport and housing in the area but they rarely exercise a substantial role in formulating and implementing programs for airport development. In 1973, after an intense local protest in Vancouver by the regional government (GVRD) and local citizens groups, an institutional framework emerged to incorporate metropolitan participation. This institution was the Airport Planning Committee (APC). Unfortunately, even with the APC in place, their decisions were not necessarily used i f the headquarter's decision in Ottawa or in the regional office were different. The APC gave the municipalities a token opportunity to express their concerns but did not guarantee that the airports development plan would be altered. Between 1920 and 1975 the two main solutions put forward by the Ministry 5 8 Ibid, p. 363. 69 of Transport, and other airport authorities, for solving airport problems were; to build entirely new "environmental" airports or to expand the existing airports infrastructure (ie. runways, terminals, cargo f a c i l i t i e s ) . 5 9 Section 2.7.1 and 2.7.2 analyze these two solutions in more detail. 2.7.1 Solution One: The Environmental Airport. The f i r s t solution of building an environmental airport required that enough land be expropriated in an area removed from populated regions. This would guarantee future airport development without interference by conflicting land-users. In the 1970s this option was the policy strategy for the creation of Mirabel, 34 miles from Montreal, and the expropriation of property in Pickering, 30 miles northeast of Toronto. While this solution solved the problems of disturbing nearby residences or other land-users i t created massive infrastructure costs for the provinces and federal government to develop highways and services (ie. water, sewage, electricity) to the new airport site. Under the Expropriation Act 1969. in effect when land was expropriated for Mirabel, the Crown assumed legal ownership of the land as soon as the proper papers were submitted in the local land registry o f f i c e . 6 0 The land was then in federal ownership and its tenants became territory tenants of the government. The properties were no longer in the tenants legal possession and they had to wait for the government to make good on 5 9 Feldman Elliot & Jerome Milch, Options on the Metropolitan  Fringe: Strategies of Airport Development. 1980, p. 224. 6 0 Feldman Ell i o t J. & Jermone Milch, The Politics of Canadian  Airport Development, Durham N.C. 1983, p. 62. 70 i t s promise of compensation. In fact, the fi r s t firm offers did not appear before June 1970, with same residents not receiving a written offer for more than 3 years after the Expropriation. 6 1 This delay in compensation for expropriation left thousands of families financial insecure and unable to start new lives elsewhere i f they chose to leave. The operational zone at Mirabel occupies 5,000 acres with a potential further 12,000 acres for airport development. In addition to these 17,000 acres, the federal government owns a Noise Buffer Zone of 79,000 acres surrounding the operational zone (Appendix 1 Map 2). 6 2 To appreciate this scale, the city of Montreal only occupies 43,000 acres of the Island of Montreal. Eventually the federal government had to form a management agency for the property. In December 1974, the Department of Public Works (DPW) became the land manager while the Ministry of State for Urban Affairs (MSUA) was the planning agency.63 MSUA also chaired the interdepartmental policy committee overseeing land use. After the financial negotiations were completed (the Ministry of Transport being compensated by DPW) the land was transferred to DPW in April 1979. The federal government had fragmented the management decision-making process by using the Ministry of Transport to operate the operational airport zone (17,000 acres), MSUA to do long range planning for the 6 1 ibid, pg. 62. 6 2 Feldman Elliot J. & Jermone Milch, The Politics of Canadian  Airport Development, Durham N.C., 1983, p. 72. 6 3 ibid, p. 75. 71 79,000 acre buffer zone and DPW to be the land manager of the entire property. In May 1982, 29,400 acres were disposed of in an effort to reduce DPW's debt load for this property. Discussions for a second international airport for metropolitan Toronto began in December 1968. In September 1975 the plans for i t were abandoned and the construction of Terminal 2 at Pearson was approved.64 The airport had been a political football between the federal and provincial governments for the entire period. Politicians argued for the airport on the grounds of; regional economic development (Ontario government's position), keeping the Mai ton community groups content with respect to no noise increase at Malton (Pearson International), and Ontario's share of federal development money with respect to the development occurring at Mirabel. None of the arguments were utilizing technical or demand data forecasting, nor did any of these arguments include the municipal acmiinistrations input. This i s a clear case of symbolic and ideological actions by the federal government winning out over the technical and statistical information. In Toronto's case the federal government's plan called for the expropriation of 18,000 acres of land for an operational zone. 6 5 The federal government did not intend to purchase the "noise land" as they had at Mirabel. A complex intergovernmental negotiations between Ottawa and Queen's Park had the province agree to purchasing same "noise 6 4 ibid, p. 79. 6 5 Feldman Elliot J. & Jermone Milch, The Politics of Canadian  Airport Development. Durham N.C., 1983, p. 89. 72 lands" for a proposed "airport city" and zoning the remaining property in the area in conformity with federal plans (Appendix 1 Map 3) . 6 6 This decision was only agreed upon after the Ontario government refused the Federal government's request to freeze temporarily several sites totalling over 250,000 acres until a final choice was made. As shown in Appendix 1 Map 3 and Table 1 to hold 250,000 acres in government possession would have been an area exceeding the entire metropolitan Toronto region by 100,000 acres. Even so, the 18,000 acres held by the federal government and the proposed "airport city" lands of the provincial government would have equalled an area approximately one quarter the size of metro Toronto i f completed. The expropriation of land for Pickering was met by a great deal of opposition by local residents, the Ontario government, and the airlines. Local residents, headed by the citizens group POP (People or Planes), were concerned about several aspects of the new airport; noise, the expropriation process, and the need for the airport to be located in Pickering. The Ontario government was concerned with who would pay for the infrastructure costs of highways, sewage, electricity, water, etc., to the remote site. These land use developments are within provincial jurisdiction and normally administered by the local municipality or Council. Pickering, being a rural municipality, did not have the tax base to fund such development. The federal government was lobbying the 6 6 ibid, p. 89. 73 provincial government to provide the funds necessary to put in the required infrastructure on a shared basis. In addition to this activity between levels of government, the airlines where not convinced that Mai ton (Toronto International) could not be modified to meet their needs. They would have to double their ground staff and equipment (ie. check-in, baggage, fuelling, etc.) i f Pickering and Mai ton were both operative. An expensive lesson had been learned by a l l airlines in the early 1980s operating in cities with dual airports (ie. Dorval -Mirabel Montreal, Dulles-National Washington D.C., JFK-LaGuardia New York, Edmonton International & Municipal Edmonton) and none cared to have i t happen again in Toronto. 2.7.2 Solution Two: Expansion of Airports. The second solution, airport expansion, maximized the land already in airport & aviation use. This increased concerns of nearby residences with respect to noise, safety and surface traffic congestion but did not seperate the airport activity from other land use activities as did Solution One. The following example of the Ministry of Transport's proposal to expand Vancouver International Airport with a third runway is -typical of problems relating to this second solution of solving airport congestion. In 1954, the federal government consolidated their holdings of 1,102 acres on Sea Island. In 1962 they paid the City of Vancouver $2.75 74 million for an additional 450 acres which included the airport i t s e l f . 6 7 By 1967 the federal government owned more than 2,000 acres on the island. In 1972 the federal government engaged in expropriating the remaining property on Sea Island, namely the cotimunity of Burkeville, for road access improvements. The expropriations were to be carried out under the new Expropriation  Act 1970 which required a public hearing. At this hearing SIRA (Sea Island Ratepayers Association) and the GVRD Planning Department testified that further study was required before airport expansion was carried out. The GVRD planners pointed out that same of the runway congestion problem could be alleviated by reducing the number of non-commercial flights at Vancouver International (in 1971 they accounted for 58% of the flights) and thereby delaying the need for a third runway. After intense public opposition to these massive public works projects, by either building new airports or large expansions of existing facilities, plus the amendment to the Expropriation Act requiring public hearings, Transport Canada decided that a third option must be explored, the "no-build" solution. Section 2.7.3 presents the third solution which is gaining in popularity in the 1980s. 2.7.3 Solution Three: The "no-build" Option. This solution required new ways to solve the airport saturation problems 5 7 Feldman E. & J. Milch, The Politics of Canadian Airport  Development Lessons for Federalism. 1979, p.116. 75 of over-crowded terminals and runways at peak periods. Canada has been slow to act on this option but in the U.S. and the U.K. airport authorities have altered their methods of management to incorporate this third solution. Both have altered their landing fee schedules to discourage general aviation traffic at major airports and developed pricing mechanisms to penalize peak users. 6 8 This did help alleviate airside congestion for a brief period (at major U.S. metropolitan airports) but, the number of passengers utilizing existing air facilities has continued to increase through the use of wide-bodied jets, and increased load factors on scheduled flights primarily from the hubbing system being adopted by most airlines (Section 2.4). As a result, urban authorities must s t i l l provide access to the airport for more people, and neighboring communities suffer from increased surface traffic. The next section provides a summary of lessons learned from the Canadian experiences through the evidence presented in Sections 2.1 to 2.7 of this thesis and their effects on airport management in Canada. 6 8 Feldman El l i o t & Jerome Milch, Options on the Metropolitan Fringe: Strategies of Airport Development. 1980, p. 231. 76 2.8 ConclusicgTs: Lessons Learned from Canadian Experiences. 2.8.1 Canadian Early Aviation History 1900-1960. There are three main lessons to be learned from Section 2.1 on Canada's early aviation history. First, the government did not create legislation which clearly and concisely dealt with the operation and management of airports. Airports appeared as secondary items on air navigation legislation or as make-work projects during slow economic cycles. Second, the federal government1 s purchase of major airports in the 1950s and 1960s, to meet ICAO commitments, initiated the spending cycle for maintaining international standards at many Canadian airports. Third, the airport expenditure cycle is parallelled by the infrastructure expenditures required by suburban areas of the major Canadian cities. This situation means none of the municipalities will ever willingly resume responsibility of managing the major airports unless funding is established from a source other than municipal taxes. 2.8.2 Government Aviation Policy 1960-1986 Section 2.2 outlines four major developments in government aviation and airport policy. First, the federal government's attempt at seperating airport noise and other environmental problems from populated areas, by building environmental airports, was physically successful but created large operational and finanical problems for the Ministry of Transport. The expropriated propertied was mishandled by an untrained and understaffed c i v i l service. 77 Second, there has been almost universal inadequacy in Canada with coordinating federal government aviation development with provincial land use policies. The only exception has been the Airports Vicinty Proctection Area (AVPA) Act as part of the Alberta Planning Act. The AVPA allows municipal planners to coordinate land use activities with airport development. Third, the Ministry of Transport has shifted i ts policy emphasis from supplying airports as a service to making that service economically efficient and more self-reliant. This policy shift has not been accompanied with policies to signicantly change the management structure of the Minstry. Without such policy the Ministry of Transport, like any government department, is s t i l l geared for supplying a service. Fourth, the liberalization of airline regulations and the creation of airline hub-&-spoke operations have both exacerbated the demands for airport access at a time when the ministry has yet to adequately acxomraodate the growth of the 1970s. 2.8.3 Canadian Airport Management Structure. As outlined in Section 2.3 the AAG in its present form varies only slightly from the seventeen year old CATA structure i t replaced. It will be just as ineffective as CATA was with managing airports in the late twentieth century because of its highly centralized bureaucratic structure. 2.8.4 Canadian Aviation Growth & Technological Change. 78 Section 2.4 outlines the interactions of technological change, passenger growth trends, airline size, the method of airline operations, and there effects on the operation of Canadian airports. A l l these factors must be correctly analyzed by airport management to anticipate future demands on the airport. At present many of the major airports in Canada are not adequately equipped to manage the newest of jet and commuter aircraft, resulting in gate, runway and airway congestion. The rapid growth in passenger traffic between 1960 and 1979 was never fully accommodated. In addition to this, the daily peaking of passenger movements, because of hub-&-spoke operations, have continued to emphasize present airport management's inability to design and plan the necessary facilites for aviation in Canada. 2.8.5 Canadian Airport Financing. As stated in Section 2.5 the method of financing Canadian airports is one of the cr i t i c a l problems with airport management. The present structure allows no private funds for airport development. The process of obtaining funds is highly centralized and political in nature. The Minister of Transport must balance project requests from a l l divisions of the Ministry and, in turn, Treasury Board must balance project requests from a l l Ministries. In this process airport development plans, which are dependent on economic and social conditions, are caught up in political developments which have nothing to do with air transportation. 2.8.6 Canadian Airports: Political Suasions Impact. 79 In Section 2.6 this thesis examined political suasion with regards to different attributes and their impact on airport management decisions in Canada. It was concluded that the ministerial management method is far too often influenced by several attributes of political suasion. If the influence of political suasion on the bureaucratic structure of the Ministry of Transport were removed or reduced, and the airport administration made more responsive to local needs, i t would be more effective in managing airports. 2.8.7 Canadian Airports: Balancing Community & Management Goals. Section 2.7 revealed several reasons for the failure of past attempts by the Ministry of Transport to balance airport and community goals. The construction, of new airports, which were far removed from other urban activities and residential neighbourhoods, was unsuccessful because of the lack of provincial cooperation (ie. road, water, sewage developments) and manpower to administer the expropriated property. The development of new airports also incurs large expenditures for a l l Canadian taxpayers. The second solution of expansion of existing airports was unsuccessful under the AAG because of the lack of consultation with local municipalities on issues of noise pollution, traffic congestion and safety. The third attempt at creating a balance between airport development and community goals has yet to be adopted in Canada. The solution of adjusting the existing facilities to maximize their use (ie. peak period 80 pricing, new lease agreements) would satisfy some cxramunity goals (ie. road congestion, reducing public funds needed for airport expansion) in the short term. In the long run this solution does not change the structure of management therefore when AAG decides that the maximum use of the existing structure has been reached, i t can initate the expansion without being bound by the concerns of local municipalities or interest groups. 81 CHAPTER THREE: AMERICA'S EXPERIENCE IN AIRPORT MANAGEMENT 3.1 American Aviation Early History 1900-1960. 3.1.0 United States 1900 - 1930: Early Beginnings. American aviation began in Kitty Hawk North Carolina with the Wright Brothers in 1903.1 The early American pioneers of aviation had similar limited sources for revenue as aviators in Canada; surveying, crop dusting, and barnstonrdng. Herbert Hoover proposed that; by fostering the development of c i v i l aviation, the government would be producing a large body of skilled pilots, mechanics and aeronautical engineers, as well as a vigorous air force and engine manufacturing industry ...2 To help provide the commercial incentive for the advancement of c i v i l aviation the Airmail Act 1925 (the Kelly Act) authorized the Post Office Department to contract with air carriers to carry domestic mail. 3 During 1926 Congress debated how the future air commerce industry should be managed. Congress concluded that the government would be responsible for initiating airways, lighting and navigational aids, emergency vehicles and weather reports, and similar to seaport facilities, municipal authorities should control and operate the airports. 4 These initiatives and divisions of responsibility were enacted in the Air 1 Wiley John R., Airport Administration. Eno Foundation for Transportation, Inc., Westport Conn., 1981, pg. 3. 2 Smith Donald J. et al., Airport Planning; and Management, Wadsworth Publishing Company, Belmont Ca., 1984, p. 233. 3 Ibid, p. 234. 4 Ibid, p. 235. 82 Commerce Act 1926. 3.1.1 United States 1930 - 1939: The Depression Years. During the Depression, the American government's committment to construct and maintain the airways was accomplished by the Bureau of Lighthouses of the Department of Commerce. By mid-1933, sixty-eight radio communications stations serving the federal airway system had been placed at intervals of 200 miles. During the 1930s the development of airports was not as systematic. Airport development was dependent on municipalities (as enacted in the Air Commerce Act 1926) and therefore was slow in developing since most municipalities saw no benefits in creating airports at the time. The catalyst for airport development occurred in 1934 with the introduction of the DC-3 aircraft. For the fi r s t time, there was an aircraft which could make money in passenger service as opposed to hauling mail. It was also the fi r s t time that air-carrier rates could be reduced and become competitive with the railroads and bus companies. To accomodate the DC-3, a municipality needed paved runways, measuring 3,500 feet in length. In 1938 only 36 of the existing 1,907 airports had paved runways long enough to handle the DC-3. At this point the United States federal government reassessed their regulations and standards for the aviation industry. Regulations and licensing of the aviation industry was restructured 83 under the Civil Aeronautics Act 1938.5 The Civil Aeronautics Act incorporated three major changes: 1) abolished the (Dammerce Department's Bureau of Air Commerce and transferred its responsibility to the new, independent Civil Aeronautics Authority (CAA), 2) created the Air Safety Board (in the CAA) as an independent safety board for investigating air accidents, and 3) created the position of Administrator of Aviation. In 1939, one of the i n i t i a l tasks of the CAA was an inventory of the nation's airports so that a recommendation could be presented to Congress seeking federal government participation in the construction, development, and maintenance of a national system of airports. 3.1.2 United States 1939-1945: World War II. In 1940 Congress appropriated $40 million for the construction and development of up to 250 airports that were vital for national defense during World War I I . 6 The Second World War greatly accelerated the overall growth of c i v i l aviation by creating tremendous technological advances (ie. DC-4 & DC-6) and demonstrated new uses for aircraft (ie. cargo services). With regards to planning and operations of the aviation industry i t was centralized even more, with the CAA emerging from the war with the additional responsibility for air traffic control of a l l airways. The intent of the Transportation Act 1940 was to focus on a policy for a national transportation system of a l l modes. It recommended the coordination of a l l c i v i l forms of transport in order to guide the large 5 Ibid, p. 237. 6 Smith Donald J. et al., Airport Planning and Management, Wadsworth Publishing Company, Belmont Ca., 1984, p. 238. 84 federal investments in transportation, under a new national agency. This agency was never created for two major reasons; 1) fear by Congress that too much of the policy making powers would be concentrated in the executive branch, and 2) the agency would be dominated by the very strong railroad constituency.7 The Transportation Act 1940 did establish two important air authorities: the Civil Aeronautics Board (CAB), composed of five members vested with legislative and judicial authority and responsible to the president; and the Civil Aeronautics AAninistration (CAA), which was responsible for safety regulation. This agency was the predecessor of the Federal Aviation Agency (FAA). The Federal Airport Act 1946 increased the size of the airports program to $500 million over seven years. This was done more for military strategic reasons then concerns for promoting c i v i l operations. At this time concern was expressed by government officials that the development of a healthy aircraft industry and supporting airport system was essential to protect America in an age of aircraft and atomic bomb technology.8 3.1.3 United States 1946-1959: Airports & Suburbanization After the Korean War civilian aviation activities grew quite rapidly as a result of higher incomes, more leisure time and longer vacations for 7 Ibid, p. 238. 8 Smith Donald J. et al., Airport Planriim and Management, Wadsworth Publishing Company, Belmont Ca., 1984, p. 240. 85 Americans.9 At this time the development of the jet aircraft became the main focus of the American aviation industry (ie. Boeing 707 & Douglas DC-8, Appendix 1 Table 1). The Boeing 707 was introduced to passenger service on October 26 1958, marking a turning point in air passenger growth demands that would revolutionize the airline industry and the demands for airport services. In approximately f i f t y years the aviation industry had grown from a canvas and twine aircraft for one (the pilot) to moving a planeload of hundreds of people at 600 miles per hour, coast to coast, in under five hours. Aircraft became the prime movers of American travellers over distances of more than 200 miles. This new generation of jet aircraft, required greatly improved airport facilities; longer runways, better lighting, instrument landing aids, and greater r e l i a b i l i t y from both radar and air-to-ground communications. In addition to these problems, by 1958, a growing segment of the aviation community was searching for ways that would unite c i v i l and military interests and improve administration of the technical obstacles of air traffic control. The Federal Aviation Act  1958 addressed these problems by giving the following responsibilities to the FAA: 1) control of American airspace, 2) the promotion of American aviation at home and abroad, 3) and the development of a common civil-military system of navigation and air traffic control. 1 0 One of the FAA's most difficult tasks was that of developing a modern airport and airways system to acxxsmmodate the new jet technology of the 9 Ibid, p. 240. 1 0 Smith Donald J. et al., Airport Planning and Management, Wadsworth Publishing Company, Belmont Ca., 1984, p. 241. 86 707 and DC-8, and the propeller traffic (DC-6, DC-7, Viscount, Vanguards, Convairs, etc.). American cities in the 1950s also faced large expenditure for infrastructure expansions (ie. freeways, sewage, water systems and public transit). The rapid growth of the suburbs resulted in surrounding major airports with l i t t l e thought given to problems (ie. noise and safety concerns) that would arise from such actions. The monitoring of American airspace and the promotion of aviation at home were part of the FAA's responsibility, therefore they had to advise the federal adndnistration on how to resolve these growing conflict situations. 3.2 American Aviation Policy 1960 - 1986. 3.2.0 Department of Transportation Act 1966. Between 1963-67, the number of aircraft in operation in the U.S. increased by 33.8%, air traffic control towers handled 54% more take-off and landings, and the number of enplaned passengers nearly doubled. This was also the era of many new jet aircraft entering passenger service (ie. DC-9, DC-8-60, 707-300, BAC-111, VC-10, 727-100, 737-100 see Appendix 1 Table 1). A l l of these factors contributed to President Johnson appointing a twelfth Cabinet post, provided by the Department of Transportation Act  1966 and headed by a Secretary of Transportation. The new act reorganized the FAA to be accountable to the Secretary of 87 Transportation. 1 1 In conjunction with the growing needs and complexity of airports, the "airport authority" method of management in the United States was growing in popularity. It worked well on the local level because of it s ability to make decisions quickly and its inclusion of the airlines and other airport users in these decisions. Speed and local participation were not enough, funds were required to alleviate the back log of air carrier demands from the 1960s for; larger waiting lounges, more gate space and improved navigational radar systems. This task would require national assistance. 3.2.1 /Airport and Airway Development Act 1970 (AADA). The Airport and Airway Development Act 1970 (AADA) was a national response to these congestion problems and concerns for safety. A l l the american airports examined in this thesis experienced substantial passenger & aircraft movement growth in this period (Appendix 2 Graphs 1-8). 3.2.2 Airport and Airway Development Revenue Act 1970. The Airport and Airway Development Revenue Act 1970 (in conjunction with the AADA) contained several new taxes to aid in the construction and improvements of airports. They were: i) seven cents per gallon fuel tax for aircraft & non-commercial traffic, i i ) 8% passenger ticket tax, i i i ) 5% cargo tax, iv) $25 annual user fee, a l l aircraft, and Ibid, p. 242. 88 v) two cent per lb. Piston and 3.5% per lb. turbine fee (if aircraft over 2500 l b ) , 1 2 This legislation expired in September 1980 and was replaced with the /Airport and Airway Improvement Act 1982 (AAIA). In conjunction with the federal funding of airports and airways (AADRA & AAIA) in the 1970s and 1980s, new legislation to deregulate the airline industry (1978) stimulated airport development requirements. 3.2.3 American Airport Development and Environmental Concerns. In 1958 President Eisenhower approved a 10,000 acres site in a agricultural area in Virginia's Loudoun & Fairfax counties for the new Dulles International Airport. 1 3 This new airport was to manage the new large jets and increased traffic to the nation's capital that could not be aaxjmmodated at Washington National. It was opened in November 1962. Dulles was the f i r s t of what were called "environmental sensitive" airports in North America. This name was derived from the fact that the large tracts of land were used as a buffer zone to reduce conflict between airport activities and other people-oriented land uses (ie., residential neighbourhoods and business communities). This buffer zone was created to protect other peoples environment with respect to noise pollution, safety concerns and traffic growth. This same approach would be used in Dallas five years later to create the Dallas/Ft. Worth 1 2 Smith Donald J. et al., Airport Plarininet and Management, Wadsworth Publishing Company, Belmont Ca., 1984, p. 243. 1 3 Stroud John, Airports of the World, 1980, p. 557. 89 Regional Airport and in Canada eight years later to create Mirabel. The airport has two 11,500 f t runways and one 10,000 f t runway enabling i t to handle the large commercial aircraft such as the 747, L1011, DC-10, and Concorde. Dulles was not able to draw much traffic away from the conveniently located National airport which lead to under-utilization of Dulles until the 1980s. In Texas, Dallas/Ft. Worth Regional Airport is one of the few other "environmental airports" built in the 1970s. It only opened to traffic in 1974 but the idea of a single airport for the Dallas/Ft. Worth region goes back to 1927.14 Both Dallas and Fort Worth established airfields in the late 1920s with expansions to both in the 1930s. The driving force behind airports at this time was local municipal management which ran counter-productive to cooperation between neighbouring municipalities. In May 1961, the U.S. Federal government ordered hearings with respect to creating a single airport for the region. By 1965 the Dallas-Ft. Worth Regional Airport Board was organized and planning for a single airport began.15 In 1968 an agreement to build the airport was reached by a dual-county authority. The authority method of management because of its flexibility was appropriate and proven successful in this case. The 18,000 acres site chosen is located half-way between Dallas and Ft. 1 4 ibid, p. 421. 1 5 ibid. p. 421. 90 Worth and i s well served by existing highways. Large areas have been planned for aircraft maintenance, industrial air parks, a world trade center and the terminal/hotel complex. When the airport is completed i t will extend nine miles from north to south, and about eight miles from east to west. 1 6 The entire complex to date has cost in excess of $500 million to construct. Traffic trends are noted in Appendix 2 Graphs 3, 4, 7 & 8. The development of environmental airports in the 1970s was believed to be a straightforward solution to the noise and traffic problems. By simply removing the airport from other urban activities and placing i t on it ' s own large tract of land the problem was solved. Unfortunately, this is not possible in every major urban area, since large areas of property are not available plus, the expense of purchasing the property and the required infrastructure may not be justifiable. Other solutions for balancing airport activities with other urban activities had to be found. 3.2.4 American Domestic Airline Deregulation - 1978. On October 24 1978, only twenty years after jet service was introduced to American and world markets, President Carter and Congress approved Public Law 95-504 or the Airline Deregulation Act 1978.17 This act was intended; to amend the Federal Aviation Act of 1958, to encourage, develop and attain an air transportation system which 1 6 ibid, p. 421. 1 7 Smith Donald J. et al., Airport Planning & Management. Wadsworth Publishing Company, Belmont Ca., 1984, p. 250. 91 relies on competitive market forces to determine the quality, variety, and price of air services and for other purposes.18 (emphasis added by author) The deregulation act only applied to domestic travel within the United States. Although this act greatly increased flexibility for airline operations, there were same restrictions placed on the American carriers which directly affected airport operations. First, the Civil Aeronautics Board (CAB) was to encourage air services to move from major urban airports to secondary or satellite airports, where consistent with regional airport plans of local and regional authorities. Second, the CAB was to ensure, where appropriate, continued and continuous service to small communities and isolated areas by means of Federal subsidy i f necessary. This subsidy was designated only for a 10 year period ending in 1988. After this, less expensive carriers will have to be established or service will be eliminated. Third, entry and exit for the airlines from serving cities was made much more flexible. In both cases, a rush by many airlines for a particular city (ie. Dallas, Denver, Atlanta as a few examples) or i f a city i s dropped by several airlines at once, this creates wild fluctuations in the demand for the airports in these cities. This fluctuation results in financial uncertainty for airport management and 1 8 Ibid p. 250. 92 reduces management's ability to plan the airports future with certainty. 3.2.5 Airport and Airway Improvement Act 1982 (AAIA). The Airport and Airway Improvement Act 1982 provided two main elements of federal aid for airport development; a multi-year authorization, and adequate levels of funding. 1 9 The U.S. by 1984 had 15,000 landing facilities but only 300 were served by major air carriers. 2 0 These three hundred facilities handle the majority of the traffic and require large expenditures in navigational and airways facilities, as well as properly equipped reliever airports. The AAIA legislation provided for a $6.32 billion modernization plan for the air traffic control system in the United States which focussed on these major airports. 2 1 The 1982 legislation also committed $4.8 billion over a five-year plan for airport development shared in the following manner; * 50.0% to primary (hub) airports, * 27.0% to general-aviation facilities, * 12.5% to state governments for airport use * 10.0% to reliever airports, and * 5.5% to commuter (small commercial service) airports. 2 2 This division allocated 60% of the funds ($2.9 billion) to the primary airports and their relievers. The federal government had acknowledged that a well planned and funded system of primary airports and their 1 9 Ibid, p. 243. 2 0 Ibid p. 245. 2 1 Ibid p. 246. 2 2 Ibid p. 247. 93 relievers could reduce hazardous situation (ie. airway congestion) and congestion problems (ie. terminal capacity). The increased commercial use of the reliever airports also improved the overall efficiency of investments in the airport/airway system as a whole. Although airport management in the United States operates using traditional business principles, its main goal IS NOT to maximize share holders wealth. Since i t is the function of an airport to provide a service, the financial manager at the airport is concerned with a COST RECOVERY STRATEGY rather than a PRDFTT-MAKING STRATEGY.23 The American federal government's input focussed mainly on providing extra funds for navigational and safety concerns over the past twenty years (AADA, AADRA and AAIA). Federal policy which attempted to offer management input have lead to expensive facilities, and disrupted services (environmental airports and the Airline Deregulation Act). Before examining further the impact of U.S. airline deregulation on airport development, a brief outline of the management methods of each airport and of the volumes of traffic would be useful. 3.3 American Airport Management Structures. 3.3.0 Historical Choices. In this thesis three main airport management systems in the United 2 3 Blair Baldwin, The Management Structure of Airport Operations in canada and the United States. Centre for Transportation Studies, UBC, Vancouver, 1980, p. 51. 94 States are examined; the municipal department, the municipal commission, and the airport authority. This latter method is not to be confused with the Canadian airport authority system developed in the late 1980s. The American airport authority i s the original model and has substantially more individual power and flexibility than i t s Canadian namesake. These three management methods have created a wide variation in how airports are managed in the U.S. For example; there are combined seaport-airport authorities such as the New York and New Jersey Port Authority (NYNJPA), city departments with a Division of Aviation such as Denver-Stapleton Airport, city Councils with a Department of Aviation such as Chicago's O'Hare, and Los Angeles International is an example of a city airport commission. 3.3.1 The Municipal Department and The Municipal Commission. The municipal department and municipal commission approaches have the common root of being responsible and accountable to the elected municipal officials. However there are variations in reporting methods which make them distinct from one another. This section analyzes both methods simultaneously to highlight their major differences and similarities in operation. Where an airport i s managed by a municipality, there are three main forms of acMinistration; 1) authority is delegated to an already existing department of the municipal government, 95 2) creation of a new department to manage the airport, or 3) authority is placed in an independent airport <ximmission. The f i r s t two forms are established using the same procedures for any municipal department. The third type of management, airport commissions, requires additional procedures to be activated. The Board of Commissioners are appointed by the elected municipal mayor. The number of commissioners and the composition of the Board depends on how the municipality establishes the commission. Commissioners can be businessman, aviation officials, bureaucrats or elected officials. Once an airport commission is established, the Board of Commissioners then selects the airport manager, who is directly responsible to the commission, not any of the municipal departments. It was evident as early as the 1940s that any advantages of combining airport administration with other city departments had tended to disappear as the complexities of airport operations increased. The weaknesses of being part of another city department or as an airport commission were identified as: i) Authority and responsibility are often divided among too many individuals or groups, and decisions are thus delayed; ii ) the route of authority is often too long and too circuitous; i i i ) airport activities are commonly subordinated to the major activities of the department having i t in their charge; and iv) despite incidental similarities between airport operations and the other activities of certain city departments, i t will be found in nearly 96 every case that the essential management requisites are basically different. 2 4 Separate airport departments have been created in many American cities because of the realization that the problems involved and skills required in airport acmunistration are quite different from existing departmental skills. For example, Chicago O'Hare International Airport is owned and operated by the City of Chicago through the Chicago Department of Aviation. Atlanta, Denver and Dallas airports are also city-owned. The chief disadvantage of operating the airport even as a separate department is that in the complexity of managing a larger city's government, the airport department may suffer at the expense of budget and time demands on Council for other issues (ie. Transit, roads, schools). 3.3.2 The American Airport Authority. The third type of airport management in the U.S. is the "authority" method. This form of airport management is found in the United States as well as many other nations. The management structure for the airport in the multi-purpose authority is essentially no different from that of a single airport authority. The Port of New York Authority created in 1921, was the f i r s t American organization of this type. 2 5 Since then the authority has been a common method for management of transportation facilities, examples are; the Port Authority of New York & New Jersey 2 4 Frederick, John H., Airport Management. 1949, p. 134, quoting, Lynn L. Bollinger, Alan Passen & Robert E. McElfresh, Terminal Airport Financing and Management (Cambridge, Mass; Graduate School of Business Acmunistration, Harvard University, 1946), chap. x i i i . 2 5 Frederick, John H., Airport Management. 1949, p. 136. 97 (NYNJPA) operates J.F. Kennedy, LaGuardia and Newark in the New York Metropolitan area, the Port Authority of Seattle/Tacoma operates Seattle-Tacoma International airport and the newly created Metropolitan  Airport Authority of Washington D»C. operates Dulles & National airports. The authority method has several advantages in its organizational behaviour. First, i t is an independent corporate agency. It can be composed as an agency with members from two states, such as the NYNJPA, or by one or more municipalities (ie. Seattle-Tacoma) or of multiple counties. The authority is structured similarly to a corporation rather than that of a state or municipality organization. This allows for more decisions to be decentralized and therefore to act more quickly on a specific problem. Second, i t i s less political in operation. Once members are selected for the Board, usually without campensation, they operate independent of the political organization. The number of commissioners and the composition of the Board depends on how the State legislation establishes the authority. Each authority's Board of Commissioners, oversee the operations of the airport. 2 6 This reduces a tremendous amount of interference by matters that are not directly or indirectly a consequence of airport operations and development. Third, the Board is responsible for hiring the Executive Director of the 2 6 Blair Baldwin, The Management Structure of Airport Operations in Canada & the United States. Centre for Transportation Studies, UBC, Vancouver, 1980, p. 43. 98 airport. The Executive Director and his staff are responsible for the operation of the airport with the Board's approval on the following •types of programs; the annual operating-maintenance budget; the capital improvements program; the c i v i l service program-swages & salaries; purchase or contracts in excess of $100,000; a l l contracts for professional services; airport master plans and land use plans; annual leases in excess of $50,000; and a l l disposition of real properties. 2 7 The NYNJPA is an example of the organizational structure of a typical airport authority in the United States (see Appendix 2 Organization Chart 1). This example is representative of the authority structures used for this thesis. In this type of structure the business acmunistration, aviation planning, aviation economics and marketing division as well as the human resources unit, and public service division are part of the central organization. Each airport manager reports directly to the deputy director of aviation of the Port Authority. Each airport has its own individual organizational structure as well. Each airport manager draws upon the central functions listed above for policy and support as required. Since the NYNJPA encompasses several transportation activities, such as bridges, tunnels, ship terminals and railways, i t has specialized support in the areas of engineering, real estate properties, security and legal consultation. This provides a degree of specialization and expertise to the multi-purpose authorities that does not exist at a single function authority. 2 7 Ibid, p. 43. 99 Fourth, the authority must operate without the benefit of local tax dollars, therefore management policies are required to ensure that a l l operating expenses are covered by operating revenues. Capital improvement expenditures are covered by bond issues and leasing agreements with the major airlines for that particular airport. This will be discussed in more detailed under financing of the airports in Section 3.5. Fifth, the authority operates as a centralized organizational system; "possessing operational independence with internal staff capable of providing a l l services, including construction of capital improvements."28 The authority also possesses its own mandate to set policies in accordance with its goals of prwiding efficient service and setting charges so that the airport breaks even. Sixth, i t i s adaptable to a regional approach, which makes i t particularly useful in the development of interstate, joint municipal, or joint municipal and county projects (ie. Dallas/Ft. Worth Regional Airport i s jointly operated by the two cities as a regional development project). The authority method has three components to its legal framework; state legislation, the airline use-agreement, and the bond indenture. State legislation creates the authority as a legal public corporation but 2 8 Blair Baldwin, The Management Structure of Airport Operations in  Canada & the United States. Centre for Transportation Studies, UBC, Vancouver, 1980, p. 43. 100 retaining no taxing power. Legislation also establishes the authority as a financially independent public corporation, which means i t raises it s own capital through debt or equity financing in private markets. The corporation also has the right to sue and to be sued. The airline use-agreement cavers the broad area of overlapping operations between the authority and the air carriers. The agreement determines the: 1) terms & conditions governing airlines use of an airport, 2) methods for calculating rates airlines must pay for facilities & services, and 3) identify airlines' rights & privileges, for example, the right to approve or disapprove any major proposed capital development projects. 2 9 These use-agreements are an integral component of the financial procedures of the American airports. Section 3.5 of this study will examine these procedures in more detail. 3.3.3 The Federal Component of American Airport Management. The major access to airport management by the federal government in the U.S. is the Airport and Airway Revenue Act. This Act is a federal taxing statute that imposes various forms of taxes on users of airports. This revenue is placed in the Airports & Airways Trust Fund (AATF). The Airport Airway Development Act establishes the principles for apportionment of the revenue in the AATF. Money is granted under the Federal Planning Grant Program for Airport Master Plan Studies and under the National Airports System Plan (NASP) 2 9 Congressional Budget Office, Financing U.S. Airports in the  1980's. Congressional Budget Office, Washington D.C., 1984, p.18. 101 to develop a 10 year nationwide plan for airports. Airport construction that conforms to these plans is granted federal money under the Airport Development and Aid Program from the AATF. As outlined in Section 3.5 this i s not the major source of funds for the airports. Each airport authority i s delegated the power to finance its own projects using the bond market and manage its operations. 3 0 Moreover, they are expected to be self-sustaining. 3 1 In the United States prior to 1986, federal government ownership was limited to Washington National and Dulles International airports. As explained in Section 3.3.1 and 3.3.2 of this thesis the remaining majority of public airports are owned by counties, cities or an authority created jointly by the city and county.32 3.4 American Aviation Growth & Technological Change. 3.4.0 American Airports and Technological Advancements. The second wave of increased passenger movements occurred in the U.S. in the 1960s and 1970s (Appendix 2 Graphs 1-4). At the same time introduction of the wide-body aircraft (747, L1011, and DC-10) called for redesigned terminals, and strengthened runways and tarmac areas. These new aircraft, in addition to the growing number of aircraft in 3 0 Baldwin Blair, The Management Structure of Airport Operations in  Canada and the United States. Centre for Transportation Studies, UBC, Vancouver, 1980, p. 68. 3 1 Ibid, p. 68. 3 2 Hagglund M.G., Task Force on Airports Management Appendix IV. Transport Canada, Ottawa, 1979, p. 1. 102 use, added further pressure to the congested airports and airway system. The following is a brief l i s t of the actions by airport management at the case study airports to alleviate problems introduced by technological change and subsequent growth in traffic over time. Atlanta's present airport site was selected in 1926 by a committee appointed by the mayor. It was originally only a 287 acres s i t e . 3 3 During the 1950s temporary terminals were constructed to handle the growth in traffic with a new terminal opening in May 1961.34 In 1977 a programme began which cost $280 million to complete the airport complex. Phase I was completed in 1980 and Phase II in 1985. In Chicago in 1946 when Orchard Place Airport (01 Hare's original name) was declared surplus by the War Assets Administration, the City of Chicago purchased i t and adjacent lands. 3 5 The airport was officially opened to domestic traffic in October 1955, but did not attract significant traffic away from Midway until the introduction of large jet aircraft, which could not be accommodated at Midway airport. A new larger terminal complex was completed in March 1963 and dedicated by President Kennedy.36 In the mid-1970s further expansion of runways, terminals and cargo facilities occurred at O'Hare. At present, O'Hare appears to be the f i r s t airport headed for handling more than 50 million passengers a year (Appendix 2 Graph 3). 3 3 Stroud John, Airports of the World. 1980, p. 390. 3 4 ibid, p. 391. 3 5 Stroud, John, Airports of the World. 1980, p. 409. 3 6 ibid, p. 409. 103 The Los Angeles International Airport site began as a private landing field by a Canadian, William M. Mines, in the 1920s.37 The City of Los Angeles interested in profiting from the air mail contracts being awarded by the Federal government, through the Air Mail Act 1925, leased Mines Field in 1926.38 In June 1930, Los Angeles Municipal Airport was officially opened. In October 1937 the City purchased the airport for $2.24 million and extensive improvements were made possible by funds made available under the Works Progress Administration (WPA) in 1938.39 This was to upgrade the facilities to acxxsmmodate the new DC-3 aircraft. In May 1945, a $12.5 million bond issue was approved for purchase of 1,860 acres needed for a west extension of the east-^west runway to accommodate the new larger aircraft (DC-4 & DC-6).40 In June 1956 a $59.7 million bond issue was needed to development the runways for jet a i r c r a f t . 4 1 New "jet age terminals" were constructed in 1961 and 1962 and by the end of 1978, after experiencing heavy increases in passenger volumes from 1960-75 (Appendix 2 Graph 7), the airport cxramissioners approved $535 million for terminal expansion to provide capacity for 40 million passengers a year. 4 2 These expenditures established Los Angeles airport in its present physical layout. 3 7 Stroud John, Airports of the World. 1980, p. 464. 3 8 ibid, p. 464. 3 9 ibid, p. 465. 4 0 Stroud John, Airports of the World. 1980, p. 466. 4 1 ibid, p. 466. 4 2 ibid, p. 466. 104 The Port Authority of New York & New Jersey (NYNJPA) is responsible for J.F. Kennedy (JFK), LaGuardia and Newark airports in the New York Metropolitan area. Each airport was started separately by their respective municipalities. The earliest of the three airports in the region was Newark Airport in the City of Newark in New Jersey. In 1928 the city purchased 68 acres to construct a municipal aerodrome. At the end of WW II i t had expanded to occupied 1,400 acres. 4 3 In 1935 New York's Mayor Fiorello LaGuardia began a search for a site for a major airport. In 1929, he chose the privately owned Glenn H. Curtiss Airport, situated only eight miles from downtown Manhattan.44 It was 105 acres with three runways a few hangers and a seaplane base. In 1937 i t was approved to be developed as a Municipal Airport and President Roosevelt approved the project for WPA funding the same year. The plan was to increase the size of the airport to 558 acres of which 357 acres had to be man-made.45 The airport was opened to traffic December 1939. The entire project of land-fill, runways, terminals and air tower cost $40 million. 4 6 By the end of 1941 the City of New York was planning a 1,200 acre cargo airport at the present JFK site, same 15 miles from downtown Manhattan. The cargo airport was never built but by 1945 the project had grown into 4 3 ibid, p. 497. 4 4 Stroud John, Airports of the World. 1980, p. 492. 4 5 ibid, p. 494. 4 6 ibid, p. 494. 105 a 4,900 acre site and by 1947 had cost the city $60 million. 4 7 In June 1947, both JFK and LaGuardia were leased to the NYNJPA for future development and operation. 4 8 In the following year, March 1948, Newark was leased to the NYNJPA as well. The NYNJPA had a great deal of work to accomplish in the late 1950s at these three airports to meet the growing demands for airport facilities. By April 1964 the Port Authority had built a new runway and a new terminal complex with two-level roadway and parking spaces for 5,000 cars at LaGuardia. In March 1966 the extensions of both runways enabled LaGuardia to accommodate jet aircraft. In only 32 years, from 1947 to 1979, the Port Authority invested over $228 million in LaGuardia alone. 4 9 In the years 1952-1960 the Port Authority built at Newark; a 7,000 f t . runway, a terminal building and a control tower. By 1963 to manage the growing traffic (Appendix 2 Graph 5) the Port Authority decided to create an entirely new terminal complex at Newark on its enlarged 2,300 acre s i t e . 5 0 The estimated cost of the development was $200 million. 5 1 Two of the three terminals were opened in September 1973. At J.F. Kennedy, New York's designated international airport, planning 4 7 ibid, p. 487. 4 8 Stroud John, Airports of the World, 1980, p. 488. 4 9 Stroud John, Airports of the World. 1980, p. 495. 5 0 ibid, p. 498. 5 1 ibid, p. 498. 106 for the new terminal complex began in 1953.52 In 1954 i t was decided that a centralized terminal would not be used and opted instead for a series of terminals. The f i r s t terminal, the International Arrival & Airline Buildings, was completed in 1957 at a cost $30 million. 5 3 These buildings were doubled in size in 1973 to manage the growth in traffic (Appendix 2 Graph 5). In September 1959 United opened their terminal, Eastern in October of the same year, American Airlines and PAN AM in 1960 and the TWA and joint Braniff/Northeast/Northwest terminals in 1962. The final two terminals for National Airlines and joint BOAC (now British Airways)/Air Canada operations were completed in the mid-60s completing the terminal complex as i t exists today. In Seattle, Washington the city's present airport site of 906 acres was chosen in 1944 and opened as the Seattle-Tacoma airport. By 1949 i t had a permanent terminal and its runway lengthened to acxxmmodate the largest aircraft (DC-4 & DC-6) of the 1940s.54 From 1969-72 Sea-Tac International Airport, as i t is now known, underwent large scale development to meet traffic demands (Appendix 2 Graph 7). Two parallel runways and the existing terminal complex and underground people-mover system were completed to acxxsrnmodate the larger aircraft and passenger loads. 5 5 By 1972 i t had expanded to occupy its present 2,000 acres. In Washington D.C., Washington National and Dulles were the only two 5 2 ibid, p. 488. 5 3 ibid, p. 490. 5 4 Stroud, John, Airports of the World, 1980, p. 542 5 5 ibid, p. 542. 107 federally operated airports in the United States. Washington National /Airport was opened in 1927 and merged with Hoover Field in 1930 since operating two airports side-by-side was obviously dangerous and inefficient. Hoover Field is now the site of the Pentagon. The present Washington National Airport was chosen by President F. Roosevelt in September 1958, after nearly 10 years of debate on where i t should be si t e d . 5 6 Funds were available from the WPA and Public Works Aclministration, plus the Civil Aeronautics Act 1938, which gave the Federal Government permission, far the first time, to construct and own commercial airports. The airport was opened to traffic in June 1941 with four runways. In November 1950 major expansion took place at the terminal and again in 1955 to expand the terminal and runway layout to its existing pattern. In November 1959 the FAA banned a l l jet operations at Washington National but in April 1966 opened i t again to twin and three-engine small jet aircraft (ie. DC-9, 727, 737). 5 7 3.4.1 American Airport Passenger Trends: 1960 - 1984. Air passenger movements in the U.S. are significantly larger in magnitude than their Canadian counterparts in terms of the major metropolitan airports. Statistics reveal that many of the American airports reached the levels of passenger & aircraft movements of Canadian airports of 1985 in the mid-1960s (Appendix 2 Graphs 1, 3, 5 & 7). In general the growth cycles occurred fifteen years earlier in the 5 6 Stroud John, Airports of the World. 1980, p. 560. 5 7 Stroud John, Airports of the World. 1980, p. 557. 108 United States. This is not to imply that Toronto or Vancouver, Canada's fi r s t and second busiest airports, will be handling 35-45 million passenger in 2000 as are Chicago and Atlanta today. The size of the domestic market in the U.S. is ten times that of Canada and their economy attracts larger numbers of business and tourist travellers. In the twenty year period between 1960-80 air passenger movements at American eastern airports were increasing at incredible rates (see Table III). The corresponding changes of aircraft movements at these airports were equally impressive (see Table III and Appendix 2 Graphs 1 & 5). Dulles airport was not opened until 1965 and therefore not included in these statistics. As shown in Table III passenger volumes in the period 1980-84, with the exception of Newark airport, are a l l significantly lower than the average five-year periods during the 1960-80s period. Newark's recent surge in passenger traffic and aircraft movements can be wholly attributed to FeopleExpress (now a Texas Air subsidiary) using this as their main hub airport in the east. At LaGuardia, traffic increased from 242,000 aircraft movements and 4.1 million passengers in 1960 to over 314,600 movements and nearly 17.5 million passengers in 1980. This represents a 130% growth in aircraft movements and a 423% growth in passengers over twenty years or an average 6.5% and 21.2% per annum growth rate respectively. 109 TABLE HI U.S. EASTERN AIRPORTS PASSENGER & AIRCRAFT MOVEMENTS AIRPORT VOLUME PERCENTAGE  TOTALS CHANGE  1960 1960-1980 (MILLIONS) 5-YEAR AVERAGE %  CHANGE PERCENTAGE CHANGE 1980-1984 PASSENGERS J.F.KENNEDY 8.812 304 LAGUARDIA 4.120 423 NEWARK 3.009 306 ATLANTA 2.228 1794 NATIONAL 4.725 181 76 105 77 449 45 11 16 256 -2 11 AIRCRAFT  MOVEMENTS J.F.KENNEDY .274 LAGUARDIA .242 NEWARK .188 ATLANTA .219 NATIONAL .316 112 130 105 242 -65 28 33 26 61 -16 3 12 79 29 -8 SOURCE: Base statistics, FAA Statistical Handbook of Aviation, 1961-1965 and ICAO, Airport Traffic Statistics, Digest No. 315, 1984. 110 The rates of change in the number of aircraft movements during the 1980-1984 period are a l l significantly lower than the average five-year periods during the 1960-80s period with the following two exceptions. First, the net decrease in aircraft movements at National airport is a result of an FAA imposed ceiling of 200,000 aircraft movements per year to be in effect by 1982. Future flight movements in the Washington D.C. area must use Dulles International or nearby Baltimore-Washington Friendship airport. Second, the strong growth in aircraft movements at Newark is a reflection of Continental's hubbing operations at this airport. The large increases in both passenger and aircraft movements at Atlanta airport occurred mostly between 1970 and 1980 as Delta and Eastern airlines hubbing activities in Atlanta expanded rapidly (Appendix 2 Graph 1 & 5). Atlanta's airport in 1978 was the second busiest airport in the U.S. for passengers handled (see Appendix 2 Graphs 2 & 4). Yet only twenty years earlier in 1958 i t was ranked thirty-fifth in the United States. American western airports experienced even larger percentage changes in passenger traffic in this twenty year period (see Table IV and Appendix 2 Graphs 3 & 7). Corresponding growth in aircraft movements was not as high. Both Chicago and Seattle experienced significantly larger increases in aircraft movements over Los Angeles and Denver. I l l In Denver, Stapleton International Airport's experience of large increases in passenger volumes but corresponding low increases in aircraft movements is partially attributable to the replacement of smaller aircraft with larger ones (ie. DC9s replaced by DC8s, 707s, 727s, DC10 and 747s). The second factor was the increased hubbing activity by Western and Continental airlines at Denver in 1979. In 1985 i t was the f i f t h busiest airport in the U.S. handling just under 30 million passengers (Appendix 2 Graph 4). 5 8 It was designed to handle only 18 million. 5 8 Mosteller Dee, "Denver's Stapleton Airport: A good place to watch Deregulation", Air Transport World. Nov. 1986, p.64. 112 TABLE XV U.S. WESTERN AIRPORTS PASSENGER & AIRCRAFT MOVEMENTS AIRPORT VOLUME PERCENTAGE  TOTALS CHANGE  1960 1960-1980 (MILLIONS) PASSENGERS CHICAGO (O'HARE) 5.690 DENVER 1.699 LOS ANGELES 6.605 SEATTLE 1.635 758 1227 501 562 5-YEAR  AVERAGE %  CHANGE PERCENTAGE CHANGE 1980-1984 190 307 126 132 38 4 13 AIRCRAFT  MOVEMENTS CHICAGO .245 (O'HARE) DENVER .297 LOS ANGELES .289 SEATTLE . 081 291 106 181 262 73 27 45 66 62 5 5 SOURCE: Base statistics, FAA Statistical Handbook of Aviation, 1961-1965 and ICAO, Airport Traffic Statistics, Digest No. 315, 1984. 113 A noticeable trend at many airports, in the east and west, has been the shift in growth from increases in just passenger traffic as experienced in the 1960-1980 period, to large increases in aircraft movements in the 1980-84 period. This development reflects the trends of Mega-Carriers formation and their use of "hub-&-spoke" operations. These trends are outlined in Section 3.4.2 and 3.4.3 of this thesis. 3.4.2 Mega-Carriers and American Airports. The deregulation of the U.S. domestic airline industry in 1978 and the relaxing of enforcement of Anti-Combines legislation in American in the 1980s, has increased merger activity in the transportation industry and has led to the creation of "mega-carriers".59 The mega-carrier was defined in Section 2.4.2 of this study. American examples of the single company mega-carrier are; Delta (Delta & Western), Northwest Orient (Northwest & Republic), and TWA (TWA & Ozark). Texas Air (merger of Eastern, Continental, PeopleExpress, Frontier and New York Air) is the major example of the mega-carrier which is a parent company but s t i l l uses the merged airline's separate logos. 6 0 b y Official Airline Guide. Martindale, David. "With Airlines on a merger binge, some are beginning to wonder, Is competition consuming itself?", Frequent Flyer. Feb. 86 p. 35. and Official Airline Guide. "When East eats West", Frequent Flyer. Mar. 87 p. 76. and The New York Times. Nash Nathaniel. "Business and the Law; U.S.'s 'Fix-It' Antitrust Policy". Sept. 16 86. 6 0 Time Magazine. Russell George. "Flying Among the Merger clouds; consolidation is the game in the buffeted airline industry." Sept. 29 86 p. 54. and Work Clemens. "A handful of carriers are becoming dominant; Fewer airlines are flying high". U.S. News & World Report. Sept. 22 86 p. 60. and The New York Times. Agis Salpukas. "Texas Air Buying People Express for $125 Million; Washington Approval Needed - Merger Would Create Largest U.S. Carrier". Sept. 16 86 Bl. and The Ottawa Citizen. "Texas Air cleared to buy People Express". Oct. 25 86. 114 With respect to airports, these developments in some cases have created virtual control of gate space at several of the major U.S. airports by one or two airlines (ie. United & American Airlines in Chicago, Delta & Eastern in Atlanta, Texas Air in Newark, Texas Air & United in Denver, and Texas Air & United in Dulles). This has made i t difficult, i f not impossible, for new airlines to enter service into these cities. The presents of a mega-carrier restricts the airports ability to diversify their sources of revenue (ie. from landing fees and gate leasing) and subjects i t to economic uncertainty i f anything happens to these mega-carriers (ie. decision to pull-out or bankruptcy). 3.4.3 Creation of the Airline "hub-&-spoke" Network - 1980. In the early 1980s as a result of the Deregulation Act the airlines created the "hub-and-spoke" system for increasing the u t i l i t y and yield factors of their equipment. The hub-and-spoke system was to replace the traditional point to point route systems that existed from the 1940s. Appendix 1 Diagram 1 compares how these systems work. As noted in aviation literature, although the hub-and-spoke system improved the airlines efficiency and created new opportunities and access for many travellers, as were the goals of the Deregulation Act, i t has created severe capacity problems for the hub airports. 6 1 Major 6 1 Official Airline Guide. "If you're not a hub, you're a nobody11/ Frequent Flyer. Sept. 85 p. 124. and Asten Neil. "Nation's Capital Gets New Hub: developments planned for Washington's airports as they prepare to transfer local control", Airports International. Feb. 86 p. 16. and Official Airline Guide. "Quick Gates Architecture meets the demand of a rapidly changing air-travel market", Frequent Flyer. Oct. 86 p. 30. 115 congestion levels are being reached as airlines try to add more flights and "Feeder" connections at the hub airports. 6 2 Many of these major U.S. airports, as is the case in Canada, do not have sufficient airside room or gate space for this change in airline operation. This congestion producing method of operations has also sparked growing incidents of near mid-air and on-ground collisions at these major airports. 6 3 The runway congestion problem i s rapidly growing as well. These developments have lead to an overall inspection of the American system with respect to safety of operations. 6 4 American airport management has taken action to try to alleviate these problems. Some $12 billion has been dedicated to airport construction work in the next few years to easy congestion from growth in the 1970s and to prevent further capacity problems in the 1990s and beyond.65 The scale of activity is almost beyond comprehension when compared to Canada's top nine airports. In Canada i t is estimated that only $1.4  billion would be required to alleviate i t s airport and airways 6 2 Time Magazine. Gordon Henry. "Buddy System in the Sky: Feeder airlines supply big carriers with small-town passengers". Nov. 11 85. and The New York Times. Paul Grimes. "Practical Traveler: Those Exasperating Airline Delays". Dec. 07 86. 6 3 Official Airline Guide. Martindale, David. "Southern California's Not-Ready-for-Prime-Time Airports. Will L.A. choke on its own services?", Frequent Flyer. Mar. 87 p 76. and GAG. "Airports: Terminal madness at DFW", Frequent Fiver. Mar. 87 p. 30. 6 4 Time Magazine. John Greenwald, "Is There Cause for Fear of Flying?". Jan. 13 86. p. 47. and Time. Ed Magnuson. "Collision in the 'Birdcage'; The Los Angeles disaster renews concern about small aircraft". Sept. 15 86 p. 28. and Time. Ed Magnuson. "Air Travel How Safe Is It?". Jan. 12 87 p. 24. and The New York Times. Jack Blum. "Don't Play Politics With Airline Safety". Dec. 07 86. 6 5 Airports International, Preparing for the '90's. London, November 1986, pp. 27. congestion problems.65 The following is a l i s t of what that $12 billion will buy in projects that relate to the American airports of this study. To manage hub-and-spoke growth Atlanta/Hartsfield has begun a $9.8 million contract to begin construction of phase one of the second international concourse of its 20 year master plan. Hartsfield is also adding a 378 acres site to its cargo f a c i l i t y . 6 7 At Chicago's O'Hare airport $1.6 billion is being dedicated to a 13 year master plan begun in 1982.68 This will raise the airports capacity from 45 million passengers to 85 million. New terminals are being constructed for both United and American Airlines hubbing operations; these two airlines account for two thirds of O'Hare's traffic. The airport i s spending $138 million of its funds to improve a people-mover system to remote car-parks. At Dallas/Ft. Worth International, Delta Airlines is spending $45 million to expand their passenger facilities from 24 gates to 33 gates to handle their increased number of flights at this hub airport. Completion date is set for late 1988.69 In Denver, the major hub airlines, United & Continental, say that they 6 6 Globe & Mail. Ken Remain. "$1.4 billion for airways and airports". Dec. 08 86 C3. 6 7 Airports International, Preparing for the '90's. London, November 1986, p. 29. 6 8 ibid, p. 29. 6 9 ibid, p. 31. 117 are being congested because of lack of gate space. A renovation program begun in 1984 will cost the airport $275 million. An additional $130 million is being spent by United to enlarge i t s concourse and $75 million by Continental for their f a c i l i t i e s . 7 0 This $480 million expenditure will be only for the short term (5-8 years), until a new airport i s built in the 1990s at a cost of $1.2 billion. The new airport occupying 10,872 acres of agricultural land will be in operation by 1990, some six miles east of the present Stapleton airport. This will double the commuting distance from Denver. It will have 5 runways and be able to handle 100 million passengers by 2020.71 Los Angeles International Airport is spending $94 million to modify Terminal Two in conjunction with its five major occupants (Air Canada, Hawaiian Air, Northwest Orient, PAN AM, and People Express). 7 2 This follows the opening of a brand new $80 million terminal in 1985 (the Thomas Bradley Terminal). In New York City the "Kennedy 2000" Plan calls for an expenditure of over $1.5 billion at J.F. Kennedy alone. 7 3 One billion of this fund will be spent on the restructuring of the road system to access the airport, a new public transport link to the city center, and a new 7 0 Mosteller Dee, "Denver's Stapleton Airport: A good place to watch Deregulation", Air Transport World. Nov. 1986, p. 65. 7 1 Airports International, Preparing for the '90s. London, November 1986, p. 28. 7 2 ibid, p. 27. 7 3 Airports International, Preparing for the '90's. London, November 1986, p. 30. 118 people-mover center connecting a l l eight terminals. A $500 million 48-gate terminal i s also being coristructed for PAN AM and i s expected to be operational by 1993. At Newark International Airport NYNJPA is building a $175 million terminal and leasing i t to PeopleExpress (purchased by Texas Air Corporation 1986) for 25 years. It will be completed in 1987. In Seattle, Seattle-Tacoma International Airport has drawn up an extensive master plan for its development in both the long and short term to accommodate domestic and trans-Pacific hub traffic. Expansions plans include; expansion of the main terminal, additional parking and cargo facilities and commuter aircraft ramp space. The f i r s t phase is a $21 million extension to the main terminal. The extra capacity is required, in part, to meet united Airlines demands for i t s newly acquired Pacific routes from PAN AM. Finally, in Washington D.C., both Dulles and National airports are upgrading their facilities to cope with increases in traffic (Appendix 2 Graph 2). A $100 million renovation is being planned for National Airport, focussing on parking improvements (cars), baggage handling and the north terminal. 7 4 Dulles International has major facilities shortage problems with three major airlines (Continental, United, & PAN AM) hubbing there, in addition to the increase in services of airlines that already served i t (New York Air, US Air, Eastern, Presidential, American Airlines). From a passenger count of 2.5 million in 1982, to 5.1 million in 1984 and flights doubling in that period to 88,700, 7 4 ibid, p. 31. 119 Dulles needs to expand quickly to manage this growth. / b None of the $12 billion figure includes any of the funds supplied by the FAA on airways expenditures through the AATF. These funds can be quite substantial and are necessary for maintaining a safe navigation and air traffic control system. 7 5 ibid, p. 31. 120 3.5 American Airport Financing. 3.5.0 Approaches to Financial Management. Airport authorities in the United States tend to use one of two approaches of financial management; a Residual Cost Approach or a Compensatory Cost Approach.76 The airports used in this thesis are almost evenly split between the two approaches. The municipally operated airports in this group seem to favour the Residual Cost approach as seen below: CITY Atlanta Chicago Dallas Los Angeles Seattle Denver New York Washington DC FINANCING Residual Cost Residual Cost Residual Cost Residual Cost Residual Cost Compensatory Compensatory Compensatory MANAGEMENT Municipal Department Municipal Department Joint City Department Municipal Commission Airport Authority City/County Department Airport Authority Airport Authority Under the Residual Cost approach the airlines assume the largest risk. They pick up a l l expenses not covered by other sources of revenue. The airlines also has more input in capital investment decisions because of their long-term use-agreements. The Compensatorv Cost approach requires the airport operator; municipality (department or (commission), state, or authority, to assume  the major financial risks. The airport operator sets the fees to be charged to airlines and other airport tenants to recover the costs. 7 6 Congressional Budget Office, Financing U.S. Airports in the  1980's. Congressional Budget Office, Washington, 1984, p. 18. 121 The Compensatory method gives the airport operator a stronger say in capital investments decisions. Usually there are shorter use-agreements, under the compensatory method, therefore no guarantees that airport operations will break even since revenues of the airlines are not directly tied to covering costs of the airport. The Congressional Budget Office study in 1984 found that 42% (10 of 24) of the largest and 42% (15 of 36) of the medium sized airports, operate as Compensatory Cost airports. 7 7 3.5.1 The use of Majority-in-Interest Clauses. In many of the major hub airports, long term "majority-in-interest" clauses exist between the major airlines and the airport (ie. Chicago O'Hare-United, Los Angeles-Western, Salt Lake City-Western, At l a n t a - D e l t a & Eastern, Denver-United & Continental, Newark-PeopleExpress, Dallas-American Airlines). These majority-in-interest clauses give preference to these airlines for gate space, counter & check-in area, landing & take-off slots, and baggage handling. Maj ority-in-interest clauses are more common of airport use-agreements at residual cost airports than at compensatory airports. A study by the Congressional Budget Office (CBO) in Washington D.C. in April 1984, on financing of airports, found; 1) 75% of large commercial airports, using residual cost approach (11 of 14) have some form of majority-in-interest clause in their use agreements; 2) 67% (14 of 21) medium size commercial airports, in residual cost approach have similar clauses, 3) only 10% of large airports (1 of 10) under compensatory approach has this clause, Ibid, p. 20 122 4) 33% (5 of 15) of medium size airports using compensatory approach have this clause. 7 8 The CBO study found that 58% (14 of 24) of the largest and 58% (16 of 36) of the medium sized airports, operate as Residual Cost airports. 7 9 The CBO study also revealed, residual cost airports have longer term use-agreements than compensatory airports. 8 0 The reason is, residual cost agreements have been designed to provide security for long-term airport revenue bond issues, and the length of the term of the use-agrement with the airline guarantee of debt service, generally has coincided with the terms of the revenue bonds. The CBO study found; 1) 90% of large (13 of 14) commercial (residual cost) airports have agreements of 20 years or longer, 2) 75% of medium (16 of 21) commercial (residual cost) airports have agreements of 20 years or longer, 3) 60% of large (6 of 10) commercial (compensatory approach) airports have agreements of 20 years or longer, 4) 40% of medium (6 of 15) commercial (compensatory approach) airports have agreements of 20 years or longer. 8 1 These different approaches to financing influence an airport's ability to; accumulate retain earnings, establish majority-in-interest clauses with major airlines and determine the length of the use agreement, which a l l have important effects on an airports performance in the bond market. 7 8 Ibid, p. 25. 7 9 Congressional Budget Office, Financing U.S. Airports in the  1980's. Congressional Budget Office, Washington, 1984, p. 20. 8 0 Ibid, p. 25. 8 1 Congressional Budget Office, Financing U.S. Airports in the  1980's. Congressional Budget Office, Washington, 1984, p. 30. 123 3.5.2 Bond Issue Types: General Obligation & Revenue Bonds. There are two approaches for bond issuer's to pay interest and repay principals; General Obligation Bonds, and Revenue Bonds. The general obligation bonds are fully backed by a government. The revenue bonds are backed by user fee revenues to be generated in the future by the developed facility. In recent times there has been a dramatic increase in the use of revenue bond financing of airports because of their tax-exempt status. For example, in 1970, 34% of a l l tax exempt bonds were revenue bonds, by 1982 this had risen to 73%. In fact, between 1978-1982, 92% of a l l airport bond sales were revenue bonds.82 The following i s a brief example of how retain earnings, majority-in-interest clauses, length of use-agreement and bond markets, work in conjunction with each other. Seattle-Tacoma International airport, in the midst of a $150 million expansion project in 1980, signed maj ority-in-interest clauses on 29-year leases with i t s airlines in 1970.83 The charges were calculated at 35% of the total needed to retire the revenue bonds. The 35% surplus (a retained earning) was transferred to a reserve and capital improvement fund to expand the airport in the 1980s. 3.5.3 Impacts of Airline Deregulation on Airport Financing. Since deregulation in 1978, three important trends in airport financial management were noted by the CBO study. First, there has been a trend 8 2 Ibid, p. 32. 8 3 Blair Baldwin, The Management Structure of Airport Operations in  Canada and the United States. Centre for Transportation Studies, UBC, Vancouver, 1980, p. 54. 124 towards shorter term contracts with respect to airport use agreements, non-airline leases and concessionaires contracts. Second, there has been a modification of the residual cost approach, with more airports moving towards the compensatory cost approach because of the airlines declining interest in having their revenues tied to airport development through the traditional majority-in-interest clauses. Third, airport managers have stepped up their efforts to maximize revenues. They have done so by strengthening and diversifying their revenue base through providing more space for shops, constructing hotels on airport property and increasing access for commuter airlines to boost landing fee income. Airports in the U.S. will need over $30 billion during the next ten years (1985 - 1995) to handle the increase in traffic levels. 8 4 The Airports Operators Council International (AOCI) stated in 1985 that $11.2 billion of this amount will be required at primary commercial airports, and $1.76 billion at reliever airports alone. 8 5 However, finding the money for airport construction in the U.S. i s becoming increasingly difficult. The US Treasury wants to remove the tax-exempt status of airport revenue bonds, which fund over 90% of major airport construction as stated earlier. The Congress Joint Tax Committee says the treasury will lose $3.1 billion between 1986 and 1990 as a result of not taxing airport and seaport revenue bonds. This effects the major airports the most, the 8 4 Stewart John, "Dollars became harder to find", Airports Internationalf November 1985, p. 14. 8 5 ibid, p. 14. 125 ones experiencing the most growth at the moment, because they have funded the majority of their development using the bond system. The bond system has several choices; the airport revenue bond (backed by an airport authority's or carrier's profitability depending i f a residual or compensatory airport), special facility bonds (backed by individual carriers for terminal or gate development), or a general  obligation bond (backed by the city or county which owns the airport). As airports have in the past been regarded as public u t i l i t i e s the investors paid no tax on the bonds, and the airports benefited by paying back low interest rates. However, the federal government in the U.S. argues, under deregulation airports have become commercial enterprises and must trade their bonds on the open market. At present, the airport revenue bonds are traded through a dealer who secures buyers that will purchase major issues at one time. 3.5.4 The Future of the Airport and Airways Trust Fund (AATF). Airport operators are concerned that they may also lose federal funding from the Airport & Airways Trust Fund (AATF). The AATF expires in October 1987.86 This fund is financed by the federal taxes on airline tickets, aviation fuel, departures, freight waybills, and through general tax sources in the AADRA 1970 described in Section 3.1. It is estimated to contain unasmmitted funds in excess of $5 billion as of 8 6 Feldman Joan M., "No fresh start seen for Airport & Airways Trust Fund", Air Transport World. February 1987, p. 20. 126 1985.87 The airports and airlines are lobbying Washington for several issues to be resolved. One, release the AATF to the airports for construction and improvements for navigational, runway, and terminal improvements. Two, abolish the AADRA 1970 i f the federal government is not going to turn over the revenues raised from i t for airport use. This would allow the airports to tax individual carriers and users instead of the double taxing that i s presently cxxurring at several airports. Three, i f the AADRA 1970 and the AATF are to remain, that the AATF be removed from the federal governments general accounting practices. The American federal government is accused of holding the AATF so as to give the impression that its overall deficit is less than i t actually i s . ibid, p. 21. 127 3.6 Impact of Poli t ical Suasion on American A i y p r w h Management. 3.6.0 Political Suasion and American Airport Management. In the American methods of airport management the majority of the authority for their operations is less political than in Canada. This has evolved in a l l three methods (City Department, City Commission or Airport Authority) because of government policy (Air Commerce Act 1926) that airports must be self-sufficient on a cost recovery basis. The only exception is, i f the airport qualifies as part of the NASP (National Airport System Program) then the federal government contributes funds over what the individual airports raise through bond issues. The greatest chance for political suasion occurs with the municipally owned airport operated as a separate Department of the City (see Flowchart 2). In the U.S., political influence is concentrated on the local level because of constitutional powers as opposed to the federal level as i s the experience in Canada. In the case of municipally owned airports, local politicians must be able to show cause for an airport's development and to deal effectively with airport problems. Therefore, a l l adndnistrative decisions made by a Department of Aviation, as part of the civic bureaucracy, are subject to Council's approval and thus subject to political suasion. The Department of Aviation must compete with other departments for Council's time to convince them to approve general obligation bonds for airport development as oppose to cither 128 FLOWCHART 2 MUNICIPAL DEPARTMENT OF AV IAT ION METHOD OF MANAGEMENT D E P T . OF PARKS D E P T . OF PLANNING DEPT. OF TRANSPTN D E P T . OF ENGINEERING • D E P T . OF A V I A T I O N F i n a l Decisions - P o l i t i c a l F i n a l Decisions - A d m i n i s t r a t i o n A" Route of Decisions Reports To 129 municipal works (ie. roads, transit, sewage, parks, etc.). Under municipal airport commission management the city loses some of the abilities of political suasion over airport development because, airport operations has been given some independence from the political process (Flowchart 3). Conflicts between the airport commission and municipal land use planners can be kept in check by effective land use zoning within the immediate vicinity of the airport and under the approach paths to the runways. In both the departmental and commission methods of management the role of the federal government is minimal. The federal government in the U.S. i s not involved with daily operational decisions, or the long-term investment decisions of these major airports. The only interface is the FAA's monitoring safety & navigational issues, and same funding from the AATF for airways and runway construction. With the airport authority method of management in the U.S., the political demarkation between the airport authority and the government is much more distinct than with the department or commission approach (see Flowchart 4). The municipal government is unable to exercise direct control over these authorities. The airport authority's autonomy is almost absolute. 8 8 This translates into very l i t t l e potential for direct federal or municipal political suasion over airport operations. 8 8 . Blair Baldwin, The Management Structure of Airport Operations  in Canada and the United States. Centre for Transportation Studies, UBC, Vancouver, 1980, p. 42. FLOWCHART "3 130 M U N I C I P A L AIRPORT COMMISSION METHOD OF MANAGEMENT C ITY COUNCIL i F i n a l r~ Decision£ P o l i t i c a l BOARD OF COMMISSIONERS . Appointed I , By J Mayor N 7 AIRPORT MANAGER AIRPORT OPERATIONS F i n a l Decision A d m i n i s t r a t i o n \ Route of ' Decisions Reports To FLOWCHART 4 AMERICAN AIRPORT AUTHORITY ... METHOD OF MANAGEMENT 131 I 1 f 1 , A I | A | 1 T1 — ' L - ^ J _ _1 * 1_ . A F i n a l Decision Po i t i c a l AIRPORT AUTHORITY (BOARD MEMBERS) T-TfT I EXECUTIVE DIRECTOR AIRPORT OPERATIONS AIRPORT AUTHORITY STRUCTURE A Created By State _ J F i n a l Decision A d m i n i s t r a t i o n Route of Decisions Reports To . A - More than one Government body ( i e . , C i t y C o u n c i l s , Regional Governments, or State L e g i s l a t i o n s ) can be r e s p o n s i b l e f o r appointing members to the A i r p o r t A u t h o r i t y ' s Board. 132 Equally, the authorities are not subject to standard political accountability mechanisms. As a result of this separation different mechanisms are used to allow for some control by the federal and municipal governments over airport authorities actions. The federal government simply uses a monetary incentive, providing grants through the AATF and NASP programs in exchange for cooperation. The municipal input is obtained through the election process to the Authority's Board of Commissioners. The airport authority usually requires that at least one position be for a politician from the most concerned municipality with respect to airport development. 3.6.1 Accountability of Political Suasion. Airport management's accountability as a department of the city, is quite high as the director reports directly to the Council. The responsibility of the airport also lays directly with the City Council. This may have advantages for appearance sake to the local voter but may prove too narrow a view i f the City Council is not actively engaged in monitoring world activities in the aviation industry. Airport management accountability as a commission, is lower than the department management method but higher than the authority method. The commission reports to the Council but is independent of the city bureaucracy. The responsibility s t i l l lies with the city Council but the commission acts on the city's behalf on managing and developing the airport, using the commission's aviation members expertise. This direct participation by aviation members helps to broaden the view of the management of the airport for opportunities for the airport which will be commercially successful and bring growth to the city. 133 The authority method of management is the least politically accountable in operation. It is an independent corporate agency created by State legislation. It is structured as a corporation which means more decisions are decentralized and therefore less time consuming than in a politically influenced body. This allows the authority to act more quickly in implementing decisions than its departmental or commission counterparts. The accountability to the local government is greatly reduced under the authority method because i t is totally independent of the formal municipal political process for decision-making. Once members are elected to the authority in a separate election, they operate independent of the municipal, state and federal political organizations. 3.6.2 Flexibility of Political Decisions. The flexibility of the department's actions is low in comparison to the commission and the authority methods. It takes time for the action to be scheduled and brought up again in Council. The reversibility of the action i s low as well. The nature of a department bureaucracy usually impedes change or modifications. The flexibility of the (commission's actions is moderate in comparison to the department and the authority methods. The commission is granted the ability to function more independently of council than an aviation department but any major funding or expansion decision will require the 134 CGfuncil's decision. Council approval is required i f the funding will require general obligation bonds. The flexibility of the authority's actions are the greatest of the three. Since i t is separated from the municipal political process and raises it's own funds independently i t can change directions quite quickly as trends and demands fluctuate in the aviation industry. 3.6.3 Hidden Agenda of Political Decisions. The Hidden Agenda or "fog factor" refers to the ability of the department to disguise its true objectives and avoid criticism for otherwise "questionable" development. In the case of the municipal department of aviation the "fog factor" component is low. The department of aviation actions are highly visible because, as a government department i t must seek authority from Council before implementing policy. Consequently the politicians on Council want to be kept informed of the department's actions because of possible backlash from the local public (ie. concerns about safety, noise, and traffic congestion). Criticism over costs for airport development would be lowest and least hidden in the case of residual cost approach municipal airports because, individual carriers are the guarantors of the revenue bonds. Chicago & Los Angeles International airports operate as municipal airports and use residual cost approach for funding. The Compensatory Cost approach airport, which operates as a Department 135 of Aviation (ie. Denver-Stapleton), will have a Council aware of possible higher public concern over costs of airport development since the general obligation bonds commit municipal taxes as the guarantor of the bonds. The ability of an airport commission to disguise i t s true objectives and avoid criticism of "questionable" development i s greater. The commissions actions are less visible than the department method of management because i t is not totally controlled by political process. The ccranission may endorse actions (ie. increased flights or increased peak congestions) that would maximize the commercial interest of the airport but would create political problems for the politicians (ie. consequent increase in noise and concern for safety of operation by citizens living on approach paths). Criticism by the public will also remain low with this method of management because its expansion funds are raised through the bond market and i t s operating expenses are covered by operating revenues, as is the case of a l l municipal airports in the United States. Similar to the departmental method, the commission residual cost airport (ie. Atlanta & Dallas), will have the least public criticism over funding. The commission run compensatory airport may experience more criticism from Council i f the commissioners are at differences from what the politicians want from the airport in an overall strategy for the development of the city. The ability of the authority to disguise its true objectives and avoid 136 criticism in a political process is quite high because of their operational independence from this process. However, they must operate without benefit of local taxes and must raise capital in the bond markets. This method of financing calls for detail plans of what is being constructed and therefore revealing what the authority's objectives really are. 3.6.4 Implementation of Political Decisions. As a department, the speed of implementation for a policy initiative is the slowest of the three management methods. As discussed earlier, the complexity of managing a large city's government, the airport department may suffer at the expense of budget and time demands on Council for other issues. As a commission, the speed of implementation is quicker than the department method but slower than the authority method because i t s t i l l requires the approval of Council. Approval from Council can be time cxjrisuming depending on the other issues demanding their time. The localized nature of the authority, with direct input available from the municipal council, local business community and airport users (ie. major airlines) can implement its decisions the quickest. It is the mayors and local businessmen who normally s i t as commissioners or directors of the local authority. As such they are more attuned to the local needs and concerns of the community. Since a l l major parties are part of the process firsthand, once the Board of Directors agree on the airport issue their decision can be put into effect without extended 137 political interference. Lack of meaningful local participation is a strong criticism of the present system of airport management in Canada.89 3.6.5 Social Costs of Political Suasion. The social cost of political suasion for the department method of airport management i s the same as any other municipal department. In comparison with the commission and authority methods of management i t is probably the highest. As a department i t requires more resources and time than the commission & authority methods to keep in contact with the other departments, airport users and the general public. Because i t raises funds through the bond market, i t is more conscious of actions, such as political suasion, which increases costs, than the ministry approach used in Canada which is financed and operated by the federal government. Under the departmental method of management the decision for airport expansion remains under the control of the local politicians & bureaucracy of a department of aviation. Airline input is indirect through their commitment in majority-in-interest clauses i f a residual airport, or on an advisory board i f a compensatory airport. The social costs of political suasion for the commission method of airport management are less than the departmental approach. The 8 9 Varty David, The Reorganization of Airport Administration in  Canada: Annals of Air & Space Law. V. 4.. McGill, 1979, p.363. 138 municipally owned airport run by a Commission management is one step removed from the political influence of the departmental municipal airport. The commission is comprise of both elected officials and individuals interested in aviation for civic as well as commercial development. In this case, the commission does not have to compete on the same level with other departments for Council's time. The commission approach is more aware of its costs and revenues because i t utilizes private business expertise as direct board members. The manager of the commission is a businessman who realizes the importance of maximizing the benefits and profits from the expenditures of resources at their disposal while keeping the cost down for airport users. Unproductive political suasion is discouraged since i t consumes resources that are not beneficial to airport operations. Social costs of political suasion are minimized under the authority method because i t is the least political in operation. As a business the authority strives to maximize their gains on any expenditures of resources. The Port Authority of New York & New Jersey operating the three New York airports and the newly created Metropolitan Washington Airports Authority are compensatory cost approach authorities. Seattle-Tacoma airport is a residual costs approach authority. In these preceding examples the compensatory cost airports should be more cost conscious since i t is their own obligation bonds (not New York City or the District of Columbia) that are the guarantors of any bonds issued. The residual cost airport has the airlines additional commitment i f their is a short f a l l in operating revenues or a run over in capital 139 projects. This heightened awareness in their resources and costs makes the authority the most attentive in reducing unproductive political suasion activities by a l l levels of government in order that the public receives airport facilities at the least cost. 3.7 American Airports: Balancing Community & Management Goals 3.7.0 Airport Development and Community Input. In the United States, in some cases, the officials responsible for the development of aviation facilities, are the same officials responsible for formulating and implementing land-use plans in the immediate vicinity. The American practice of utilizing municipal officials or airport authorities to manage the nation's airports is considered the most decentralized system of airport management in the world. 9 0 The federal Department of Transportation (DOT) only supervises the development of operational policy of the airports in the system and, only provides financial and technical assistance for construction relating to navigational & airway projects. The federal government did not construct or operate any metropolitan commercial air facilities in the United States, with the exception of the two Washington D.C. airports up until 1986. These airports serve the District of Columbia and therefore were under the jurisdiction of the federal government. In 1986 these two airports were turned over to an airport authority for 9 0 Feldman Elliot J. & J. Milch, "Options on the Metropolitan Fringe: Strategies of Airport Development", National Resources & Urban  Policy, 1980, p. 221. 140 development. In several of the cities studied; Atlanta, Chicago and Los Angeles, the city government has total responsibility for the airport developments. Dallas/Fort Worth Regional Airport is managed by a board of representatives from the two cities. In these cases, the municipal governments have considerable influence over the decision-making process. In some situations, as with O'Hare Airport in Chicago, this has not been to the advantage of the metropolitan region. Chicago's O'Hare is firmly linked to local government as a departmental residual cost approach airport. Geographically, O'Hare is located in the suburbs and only linked to Chicago by the city-owned Kennedy Expressway. An organized suburban coalition, the Suburban O'Hare Commission, a group of fifteen northwest suburbs plus DuPage County surrounding Chicago, is lobbying for a regional airport authority to operate O'Hare and Chicago's two other major airports (Midway and Meigs Fi e l d ) . 9 1 The coalition is seeking a voice in determining how many flights land at O'Hare, at what times and with what kinds of aircraft. There efforts are being supported by politicians of surrounding municipalities (ie. Martin Butler-Park Ridge Mayor). The Suburban O'Hare Commission, want the Illinois legislature to establish a regional authority so that they a l l have a say in future O'Hare developments. The State legislature can do this (as was done in 9 1 The Official Airline Guide, "Who owns O'Hare", Frequent Flyer. Ltecember 1986, New York, p. 34. 141 the New York and Seattle-Tacoma regions) but the City of Chicago is resisting. The City does not want to share the power of controlling the airport. The financial burden of modernizing airports for the heavier jet aircraft and more sophisticated navigational and runway technology, forced many municipalities to abdicate their responsibilities of airport management. Since World War II, similar to the Canadian situation, the direct participation of local officials in airport development in the U.S. has declined. 9 2 This has lead to a rise in popularity of the authority method of management to replace direct municipal management, not participation of the Federal government, as was the case in Canada. The public authority is managed by more operational & business oriented managers than in a civic department. In the U.S., be i t a department, commission or an authority, when dealing with airport development the primary objective in the past has been to meet traffic demand by functioning as a well-managed business. 9 3 This becomes a cyclical justification for airport management to develop airport facilities. For example the NYNJPA as an authority backed by i t s own revenue bonds is organized to encourage development, which may not be to the best interest of the community at large. As more development i s provided, 9 2 Feldman Elliot J. & J. Milch, "Options on the Metropolitan Fringe: Strategies of Airport Development", National Resources & Urban  Policy, 1980, p. 221. 9 3 ibid, p. 222. 142 more traffic tries to use the airport, resulting in the need for further development to meet the demand. When an airport authority is in charge they can proceed with this strategy regardless of the neighboring municipal councils plans for land development in the area. In the Chicago case, the American municipal management method is quite similar to the Canadian federal situation with respect to the Draconian methods which can be used to push development though, in the U.S. the reasons for development are usually based on economic pressure directly related to the airport. In the Canadian case the cause may be for political reasons unrelated to aviation developments. The American options for airport land-use development strategies are the same as outlined for Canada; environmental airports, expansion of existing airports, or the "no-build" strategy. These options were explored much earlier in the U.S. because passenger traffic volumes increased at an earlier stage than in Canada (see Appendix 2 Graphs 1 & 3 and in Appendix 1 Graphs 1 & 3). The magnitude of the growth of traffic has also been on a much larger scale in the United States than in Canada. 3.7.1 Solution One: The "Environmental" Airport. To build an "environmental" airport required that enough land be purchased in an area removed from populated regions to guarantee future aviation development without interference by conflicting land uses. Examples of this practice are: Chicago O'Hare (1948), New York's LaGuardia (1939), JFK (1947) and Los Angeles (1945). A l l are examples of 143 when land prices were s t i l l uninflated by suburbanization trends and the existing airport management purchased property with a long term plan in mind. By the late 1950s and early 1960s many of the American cities had large scale suburban developments and the purchase of large tracts of lands accessible to the downtown core were not feasible. To create the "environmental" airports of the 1960s, Dulles (1962) and Dallas/Ft. Worth (1968), required direct U.S. federal intervention into airport management. The method of intervention by the Federal government to create Dallas/Ft. Worth Regional Airport in Texas was only to establish a committee to determine where and how a regional airport could be built to serve both Dallas and Fort Worth (Section 3.2.3). In the case of Dulles airport, outside of Washington D.C., the federal government actually decided to manage the airport, which made i t the second major cammercial airport that was federally controlled. 3.7.2 Solution Two: Expansion of Airports Many cities expanded their existing airports between 1950-80 to maximize the use of land already in airport & aviation use as documented in Section 3.1 and 3.4 of this thesis. Examples of this are Atlanta, Denver, Los Angeles, Newark, J.F. Kennedy, LaGuardia, Seattle and Washington National airports as described in Section 3.4. In a l l of these cases as municipal management or as an authority, airports were expanded to meet the demands of the airlines. There was l i t t l e attempt 144 to modify traffic operations (ie. peak congestions) to reduce the infrastructure needs (ie. larger terminals, more runways, large parking lots). 3.7.3 Solution Three: The "No-Build" Option. The option to not build, but instead to find methods to spread out the peak-hour congestion problems, was initiated in the late 1960s. Curtailment of general aviation from major hubs, slot allocations to airlines by the FAA at same major airports, and discussions about differential pricing of landing fees by time of day were ideas put forward as solutions. The f i r s t example of curtailing general aviation was in 1968 by the port authority at New York's three major airports. 9 4 The landing fee for general aviation was increased for landing during peak hours, resulting in a 30% decline in traffic at these major airports. A second option for modifying traffic was adopted in 1969 by the FAA to impose hourly quotas on air traffic at five metropolitan airports, including a l l three in New York. 9 5 The option of having differential pricing has yet to be adopted by the FAA but was set in place by the BAA (British Airports Authority) in 1971 at congested Heathrow Airport in London England. By deciding not to build other costs are incurred such as; lost employment and economic opportunities in the construction industry, 9 4 ibid, p. 231. 9 5 ibid, p. 231. 145 staffing of the new facility, and related aviation businesses (ie. maintenance base, hotels, catering services, car rental, high-tech firms requiring direct connections to global markets). Airport development merits careful analysis of social, economic, and political trade-offs. More rigorous measurements of benefits could offer clear choices for the makers of public policy. 146 3.8 Conclusions: lessens Learned from American Experiences. 3.8.1 American Early Aviation 1900-1960. Section 3.1 documents the fact that from the early 1920s, responsibility for American airport development belonged to the municipalities. They met this challenge successfully for the f i r s t four decades of the twentieth century by integrating airport development with, local expertise, business interest and by raising funds through bond markets instead of raising taxes. The U.S. government1 s contribution to aviation at this time was the construction and maintenance of airways, lighting and navigational aids. In the late 1940s and 1950s the municipal department and municipal commission airports were experiencing difficulties in commanding the attention of council. Council was faced with the expanding complexities of city management because of the explosive growth of suburban areas. Many of the municipalities adopted the authority structure in order to keep the airports running efficiently, effectively and unburdened by non-aviation matters. An appeal had to be made to the American federal government for financial assistance in upgrading the entire air system (airways & airports) to meet the needs of the new jet technology and passenger growth of the 1960s. The cost of meeting these demands and in purchasing the new technology was on a scale larger than anything seen up until this time. 3.8.2 American Federal Policy 1960-1986. 147 Section 3.2 presents the main policy actions of the U.S. federal government on aviation issues in the latter half of the twentieth century. In the 1970s, in response to the appeal for funds, the American federal government past the AADA and the AADRA. These were successful policies in raising the necessary capital to ease congestion problems in the airways and in terminals at major airports. The federal policy of airline deregulation in 1978 basically undid the work of the AADA and the AADRA. Hubbing operations altered the demands on the entire airport system. The post-deregulation era has witnessed a whole new growth in passenger movements and massive airport expansion programs. The federal government promised an equally large expansion in the air traffic control system, using the $5 billion raise through taxes from the AAIA, but have been slow to actually implement this plan. This slow response by the federal government has lead to further congestion problems at the airports and serious safety hazards in the air. 3.8.3 American Airport Management Structures. Since the 1920s the U.S. has had three choices for airport management, municipal department, municipal commission or the airport authority. The main advantage of the municipal methods (department or commission) of airport management is that airport development is tied directly to Council and the bureaucracy. This enables the Council to coordinate airport management's development interests directly to the City's land use plans, economic strategies, and social concerns (ie. safety & noise). This direct link is also their main disadvantage since i t can also delay important decisions and slow airport management's ability to 148 take advantage of situations that are favorable for airport development. This direct link also requires public funds to guarantee bond issues, which is not always possible i f the city has other financial commitments. There are four main advantages of the airport authority method of airport management. One, i t operates as an independent incorporated agency. This allows i t the flexibility to have representation of several political divisions on its Board. Two, i t is less political in operation, which allows the Board to concentrate on issues that are directly and indirectly a consequence of airport operations and development. Three, the authority can act quickly in implementing decisions due to the low amount of political interference. Four, as an incorporated agency i t guarantees it's own bond issues, thereby freeing the city's public funds to be used for other projects (ie. hospitals, schools, parks etc). 3.8.4 American Aviation Growth & Technological Change. American airports used in this thesis have experienced continuous growth in passenger movements for the last six decades. Unlike their Canadian counterparts, the American airport management methods have been more successful in analyzing these growth trends and equipping themselves to meet the demands. The hub-&-spoke systems of the 1980s have required major terminal design modifications and expansion but the American airport managers have successfully responded to this challenge. They will spend over $12 billion over the next ten years to build the necessary terminals and ground facilities to accorranodate the growth. 149 The American airport system's trouble spot is getting the U.S. federal government to spend the $5 Billion AATF funds on necessary airway and runway updates to alleviate air traffic control congestion. 3.8.5 Financing American Airports. The United States has been using two major approaches to airport financing since the 1920s. The Residual Cost approach airport has the airline assume the largest financial risk. The Compensatory Cost approach airport has the airport operator assume the largest financial risk. These methods have proven to be very successful since in sixty years of financing of airport projects in this manner there has never been a failure of an airport bond. Since deregulation of the airlines in the U.S. several new trends have emerged in airport financing. More airports have had to move away from residual cost approach towards cxampensatory financing because, fewer airlines want to be directly tied to airport expenditures. Airport management has also diversified their revenue base by constructing more shops, hotels and other non-aviation businesses on airport property to secure funds for airport operations. This diversification in business activities has been interpreted by the U.S. federal government as a move away from being public u t i l i t i e s to being a commercial enterprise and therefore may have their tax-exempt status removed from their bonds. Such a move by the federal government would seriously damage the airports ability to raise the necessary funds for capital projects. This interference by the federal government in conjunction with their reluctance to spend the AATF funds on navigational projects has seriously jeopardized the airport and airway 150 system in the United States. 3.8.6 Impact of Political Suasion on American Airports. The American methods of airport management are less influenced by political suasion attributes than their Canadian counterpart. Of the three methods of airport management in the U.S., the one influenced the most by political suasion i s the municipal department airport. The ability to reduce the impact of political suasion is at i t s greatest when the airport is operated by an airport authority. Since the airport authority is an independent agency i t is not entangled in the political elements which a departmental or commission airport are because of their direct accountability to the Council. 3.8.7 American Airports: Balancing Community and Airport Goals. Section 3.7 of this thesis outlines the different development solutions proposed by airport management to their respective cammunities for approval. In the U.S. the expansion policy used by a l l three methods of management, was accepted from the 1930s until the 1950s because the airports were remote from residential and other urban land use activities. When the cities finally surrounded the airports during the 1950s and 1960s the conflicts between airport management and community goals became much stronger. A 1970s solution was to build new airports farther away from the city (ie. Dulles and Dallas/Ft. Worth airports). This proved to be either too expensive or not enough property was available for such a large project in the vicinity of a city. The 1980s proposal has been to modify the users of the major airports and the 151 diversify the airports use to make i t more appealing to a wider membership of the community. This proposal has been successful in the U.S. in the short term, but i t does not solve the long term needs of the airport for growth capacity nor the ccmTttunity long terms concerns over safety, and noise. 152 CHAPTER FOUR: AIRPORT MANAGEMENT IN CANADA BEYOND 1990. 4.0 CONCLUSIONS Chapters Two and Three yield facts which are useful in determining how Canadian airport management should operate in the future. This chapter objective is to present the success of each of the four management methods in achieving the study's five criteria (see TABLE V). The criteria are used as indicators of management's ability to be effective in managing airports. Due to the non-quantitative nature of most of the information the matrix utilizes a "yes" or "no" measurement of each method of management in achieving the criteria. The evaluation is based on the information presented in Chapters Two and Three. 4.1 METHOD OF MANAGEMENT: AIRPORT AUfflORITY The airport authority method of management is the only method that successfully achieves a l l five criteria. Since the 1940s, as proven in Section 3.3, i t has gained popularity in the U.S. as a method of management for airports. The authority is structured more like a corporation than a government department. This structure allows for more decisions to be decentralized and results in less time spent waiting for approvals. Airport authorities have successfully implemented national government policies such as the FAA (1946), AADA (1970), AADRA (1970), and the AAIA (1982) in the United States. The airport authority has also been the most successful in developing airports to meet traffic growth and technological change. This 153 TABLE V EVALUATION OF AIRPORT MANAGEMENT METHODS CRITERIA* METHODS ONE TWO THREE FOUR FIVE AIRPORT AUTHORITY MUNICIPAL COMMISSION MUNICIPAL DEPARTMENT FEDERAL MINISTRY YES YES YES YES YES YES YES YES NO NO YES YES YES NO NO NO NO NO NO NO *CRTTERIA: ONE: Implementation of National Aviation Policy. TWO: Admirdstration of Technological & Aviation Growth. THREE: Acquisition of Funds. FOUR: Reduction of Political Suasion. FIVE: Balancing of Community and Airport Goals. 154 management structure uses airline and other aviation expertise to keep up to date on a l l aviation developments as demonstrated in Sections 3.3 - 3.5. The airport authority is an independent corporate agency created by State legislation. Once created i t operates independently of the state and municipal political organizations with the Board members and Manager being elected in separate elections. This has successfully reduced the influence of political suasion as measured in Section 3.6 of this study. The authority must operate without benefit of local tax dollars therefore management must ensure the acquisition of funds from other sources. /American airport authorities since 1940, through the "Compensatory Approach" use of user fees and bond issues, have successfully acquired the necessary capital to meet their financial needs (see Section 3.5). The Authority's Compensatory Approach to funding has been gaining in popularity since deregulation in 1978 as documented by the Congressional Budget Office study of 1982 discussed in section 3.5 of this thesis. This method requires the authority to take on the larger share of financial risk instead of the airlines. The airport authority has proven to be successful in balancing management goals and ccmmunity goals by presenting several options for development. This balance was achieved, as shown in Section 3.7, in Seattle, Washington D.C., and New York City because, with elected representation of airport users and community members on the airport authority's Board a wider range of solutions could be explored that were 155 authority's Board a wider range of solutions could be explored that were acceptable. 4.2 MANAGEMENT METHOD: MOmCTPAL COMMISSION A municipal commission as airport management is successful in achieving three of the five criteria. The two criteria that were not successfully achieved were; the reduction of political suasion, and the balancing of community and airport management goals. Municipal commission airports, such as Los Angeles International (LAX), have successfully implemented national aviation policies for the past sixty years. Airport management at LAX utilized the federal funds from the AADA and the AADRA established in 1970 to expand runways, navigational systems, lounges and gate space. In 1982 same funds were also acquired from the $4.8 billion airport development fund and the $6.3 billion navigational fund provided by the AAIA federal legislation. Through these actions the municipal cximmission airport has proven that i t can participate in achieving federal government policy to provide a well planned system of primary airports to reduce hazardous situations (ie. airway congestion) and congestion delays (ie. terminal capacity). The airport commission at LAX has successfully persuaded investment in their facility as required, as discussed in Section 3.4. Since the 1960s the municipal commission airport has become less effective on this criteria because of; slow response time of the city bureaucracy on 156 decisions, a reduction in airlines interested in Residual Cost financing due to deregulation, and the possibility of the tax-free status of the airport revenue bond being eliminated. Although these factors may make i t increasingly difficult for the municipal conmission airport to acquire the necessary capital when i t is needed in the future, further research is required. The municipal commission airport i s not successful in minimizing the influence of political suasion because, even though i t operates separately from the municipal bureaucracy, the final decisions are made by the municipal Council. This control by Council requires the airport commission's decisions be subject to time and budget concerns for other issues facing the municipality that are not directly a concern of airport development. The balancing of community and airport goals is also unsuccessful with a municipal commission because of the lack of representation by; municipal departments, other nearby municipalities, and business interests. The municipal commission airport only has appointed officials from the mayor's recommendation regardless of their knowledge of aviation. The commission, operating independently of the municipal bureaucracy, may be in favour of an airport development decision which may not be acceptable by the municipality. Unless the airport commission is required to consult with the municipal departments before a decision is sent to Council for approval, this decision will meet opposition at Council stage and delays can be expected. 157 4.3 MANAGEMENT METHOD: MDNICTPAL DEPARTMENT Similar to the municipal commission, the municipal department is successful in achieving three of the five criteria. The two criteria not achieved are the same as the municipal commission; the failure to reduce political suasion on airport decisions, and the failure to balance community and airport management goals. The evidence in this research suggests the failures of the municipal department are even greater in magnitude (Section 3.6 & 3.7) than with the municipal commission airports. Municipal department airports, such as the four used in this study, have a l l successfully implemented national aviation policies. A l l utilized the federal funds provided through the AADA and the AADRA in the 1970s and the AAIA in the 1980s. In particular, Dallas-Ft. Worth benefitted from direct federal intervention to initiate discussions between the cities of Dallas and Fort Worth to develop a single modern airport in the 1970s (Section 3.7). Municipal department airport's have successfully negotiated the changes in passenger growth and technological advancements at their airports (Section 3.3 & 3.4). The municipal department airports in the top eleven American airports are the most active in planning & building for meeting their demands of the 1990s and early 2000s (Section 3.4). In the United States the municipal department airport is directly 158 l accountable and responsible to Council. Since the early 1950s the decision-making process of the municipal airport has not kept pace with airport and airline development needs since decisions are subject to a growing number of complex issues facing Council. Direct management by airport users and aviation business interests is not possible since airport management is part of the municipal bureaucracy. Successful fund acquisitions are a result of majority-in-interest clauses held by airport users and aviation business interests through "Residual Cost" financing (Section 3.5). Three of the four municipal department airports in this study use Residual Cost financing to meet their financial requirements for development. The municipal department airport fails to reduce the influence of political suasion because, as part of the bureaucracy, i t must compete with other departments for Council's time to convince them to approve airport development. This accountability to Council makes the airport department's actions highly visible but reduces the speed of implementation of its policies. Every airport issue is weighted by the politicians with respect to its political impacts and merits as oppose to the quantitative evidence as to the benefits to the airport. In the United States the municipal department airports also have a history of failing to balance airport and community goals. In Chicago, the surrounding municipalities have taken the Chicago Department of Aviation to court over aviation development (Section 3.7). In Texas, the U.S. federal government had to order the municipalities of Dallas 159 and Ft. Worth into negotiations to determine the location and management structure for one regional airport. 4.4 MANAGEMENT METHOD: FEDERAL MINISTRY (CANADA) The ministerial method of airport management has failed, particularly since 1940, on a l l five criteria. The major Canadian airports operated by the federal Ministry of Transport have been unable to execute any of the major national government policies without beconiing increasingly dependent on the federal government for funds and direct management. The introduction of federal funding for improvements to meet the ICAO commitments of 1948 (Section 2.1) was the fi r s t sign of local airport management's inability to implement federal policy. Subsequently the Department of Transport purchased several airports across Canada in the 1950s and 1960s to manage them. Many of the federal policies implemented by Parliament, in the thirty years between 1960-1980, had negative impacts on the airports managed by the Ministry of Transport. The Regional Air Carrier Policy (1967) increased the demand for already congested airports, the implementation of the Airport Revolving Fund (1979) eliminated the possibility for revenue generating airports to be self-sufficient, and the liberalization of airlines (1984) created a second wave of demand for airport capacity when the federal ministry was reducing funds on airport expenditures (Section 2.2 & 2.3). This method of airport management has also failed on several occasions 160 to effectively acxonmodate changes in aviation technology and aviation growth. The evidence shows, the major airports in Canada have been caught in a losing cycle of catching up to the advancements (Section 2.4). The recent period of declining or slow growth in passenger traffic (1981-84) has given these airports an opportunity to break this cycle. They now could meet the aviation needs of the newest equipment (ie. 747-400) and integrate commuter airline needs into terminal designs. Unfortunately the federal government is not financially committed to these developments at this time and therefore the major airports are not able to break free of this losing cycle. Airport management was slow to react to the passenger volume increases of the 1960s and 1970s resulting in congestion problems and under designed terminals. The mega-carriers of the 1980s have added to these congestion problems by creating a monopoly over airport space in some cities thereby making i t impossible for other carriers to expand their service at these cities or for new carriers to entry service. Cities that have experienced this situation are witnessing the failure of the intent of other national aviation policy which was to increase competition by removing airline regulation (Section 2.4). These developments compounded with the creation of hub-&-spoke operations, and the lack of response by the ministerial management method, have resulted in even larger unsolved congestion and safety problems at major Canadian airports in the 1980s. The ministerial method of airport management has a serious fault in how 161 the major airports secure financing (Section 3.5). Airports compete against each other and with other ministries for limited funds available from the Federal Treasury. In 1988, with a government focussed on reducing their debt i t becomes increasingly difficult to convince them to spend the necessary funds on airport development for the 1990s and 2000s. The focus of the problem is airport financing i s tied directly to the political process of the Federal budgetary and financial planning process. Effective control of implementing any large project is centralized to Ottawa in a political process leaving local airport management unable to plan its future with financial certainty. Of the four management methods examined in this thesis the ministerial airport management decisions are the least successful in reducing political suasion (Section 2.6). The conflict between a service oriented government and cost/profit oriented aviation clients (airlines or concessionaires), has often resulted in major delays between meeting aviation demands and government investments. Being part of the federal bureaucracy the constant assessing of airport management decisions for political ramifications has meant changes are slow in developing and management is less effective in dealing with aviation developments. A lack of meaningful local participation has always been a strong criticism of the ministerial method of airport management in Canada (Section 2.7). This problem has resulted in the Ministry's inability to balance airport and cxsmmunity goals in relation to airport development. Airports are large properties operated outside of local planning 162 jurisdictions but their spatial influence on residential, commercial, industrial and recreational planning strategies are c r i t i c a l . /Although the solutions for airport development are the same as the American examples, the federal government applied them in unilateral moves without input from concern local interests. A management method which has more direct input by local participants (municipal government, aviation clients) would facilitate better balanced community and airport goals. 4.5 IfliXXMMEMlftTIONS The intent of this thesis was to analyze the Canadian and American approaches to airport management using five variables. As part of this comparison a proposition was also made that to; determine whether management of metropolitan airports in Canada requires a less or more centralized structure in order to be more successful in operating the airports effectively. After reviewing the four methods of management, the American airport authority method, with some modifications, emerged as the most promising method to decentralize airport management and increase their effectiveness as measured by the five variables. Several actions must be taken to establish airport authorities in Canada. First, the Federal Government in Canada, as the political body responsible for metropolitan airports in Canada, can initiate the necessary legislative changes. Airport authorities should be established as independent incorporated agencies to avoid the political influences which ministerial agencies and crown corporations are subject 163 to. The legislation would establish the authority with a method of electing members of the Board and the Airport Manager from local residents in separate elections. The separate elections reduces the pressure of political suasion on Board members and the manager because they are not dependent on being appointed by the other. The legislation to create the new authorities would also require coordination with Provincial land acts and policies since land is under Provincial responsibility as determined by Section 92 of the Constitution. In the past airport operations have been exempted from Provincial zoning acts and land acts because the Federal Government was given the right to operated aviation independently. This is a highly complex legal and constitutional question i f the Federal Government decides to actually give over the rights of the property to the new authorities. The issue requires much further research in these areas than is possible in the scope of this thesis but has been noted as a major issue to be address to enable the creation of airport authorities in Canada. Second, at least one of the positions on the Board should be a local senior bureaucrat from the planning department so that airport development plans are integrated with development plans for the entire vicinity. A senior planner on the Board is advocated, instead of a local politician, because this will provide the Board with a local planning perspective while eliciting operational knowledge of development for the region. A local politician on the Board would 164 entangle the airport authority in political issues and election cycles which are not a concern of the airport. Third, i t is recommended that legislation be passed by the Canadian federal government requiring the taxes raised on airline tickets, aviation fuels, etc., be firmly committed to airport and airway development. This legislation is necessary to prevent the problems that the American airports are currently faced with in convincing the American federal government to use the $6 Billion AATF funds on updating the airport and airway systems (see Section 3.5). Fourth, the Canadian federal government should maintain control of setting the standard for air traffic control regulation and airport security as a matter of national security. Safety and security issues are national and international issues which should not be viewed in isolation by individual airports or cities. Fifth, the new airport authorities must have the power to raise their own funds for operational and capital expenditures. These funds can be raised in the bond markets thereby separating airport development from the dependency on the political cycles of federal budgeting or any other political budgetary processes. The independence in funding gives individual metropolitan airports the ability to plan their financial future with greater certainty. A transitional period of federal guarantees will be required until the new airport authorities can prove to investors that they can effectively operate the airports. After this 165 i n i t i a l period of transition the airports should operate similar to Compensatory Cost approach airports in the United States. This approach will reinforce control with the airport authority for development plans and security over financial planning. Sixth, the Canadian airport authorities must have an effective cximmuriity relations department to maintain effective cxammunications and consultation with concerned municipalities and other interest groups. It is recognized that not a l l parties will be satisfied with a l l decisions by the Canadian airport authorities but this method has more room for improvement of communications over the present ministerial system. Seventh, the development of separate airport authorities will require training programs for existing personnel and a program to find highly qualified people for areas not currently under local airport management control. Current management is specialized in the political and bureaucratic procedures common to an organization which is part of a federal ministry. These skills are not the ones needed by management for operating independent airport authorities. Greater emphasis will be placed on the skills of; marketing, financing, public relations and cost analysis. 4.6 IMPLICATIONS The following implications could develop with the five criteria used to 166 monitor management's effectiveness i f airport authorities are established as the method of airport management at metropolitan airports in Canada. First, an airport authority will be able to implement national aviation policies more quickly and accurately because the authority's main directive and interest is concentrated on operating an airport. The airport authority will not be entangled in political issues which are not of direct concern of airport operations. Second, the administration of technological and passenger growth will be better managed using the airport authority method because of the direct input from the aviation community to the Board and Airport Manager in the development process for the airport. This process also has the local community represented through the position of a senior local planner to ensure coordination of airport development with the community's development strategy. The airport authority method improves the response time to changes in technology or passenger movements because, its localized nature allows i t to take action as these changes occur in their own region. Airport management is not required to wait for a centralized governing body to recognize trends and take action on i t . Responses to technological change and passenger growth will vary from one airport to another but that is expected since each city is faced with a different set of economic and social reasons for airport services. The localized nature of airport authorities allows for this flexibility. A fixed standard for safety and security can be set by the 167 Ministry of Transport for a l l airport operations thereby ensuring the public with safe operations regardless of the authority's and community's economic interests in airport development. Third, the acquisition of funds will be much less limited than when under the ministerial system. Airport authorities have proven that there are a large number of investors who are quite willing to invest in airport developments because of the tax-exemption status of airport bonds. This tax free status is crucial to the success of airport bonds and must be ensured when the federal government legislates the creation of the authorities. Otherwise there i s the possibility the airports will not be able to attract the investors they require to supply the necessary funds after the federal government withdraws its funds. Fourth, the airport authority method is the best method of reducing the high amount of political suasion problems currently plaguing the ministerial airports in Canada. The politicians will have no control over the airport's daily operations or expansion plans. The airports will no longer be subject to fund freezes when there are elections called or when there are Cabinet shuffles. The airports will no longer be subject to cycles of political uncertainty with respect to the direction of airport development because of other political issues which prevent Cabinet from making a budgetary decision in favour of the Ministry of Transport. Fifth, the airport authority method offers the best method for 168 integrating community goals into airport development plans. This will be a major breakthrough for the metropolitan Canadian airports. This ax»rdination of airport and community goals will present the opportunity to show how important airports are to their communities, economically as employment centres and socially as a connection to world cultures. The evidence in this thesis indicates that the airport authority method of management is a better management method for metropolitan airports than the Federal Ministry. The Canadian federal ministerial management method has failed with respect to the five variables identified in this thesis resulting in reduced efficiency, large additions to the public deficit and dissatisfaction by the travelling public and aviation business community. 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"The Fall of the Screaming Eagles: A charter-jet crash k i l l s 248 members of a famed Airborne unit", (Accident site Gander NfId), Time: New York, December 23, 1985, pp. 16-17. . Gordon M. Henry. Reported by Lee Griggs. "Buddy System in the Sky; Feeder airlines supply big carriers with small-town passengers". Time: New York, November 11 1985. . William E. Smith. Reported by J. Borrell & M. Gondicas. "Explosion on Flight 840; The shadow war continues as a bomb goes off aboard a TWA jet over Greece". Time: New York, April 14 1986, pp. 22-24. . George Russel. Reported by F. Ungeheuer. "Air Pocket in the Revolution". Time: New York, July 07 1986, pp. 46-48. . Ed Magnuson. Reported by P. Delaney and L. Kartus. "Unfriendly Skies; Delays and scrubbed flights take the joy out of this summer's flying". Time: New York, September 01 1986 pp. 10-11. . Ed Magnuson. Reported by J. Beaty and J. Hannifin. "Collision in the 'Birdcage'; The Los Angeles disaster renews concern about small aircraft". 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Regional Airports Task Force Association: Edmonton Alberta, June 1987. Wiley John R. Airport Administration. Westport Connecticut: Eno Foundation of Transportation Inc., 1981. Wiley John R. Airport Administration and Management. Westport Connecticut: Eno Foundation of Transportation Inc., 1986. PUBLIC DOCUMENTS 176 Canada. Parliament. House of Commons, "Speech Notes for Transport Minister Bon Mazankowski, Press Conference after Tabling of the National Transportation Act", Ottawa June 26 1986. Canada. Parliament. Nielsen Task Force: Vol. 6 Economic Growth &  Transportation. A Study Team Report to the Task Force on Program Review. Ottawa September 1985. Canada. Parliament. "Notes for Remarks by the Honourable Lloyd Axworthy", Standing Committee on Transport. Minister of Transport to the House of Commons, Ottawa May 10 1984. Canada. Transport Canada (Airports Authority Group). " Regorganization of the Airports Authority Group", Communique No. 3. Ottawa March 03 1986. Canada. Transport Canada. "Freedom to Move: The Legislation (Overview of National Transportation Legislation)", TP 7749 Document. Ottawa, June 1986. Canada. Transport Canada. "New Transportation Acts Tabled in Parliament", INFORMATION. Ottawa: press release June 26 1986. Canada. Transport Canada. "Freedom to Move: a framework for transportation reform", White Paper. Ottawa July 1985. Canada. Transport Canada. "Transport Canada Capital Project Approval Process", TP 100 Document. Ottawa 1985. Canada. Transport Canada. Deputy Minister Circular 86-04701-103. Ottawa 1985. Canada. Transport Canada. Circular. Vancouver International Airport, Vancouver 1985. Canada. Transport Canada. Comrnunique No. 3. Vancouver International Airport, Vancouver 1985. Canada. Transport Canada. "New Canadian Air Policy", Standing Committee on  Transport, notes for remarks present to House of Commons, Ottawa, May 10 1984. Canada. Transport Canada. "Airport Classification System", AK-40-10 Document. Ottawa 1983-84 Edition. Canada. Transport Canada. "Fincancial Planning & Programming in Transport Canada, Approval-in-Principle Process", Ottawa 1982. Canada. Transport Canada (Air Division). Hagglund M.G. Task Force on airport  Management Vol I & II. Ottawa 1979. Canada. Ministry of State for Small Businesses. "Statement by the Hon. Andre Bissonnette (minister), on the Occasion of the Tabling in Parliament of the new National Transportation Act", Ottawa June 26 1986. 177 United States. Department of Housing and Urban Development. Environmental Planning Paper, Airport Environs; Land Use Controls. Washington D.C.: U.S. Dept. of Housing and Urban Development, May 1970. 178 NEWSPAPER ARTICLES & RELEASES (By Date) September 07 1985 Al & A10. The Vancouver Sun. Chris Rose. "Year of the Aircrash". Vancouver. October 05 1985 B4. Globe & Mail. Carey French. ''Wardair gets set to offer scheduled flights". Toronto. October 09 1985 Bl & B8. . Robert Gibbens. "CP Air plans takeover of Nordair in bid to compete with Air Canada". Toronto. October 18 1985. Globe & Mail. Ken Remain. "Refashioned propeller back in vogue". Toronto. October 30 1985. The Vancouver Sun. Peter Cowan. "Airport agency ridiculed for losses". Vancouver. October 30 1985. Globe & Mail. "Delays predicted at Toronto airport". Toronto. October 30 1985. . David Stewart-Patterson. "Soaring airport costs linked to planning; Mazankowski • s ministry criticized for losing $678 million last year". Quoting from the Auditor-General (K. Dye) annual report Toronto. November 23 1985. . Letters to Travel. "Passenger hates returning to Pearson". Toronto. November 25 1985 Al & A2. . "As many as 50 passengers die when troops storm hijacked jet". Toronto. November 26 1985 A9. . "Bag set off alarm bell, Air India probe told; Airport alarm ignored, RCMP told". Toronto. December 02 1985 A9. . David Stewart-Patterson. "Growth expected at most airports but Toronto to be busiest". Toronto. December 02 1985 B18. . Marian Stinson. "Deregulation offers charter airlines better chance at profits". Toronto. December 02 1985 B17. . Doug Jansen. "CP Air gearing up to challenge Air Canada's domination". Toronto. December 02 1985 B17. . Cecil Foster. "Commuter carriers now most profitable in airline industry". Toronto. December 02 1985 B15. . Wilfred List. "Fears over effects of deregulation force unions into defensive mode". Toronto. December 02 1985 B15. . Carey French. "Tempo of competition rises in open-sky atmoshpere". Toronto. December 05 1985. Globe & Mail. Cecil Foster. "Nordair gets ready for new role as feeder line to CP Air". Toronto. 179 December 09 1985 Bl l . Doug Jansen. ••Vancouver's airport gets $17 million facelift for Expo 86". Toronto. December 14 1985. . "Don't rush deregulation, Turner urges". Toronto. December 14 1985. Globe & Mail. "Arrow 'sloppy,' U.S. expert says". Toronto. December 14 1985. . "Pilots reveal fears in U.S. safety poll". Vancouver. December 14 1985. The Vancouver Sun. Alex Binkley. "Crash brings Liberal cal l for deregulation delay". Vancouver. January 11 1986. Globe & Mail. Carey French. "Pilots, airlines dispute safety of twin-jets". Toronto. January 16 1986. . Carey French. "CP Air to start non-stop service to China from Vancouver in May". Toronto. January 17 1986. . Susan Delacourt and Francois Shalom. "Travellers in the dark as security increased". Toronto. January 17 1986 Al & A2. Globe & Mail, Michael Harris. "RCMP fear airport bomb attack: Tip sparks search for Libyan". Toronto. January 18 1986. The Vancouver Sun. "Airport security net kept tight". Vancouver. January 18 1986. Globe & Mail. Barbara Yaffe. "Air Canada's plan to move to St. John's has Gander in uproar". Toronto. January 20 1986. . Kirk Makin. "Officials are silent on threats at airports". Toronto. January 23 1986 Al & A3. . Jeff Sallot. "Near-collisions at airports spark inquiry". Toronto. January 23 1986. . "Transportation hits deregulation". Toronto. January 25 1986 Bl & B3. . Carey French. "Air Canada, CP Air revving up for dogfight over world routes". Toronto. January 25 1986 C5. . Margaret Mironowicz. "Aviation's grand old man readies for next battle". Toronto. January 27 1986. . Miro Cernetig. "Island airport out of space, shuts runway". Toronto. January 27 1986. . "Family wins expropriation battle, Will get back land on Sea Island". Toronto. February 05 1986. Globe & Mail. Lawrence Surtees. "Deregulation need not break up Air Canada, chairman tells seminar". Toronto. 180 February 27 1986. . Jeff Sallot. "Travellers in the North get measure of relief". Toronto. February 27 1986. Globe & Mail. Andrew Mcintosh. "Fliers in south will feel air tax bite". Toronto. Jan-Feb 1986, p. 10. CP Air News. "Sound Planning behind airline's many changes", CP Air News. Vancouver. March 15 1986. The Vancouver Sun. "Heathrow Airport ready for terminal number four", Vancouver. March 21 1986, A5. Globe & Mail. Margaret Mironowicz. "Wardair to fly cross-Canada route at lower prices", Toronto. March 28 1986. . Barbara Yaffe. "Gander irked by loss of Air Canada flights to St. John's Airport", Toronto. April 05 1986. . Barbara Yaffe. "Feathers ruffled, Gander flies into action". Toronto. April 05 1986 pp. 1 & 20. The New York Times. James Sterngold. "A Switch From Long Bonds; Shorter Issues Gaining Favor". New York. April 09 1986. Globe & Mail. Christopher Waddell. "Cause of Gander air crash s t i l l elusive, probe told; Combination of factors cited as possibly triggering accident". Toronto. April 10 1986. The New York Times. Letter to Editor (by Alfred E. Khan). "Good and Bad in Our Vanishing Regulatory Agencies". New York. June 12 1986. Globe & Mail. Andrew Mcintosh. "Airport aid in PM's riding defended". Toronto. June 23 1986, B13 & B14. . Bruce Little. "Policy changes wil sweep across land, water, sky". Toronto. June 23 1986. . Carey French. "Competition may affect air safety". Toronto. June 26 1986. . Agis Salpukas. "How People Express grew into a loser". Toronto. June 27 1986 A3. . (Madrid Spain). "Suitcase explodes at airport". Toronto. June 30 1986, A5. . Barbara Yaffe. "North Atlantic flights at risk, radio operators say". Toronto. July 09 1986. Globe & Mail. "People Express board weighs options". Toronto. July 10 1986 B7. . "U.S. puts conditions on Texas Air Merger". Toronto. 181 July 15 1986. . Christopher Waddell. "Deregulation may change airline pact". Toronto. July 20 1986. The Vancouver Sun. Larry S t i l l . "Three airlines win right to recover $11 million from B.C. government". Vancouver. July 30 1986. . "Jet to open new airport". Vancouver. August 03 1986. Sunday Times. Ian Williams. "Planes in new wave". London England. August 04 1986. New York Times. Willard F. Mueller. "Wrong signals On Antitrust". New York. August 05 1986 Al & A3. Globe & Mail. Lome Slotnick. "Airline deregulation threatens plane refuellers' jobs, wages; Workers feel let down by federal airport policy". Toronto. August 07 1986. The Vancouver Sun. Alan Daniels. "Canada applauded for airport security". Vancouver. August 08 1986. . "Canadians fear they'll lose war over Pacific air routes". Vancouver. August 08 1986. Globe & Mail. Carey French. "CP Air worried about North Pacific routes". Toronto. August 09 1986 pp. 1-2. The Financial Post. Giles Gherson. "Air rivalries heat up; U.S. mergers flash danger signal for Canadian carriers". Toronto. August 09 1986. . Mathew Horsman. "Quebecair sale to Nordair Metro leaves Air Canada out in the cold". Toronto. August 12 1986. Globe & Mail. Jeffrey Simpson. "Terminal horror"; an open letter to the minister of transport John Crosbie. Toronto. August 13 1986 A15. . Douglas McArthur. "Up, up and away to airport on an Air Canada helicopter". Toronto. August 13 1986. . Mathew Ingram. "Airport firemen upset by memo on staff reduction". Toronto. August 14 1986. The Vancouver Sun. Alan Daniel. "Airport passenger record set". Vancouver. August 16 1986. . David Gersovitz. "U.S. airlines boost security at airports". Vancouver. August 23 1986 Al & A2. Globe & Mail. Peter Moon. "Airport Mounties may get combat uniforms, new arms; New weapons proposed". Toronto. August 24 1986 Al & A15. The Sunday Star. Olivia Ward. "Waits, lineups growing in congested Terminal 1". Toronto. 182 August 26 1986. Globe & Mail. "Mounties at airports to keep old uniforms". Toronto. August 26 1986. The New York Times. Jonathan P. Hicks. "Hub Shakeouts Hard to Avoid". New York. August 27 1986 Bl & B39. . Clyde H. Farnsworth. "Japan Plans Open Bids On Project; Japanese Airport Bidding to Be Open". New York. August 30 1986 B7. The Vancouver Sun. Rob Ludlow. "Air traffic on the way up, controllers on way down". Vancouver. September 01 1986 Al & A2. Globe & Mail. "Mid-air collision near Los Angeles k i l l s 67 in 2 planes, 5 on ground". Toronto. September 02 1986 Al & A17. The New York Times. Richard Witkin. "Crash Inquiry said to focus on error by private plane". New York. September 02 1986. . Robert Lindsey. "Los Angeles skies heavily traveled; Air Traffic in Region, Busiest in U.S., Poses Major Safety Challenge to Experts". New York. September 02 1986. . Robert 0. Boorstin. "Figures Show 3% Rise in Near Collisions". New York. September 03 1986. . Ralph Blumenthal. "Private Flying Safety Debate Flares". New York. September 06 1986 Al & A3. Globe & Mail. (Karachi Pakistan) "2 hijackers slain as troops storm plane; 17 dead, 3 Canadians among injured". Toronto. September 12 1986 Al & A2. . Drew Fagan. "Investors invited to build terminal at Toronto airport". Toronto. September 15 1987. Globe & Mail. (Seoul, Korea) "5 Koreans killed, up to 35 injured in airport blast". Toronto. September 16 1987. . "Texas Air acquires People Express". Toronto. September 16 1986 Bl & B36. The New York Times. Thomas C. Hayes. "Texas Air's Hard Bargainer". New York. September 16 1986 Bl & B36. . Agis Salpukas. "Texas Air Buying People Express for $125 Million; Washington Aprroval Needed - Merger Would Create Largest U.S. Carrier". New York. September 16 1986. . Nathaniel C. Nash. "Business and the Law; U.S.'s 'Fix-It' Antitrust Policy". New York. September 17 1986 A19. Globe & Mail. Douglas McArthur. "Efficient Atlanta airport the shape of the future". Toronto. September 17 1986. . John Eraser. "French visa rules spark airport delays". Toronto. 183 September 20 1986. . Lise Bissonnette. "Oh to be jammed into Toronto airport!". Toronto. September 23 1986 Al & A37. The New York Times. Steven Prokesch. "Behind People Express's Fall: An Offbeat Managerial Style". New York. September 23 1986, Al & A2. Globe & Mail. Christopher Waddell. "Report rejects privatization of airports". Toronto. September 26 1986 Al & A2. . "Canada says airport terrorism should be extraditable crime". Toronto. October 11 1986. The Vancouver Sun. David Gersovitz. "Flight delays can leave you waiting in the wings". Vancouver. October 14 1986 Al & A2. Globe & Mail. Zuhair Kashmeri. "Canadian airport security program working". Toronto. October 22 1986 B22. . Rudy Platiel. "Reward seen as secret to privatization". Toronto. October 25, 1986. The Ottawa Citizen. "Texas Air cleared to buy People Express". Ottawa. November 11 1986 D7 & D10. . Norman Provencher. "Airline Deregulation; It's a plan that worries small-town Canada". Ottawa. November 11 1986 D10. . "U.S. experience shows pitfalls of deregulation". Ottawa. November 12 1986. Globe & Mail. Gary Webb-Proctor. "Malton in revolt against noise from low-flying jets at airport". Toronto. November 18, 1986 B8. . "Air Deregulation plans under attack". Toronto. November 24 1986. . "High-flying PWA on the lookout for opportunities". Toronto. November 25 1986. . "Repair centre is considered for Mirabel". Toronto. November 29 1986. The Vancouver Sun. Alan Daniels. "AirBC, Air Canada deal receives mixed reviews". Vancouver. December 01 1986. Globe & Mail. Joan Breckenridge. "Service chain lands Canadian airport". Toronto. December 02 1986 Al & A14. . Carey French. "Regional carrier PWA on brink of buying giant CP Air". Toronto. December 03 1986 Bl & B2. . Carey French. "PWA's takeover of CPAL may ease war, not rivalry". Toronto. December 05 1986 A4. . Ross Howard and Francois Shalom. "Troubled 184 Montreal airports to be merged". Toronto. December 05 1986. . Editoral letter. "The airport shuffle". Toronto. December 07 1986. The New York Times. William F. Bolger. "Take the F.A.A. Out of Traffic Control". New York. December 07 1986. . Jack A. Blum. "Don't Play Politics With Airline Safety". New York. December 07 1986. . Paul Grimes. "Practical Traveler: Those Exasperating Airline Delays". New York. December 08 1986 CI & C2. Globe & Mail. Douglas McArthur. "Deregulation: not what was expected". Toronto. December 08 1986 C3. . Ken Remain. "$1.4 billion for airways and airports". Toronto. January 09 1987. . "Rise in near misses reported by FAA". Toronto. January 13 1987 Bl & B2. . Carey French. "Air Canada chairman urges quick privatization of airline". Toronto. January 13 1987 Al & A12. The New York Times. Richard Witkin. "Safety Record Of U.S. Airlines Shows Big Gains". New York. January 16 1987. . Richard Witkin. "2 Planes Collide in Utah, Killing 10 3 Houses Reported Damaged -No One on Ground Hurt". New York. January 17 1987. Globe & Mail. "FAA approves 3 jets for flying new routes". Toronto. January 21 1987. The New York Times. "5 Die in Midwest Plane Collision". New York. February 02 1987 Bl & B15. . Eric Sdmdtt. "Vast Growth Set for New York Airports". New York. February 06 1987. Globe & Mail. Jock Ferguson. "Groups recruit PM's associates in contest for air terminal". Toronto. February 07 1987. The Vancouver Sun. Gordon Hamilton. "Airport hotel proposals sought". Vancovuer. February 10 1987 A3. Globe & Mail. Robert Fife. "Crosbie fishing trip with airline chiefs called cause to resign". Toronto. February 12 1987 Al & A17. The New York Times. Richard Witkin. "Plan to Avert Air Traffic Delays On East Coast Is Starting Today". New York. February 18 1987. Globe & Mail. "Story 'full of errors' on airport contract, aide to LaSalle says". Toronto. 185 February 24 1987. The New York Times. (Japan). "Japan Airport Competition". New York. February 28 1987 Bl & B4. Globe & Mail. Cathryn Motherwell. "Privatization trend faces test over Big 3". Toronto. February 28 1987 B4. . Cathryn Motherwell. "Tory-style privatization process tests bidders' stamina, corporate coffers". Toronto. March 01 1987 Bl & B4. . Bruce Little. "Privatization i s a dull knife in deficit cutting". Toronto. March 02 1987. . Carey French. "Chief pushing Air Canada sale". Toronto. March 03 1987 Bl. • Brian Milner. "A better l i f e i s objective of worldwide privatization push". Toronto. March 15 1987 Al. Province. Lavern Procyk. "Airport Boycott Feared". Vancouver. April 09 1987 Al & A3. The Vancouver Sun. "Airports for sale or rent, some strings attached". Vancouver. April 11 1987 Bl & B4. Globe & Mail. Cecil Foster. "Air Canada aim to break away from Ottawa". Toronto. May 05 1987 B16. . Christopher Burns. "Hub system lets travellers get from there to here, but not a l l that easily". Toronto. May 05 1987 B20. . "Airline traffic rises 6%; accidents down (World)". Toronto. May 27 1987 A5. . Deborah Wilson. "'Disaster' tests airport's emergency plans". Toronto. May 28 1987 A8. . Michael Tenszen. "Human mistakes cited as airplane accidents show increase of 8% (Canada)". Toronto. June 12 1987. . David Stewart-Patterson. "Cities fear airports they take over may turn out to be white elephants". Toronto. June 14 1987 S8 pp. 1 & 8. The New York Times, Sunday. Jennifer Stoffel. "An Airport to Land Business". New York. June 16 1987 B23. Globe & Mail. "BAA annual pre-tax profit rises before privatization". Toronto. June 17 1987 A8. . Michael Tenszen. "U.S. airlines reeling from deregulation". Toronto. June 18 1987 A3. . Michael Tenszen. "'Close calls' get closer in crowded U.S. air lanes". Toronto. 186 June 22 1987 A3. . Patrick Sullivan. "Military airports tighten security". Toronto. June 23 1987 Al & A5. . Jock Ferguson. "Condo builder wins air terminal contract". Toronto. June 23 1987 A5. . Stevie Cameron. "Bids 'pure as the driven rose' despite lobby, Crosbie says". Toronto. June 23 1987 B23. . Cotten Timberlake. "Highest bidders to get same BAA stock as Britain serves privatization with twist". Toronto. June 24 1987 B18. . Michael Tenszen. "Clean up deregulation mess, airline chief urges". Toronto. June 25 1987 B19. . Michael Tenszen. "Ex-polit claims same U.S. airlines prefer profit to safety". Toronto. June 25 1987. The Vancouver Sun. Alan Daniels. "Better Use of Airports Urged". Vancouver. June 24 1987, . Mark Wilson. "Airline ticket levy could play havoc with income". Vancouver. June 26 1987 B3, Globe & Mail. Peter Cook. "Canadian privatization turtle holds a lesson for British hare". Toronto. June 26 1987 B7, . Michael Tenszen. "Ottawa to give air safety top priority under deregulation". Toronto. June 27 1987 A7, . "Boston neighbors vow to rebuild after crash". Toronto. 187 INTERVIEWS & SPEAKERS Director Port Authority of Seattle, Growth of the Seattle Port Authority, Canadian Institute of Planners Confernece, Vancouver, July 22 1986. Guffi Ross (Senior Planner Municipal Affairs Alberta), lecture on the AVPA  GUIDELINE PROCESS. Canadian Institute of Planners Conference, Vancouver: July 22 1986. British Columbia Aviation Council (BCAC) Conference, Meridian Hotel, Vancouver B.C. May 12-13 1987. Price Waterhouse/Sypher:Mueller Conference, Canadian Airports: The New Era. Pan Pacific Hotel, Vancouver B.C. June 24 1987. 188 APPENDIX 1 TABLE 1 CITY OR AIRPORT S I Z E OF CITY# ( a c r e s ) S I Z E OF AIRPORT ( a c r e s ) AIRPORT SIZE as a % of c i t y s i z e DISTANCE t o C i t y C e n t r e CANADA C a l g a r y 124,784* 4,900 3.9 9 m i . S Edmonton 85,496 7,200** 8.4 19 " NE H a l i f a x 15,567 2,300 14.9 26 " NE D o r v a l ' 43,000 3,600 8.3 14 i . y M i r a b e l 43,000' 88,000 204.6 34 " NW O t t a w a 81,048 5,100 6.2 11 " S T o r o n t o 153,600' 14,300 9.3 18 " NW V a n c o u v e r 28,169 3,657 12.9 11 " S W i n n i p e g 62,515 3,800 6.1 4 n y UNITED STATES A t l a n t a 83,968 3,800 4.5 9 mi . S C h i c a g o 145,984 7,000 4.8 18 " NW D a l l a s 18,000 18,000 100.0 13 " NW D e n v e r 68,352 4,651 6.8 6.5 i " NE L o s A n g e l e s 298,176+ 3,500 1.1 17 " SW J . F . Kennedy 192,96011 4,930 2.6 15 " SE L a G u a r d i a II 650 0.3 8 " NE Newark ti 2,300 1.1 16 " SW S e a t t l e 53,504 . 2,000 6.5 13 " S D u l l e s 40,128++ 10,000 24.9 26 .. y N a t i o n a l II 680 1.7 3 " S ( N o t e s on f o l l o w i n g page) 189 APPENDIX 1 NOTES TO TABLE 1 SYMBOL NOTE * M e t r o p o l i t a n a r e a o f C a l g a r y i n c l u d e s l a r g e r u r a l l a n d t r a c t s . ' A c r e a g e r e p r e s e n t s t h e s i z e o f t h e C i t y o f M o n t r e a l . * A c r e a g e r e p r e s e n t s t h e M e t r o p o l i t a n a r e a o f T o r o n t o . + A c r e a g e r e p r e s e n t s t h e M e t r o p o l i t a n a r e a o f L o s A n g e l e s , H A c r e a g e r e p r e s e n t s t h e M e t r o p o l i t a n a r e a o f New Y o r k C i t y . ** A c r e a g e and d i s t a n c e f i g u r e s r e f e r t o Edmonton I n t e r -n a t i o n a l A i r p o r t . ++ A c r e a g e r e f e r s t o t h e D i s t r i c t o f C o l u m b i a M e t r o p o l i t a n a r e a . 190 APPENDIX 1 TABLE 2 AIRCRAFT STATISTICS (By Decade) YEAR BUILT AIRCRAFT TYPE PASSENGER CAPACITY SPEED (mph)/ RANGE ( m i ) MAX T.O. WEIGHT ( I t 1926 T r i m o t o r 22 128/700 12,500 1935 DC-3 36 194/1510 28,000 1937 BEECH-CRAFT 18 9 209/1530 9,900 1942 DC-4 86 204/2140 73,000 1946 DC-6 108 265/3005 107,000 1947 CONVAIR-240 52 289/1300 49,100 1950 VICKERS-700 59 312/1750 64,500 1953 DC-7 105 274/4100 143,000 1955 CONVAIR-540 56 300/1230 55,000 1955 FK F27 48 302/1335 45,000 1956 VICKERS-800 75 352/1725 72,500 1958 DC-8-10 179 580/7000 325,000 1958 B707 181 618/4235 '257,000 1959 B707-320 195 605/6240 333,600 1959 VANGUARD 139 425/1830 146,500 SOURCE: T a y l o r J o h n C o m m e r c i a l W.R. ( e d . T r a n s p o r t ) . JANE'S P o c k e t A i r c r a f t , C o l l i e r Book o f , New Y o r k , 1! APPENDIX 1 TABLE 2 ( c o n t d ) S T A T I S T I C S OF MAJOR COMMERCIAL AIRCRAFTS (By Decade) YEAR BUILT AIRCRAFT __TYPE__ PASSENGER SPEED (mph)/ CAPACITY RANGE ( m i ) MAX T.O. WEIGHT 0 1962 VC-10 174 581/4720 335,000 1963 BAC 111 89 541/1865 92,000 tt»» B727-100 131 607/2025 160,000 1965 DC-9 125 560/1685 114,000 1966 DC-8-60 259 600/7700 350,000 ti tt B747-100 480 608/6620 775,000 1967 B727-200 189 599/2880 208,000 II ti B 737-100 115 586/2530 N.A. it ti B 737-200 130 576/2370 115,500 II ii BAC 111— 500 119 541/1480 99,650 1969 CONCORDE 120 1558/3050 389,000 1970 DC-10-10 380 570/4272 555,000 1972 DC-10-30 380 570/5930 580,000 II n A-300B 331 582/1000 ' 302,000 1977 DASH7-100 50 261/795 44,000 1978 A310-200 265 529/4364 305,560 1980 MD-81 172 578/1300 149,500 S o u r c e : T a y l o r J.W T r a n s p o r t .R.f JANE' S P o c k e t Book o f C o m m e r c i a l A i r c r a f t , C o l l i e r , New Y o r k , 1973. 192 APPENDIX 1 TABLE 2 ( c o n t d ) S T A T I S T I C S OF MAJOR COMMERCIAL AIRCRAFTS (By Decade) YEAR BUILT AIRCRAFT TYPE PASSENGER .CAPACITY SPEED (mph)/ _RANGE_(mi)_ MAX T.O. WEIGHT (! 1980 DC-10-30ER 380 623/6600 580,000 1981 DC-10-15 380 623/4258 455,000 »»ti MD-82 155 ' 578/1497 147,000 i t i t B A e l 4 6 - 1 0 0 93 ' 440/1077 84,000 1982 B757-200 239 608/4595 250,000 1983 MD-83 155 578/2880 160,000 I t TI B A e l 4 6 - 2 0 0 109 440/1355 93,000 f t I t B767-200 290 608/3777 300,000 It I t B747-300 512 610/6502 800,000 I t It A300-600 375 553/4030 363,765 1984 B737-300 149 532/1860 124,500 t t t i DASH8-100 39 309/1025 33,000 1985 DASH8-300 56 327/1000 39,600 t t t t EMB-120 30 313/1088 25,353 1986 DASH7-150 50 261/1313 47,000 t t t t B767-300 330 608/4404 345,000 t t t t B767-300ER 310 608/6707 380,000 1987 A320-200 179 500/2222 145,505 1988 B747-400 515 610/8060 850,000 1989 MD-11 405 623/7830 575,000 S o u r c e : T a l y o r J.W.R., JANE'S A l l t h e W o r l d ' s A i r c r a f t 1 986-87. L o n d o n , 1986. 193 FIGURE 1 PERSONS YEARS AS A PERCENTAGE OF ANNUAL TRANSPORT PROGRAM RESOURCES 1985-86 ACC INVST 1.2% SAFETY 9.0% ECO RGLTN 2.5% OTHER 2.4% RESEARCH 0.7% RWY FREIGHT 0.2% GRAIN 0.2% RAIL PAX 0.2% PORTS 0.5% FIGURE 2 NET COSTS AS A PERCENTAGE OF ANNUAL TRANSPORT PROGRAM RESOURCES 1985-86 FIGURE 3 APPROVAL-IN-PRINCIPLE PROCESS 195 P r o b l e m / O p p o r t u n i t y / I d e a P r e p a r a t i o n of APD A d m i n i s Appr F 1 t r a t i o n o v a l < $3M C a p i t a l P r o g r a m > > $3M* DM/DMX A p p r o v a l * $1M f o r D e p a r t m e n t a l A d m i n i s t r a t i o n G roups £ l e s s t h a n o r e q u a l t o > g r e a t e r t h a n S o u r c e : " F i n a n c i a l P l a n n i n g & P r o g r a m m i n g i n T r a n s p o r t C a n a d a , A p p r o v a l - i n - P r i n c i p i e P r o c e s s , " T r a n s p o r t C a n a d a , O t t a w a , 1982. FIGURE 4 PROJECT APPROVAL PROCESS 196 PRELIMINARY Preparation of PAD or TBS Administration PAD Approval TBS / DM/DMX Approval M i n i s t e r 1 s Approval s TB Preliminary Approval ** Develop Class B Cost Estimates ** Subject to the al l o c a t i o n and EFFECTIVE Preparation of ' PAD or TBS Administration Approval PAD TBS DM/DMX Approval Minister ' s Approval *• TB Ef f e c t i v e Approval * ** Implement Project a v a i l a b i l i t y of funds Source: "Financial Planning & Programming in Transport Canada, Project Approval Process:" Transport Canada, Ottawa, 1982. 197 198 MAP 2 Montreal and its airports. Reprinted from Elliot J. Feldman and Jerome Milch, Technocracy versus Democracy: The Comparative Politics of International Airports (Boston: Auburn House Pub-lishing Company, 1982). APPENDIX 1. MAP 3 Toronto and its airports. Reprinted from Elliot J. Feldman and Jer-ome Milch, Technocracy versus Democracy: The Comparative Politics of In-ternational Airports (Boston: Auburn House Publishing Company, 1982). The C a n a d i a n APPENDIX 1 ORGANIZATIONAL CHART 1 A i r T r a n s p o r t a t i o n A d m i n i s t r a t i o n 1978 Deputy M i n i s t e r Administrator A i r Admi n i s t r a t i o n Deputy Administrator I D i r e c t o r PERSONNEL I D i r e c t o r General POLICY & PLANNING D i r e c t o r General FINANCE I D i r e c t o r OPERATIONS REVIEW D i r e c t o r General AIRPORTS & CONSTRUCTION D i r e c t o r General-CIVIL Regional Administrator(s) I Region Manager PERSONNEL Region Manager PLANNING Region Manager FINANCE A i r p o r t (Note 1) X Region Manager AIRPORTS & PROPERTIES Region ADMINISTRATIVE SERVICES / / NOTE 1 PRINCIPAL AIRPORTS Managers report to Regional Adm. Adminstrator: A i r p o r t (Note 2) r Region Manager CONSTRUCTION SERVICES I Region Manager TELE-COMMUNICATIONS Region Mgr A i r T r a f f i S e r v i c e s Manager AIRPORT OPERATIONS Toronto/Dorval/Mirabel I Region CIVIL AVIATION A i r p o r t (Note 3) 1 NOTE 2 PRINCIPAL AIRPORTS Managers Report to Region Maanger of A i r p o r t s & Pr o p e r t i e s Branch: Vancouver/Calgary/Edmonton I n t l Winnipeg/Ottawa/Halifax/Gander NOTE 3 PRINCIPAL AIRPORTS Managers report to Manager of A i r p o r t Operations: Victoria/Regina/Saskatoon/Thunder Bay/London/Windsor/Quebec/ Charlottetown/Fredericton/Moncton S a i n t John/Sydney/St. John's Source: Baldwin B l a i r , The Management Structure of A i r p o r t Operations i n Canada and the U.S.. 1980, pg. 7. APPENDIX 1 ORGANIZATIONAL CHART 2 Canadian A i r T r a n s p o r t a t i o n A d n i n t i t r a t i o n 1972 GENERAL MANAGER PRINCIPAL AIRPORT X REGIONAL ADMINISTRATOR REGION MANAGER AIRPORTS & PROPERTIES BRANCH SUPERINTENDANT AIRPORT SERVICES INDUSTRIAL SAFETY AIRPORT EMERGENCT SERVICES AIRPORT POLICING « SECURITY AIRPORT TERMINAL SERVICES * • — — » — ,-. -n- -m SUPERINTENDANT MARKETING ft PROPERTIES MARKETING PROPERTIES SUPERINTENDANT AIRPORT FACILITIES SUPERINTENDANT PLANNING & PROGRAM ADMINISTRATION MECHANICAL MAINTENANCE BUDGET ADMINISTRATION ELECTRICAL MAINTENANCE CIVIL ENGINEERING MAINTENANCE PLANNING STAFF FINANCIAL ASSISTANCE STAFF PROJECTS STAFF A l l Report -separately I Manager AIRPORT OPERATIONS TRANI SPORT CANADA AIRPORT TRANSPORT CANADA AIRPORT a: TRANSPORT CANADA AIRPORT TRANSPORT CANADA AIRPORT IE TRANSPORT CANADA AIRPORT T TRANSPORT CANADA AIRPORT TRANSPORT CANADA AIRPORT 1 General Manager PRINCIPAL AIRPORTS a: TKAnSPORT CANADA AIRPORT A DH PRINCIPAL AIRPORT - ^ - 1 1 ADM PRINCIPAL AIRPORT Susbalty Airp o r t * Sourest Baldwin B l a i r , The Manageaent Structure ot Airport Operations In Canada and the U.S.. UBC, I960, p.9. K5 O O 201 APPENDIX 2 DIAGRAM 1 A I R L I N E ROUTE STRUCTURES A i r l i n e R o u t e S t r u c t u r e P r e - 1 9 7 8 * L i n e a r Network - D i r e c t , non-stop f l i g h t s between most c i t i e s . ADVANTAGES * D i r e c t f l i g h t s f o r passenger * Shortest f l y i n g time * A l l a i r p o r t s experience growth i n t r a f f i c VAN DISADVANTAGES (I) TOR * Economically i n e f f i c i e n t f o r a i r l i n e o p e r a t i o n s - i e . where de n e s i t y i s low on some rout e s * A i r l i n e s need more equipment & crew t o keep a l l routes i n o p e r a t i o n A i r l i n e R o u t e S t r u c t u r e P o s t - 1 9 7 8 * Hub & S p o k e S t r u c t u r e f i r s t u s e d i n t h e d e r e g u l a t e d U.S. d o m e s t i c m a r k e t . VAN TOR ADVANTAGES DISADVANTAGES Economies of Density working f o r the a i r l i n e s - ^ -become more e f f i c i e n t use of equipment and crew more e f f i c i e n t a i r l i n e may mean lowere f a r e s may open up p o s s i b i l i t i e s f o r other a i r p o r t s i n system to a t t r a c t new t r a f f i c by f r e e i n g up time s l o t s f o r l a n d i n g * Passengers now must change planes * Connecting time adds t o journey * i n example, CAL a i r p o r t has a l a r g e r i n c r e a s e i n t r a f f i c i n comparison t o others i n system * CAL a i r p o r t q u i c k l y congested during peak hours t o process "hubbing" f l i g h t s CANADA AIRPORTS - EAST Enplaned & Deplaned Passenger Volumes 1964 - 1980 GRAPH 1 Toronto Dorva! Ottawa — Halifax Mirabel 1964 1968 1972 1976 1980 Source: Aviation Statistics Centre, DBS-51-203 k 51-005, Ottawa. CANADA AIRPORTS - EAST EnpScned & Deplaned Passenger Volumes 1981 - 1984 L —< c - 4 : z—, ? ; , j • Toronto -©- Dorval -*r Ottawa — Halifax H— Mirabel 1981 1982 1983 1984 Source: Aviation Statistics Centre, DBS-51-005 Table 3, 1985. Canada Airports - West Enplaned k Deplaned Passenger Volumes 1964 - 1980 GRAPH 3 0 -| 1 j 1 i 1 i > ~~ 1964 1968 1972 1975 . 1980 Source: Aviation Statistics Centre, DBS 51-203 k 51-005, CANADA AIRPORTS - WEST Enplaned k Deplaned Passenger Volumes 1981 - 1984 GRAPH 4 1981 1982 1983 1984 Source: Aviation Statistics Centre, D3S-51-005, Table 3, 1985. CANADA AIRPORTS - EAST T H 0 U S A N D S Total Civil Aircraft Movements 1964 - 1 9 8 0 GRAPH 5 Toronto -e - Dorval Ottawa — Halifax Mirabel 1964 1968 1972 1976 1980 CANADA AIRPORTS - EAST Total Civil Aircraft Movements 1981 - 1984 GRAPH 6 240 -140 -Toronto -Q- Dorval -x- Ottawa — Halifax -+- Mirabel 1981 1982 1983 1984 Source: Aviation Statistics Centre, TP 577, Table 3, 1968-84 CANADA AIRPORTS - WEST Total Civil Aircraft Movements 1964 - 1980 GRAPH 7 1964 1968 1972 1976 1980 CANADA AIRPORTS - WEST Total Civil Aircraft Movements 1981 - 1984 GRAPH 8 D S 100-50-j - i : i : 1 1981 1982 1983 1984 Source: Aviation Statistics Centre, DBS 51-005, Table 3, 1985. APPENDIX 2 ORGANIZATIONAL CHART 2 Port A u t h o r i t y of New York & New Jersey D i r e c t o r & Deputy D i r e c t o r A s s i s t a n t D i r e c t o r X Business Admin. D i v i s i o n Gen. Mgr. A v i a t i o n Planning D i v i s i o n Chief & Assoc. Chief A v i a t i o n Economic Marketing Div. Chief Assoc. Chief of Finance, & Assoc. Chief Finance A s s i s t a n t D i r e c t o r Kennedy I n t l A i r p o r t General Manager LaGuardia A i r p o r t General Manager New Jersey A i r p o r t s General Manager A d m i n i s t r a t i o n & Human Resources Unit A v i a t i o n P u b l i c S e r v i c e s D i v i s i o n Chief H e l i p o r t s Manager SOURCE: Smith Donald e t . a l , A i r p o r t Planning and Management, 1984, p. 135. ( E f f e c t i v e December 8 1982) to O 207 M I L L I 0 N S U.S. AIRPORTS - EAST Enplaned & Deplaned Passenger Volumes 1950 - 1980 GRAPH 1 40 1 30 -20 -10 -J.F. Kennedy LaGuardia -x- Newark — Atlanta •+• Dulles -^National 1950 1955 1960 1965 1970 1975 1980 Source: FAA Statistical Handbook of Aviation, 1961 & 1965, U.S. AIRPORTS - EAST Enplaned & Deplaned Passenger Volumes 1981 - , 1 9 8 4 GRAPH 2 40 M I L L I O N S 20 '10 j • — t >~ S I -=i 3 " J P ^ ; J • — ( — -j ; ; J.F. Kennedy LaGuardia •x- Newark — Atlanta -+• Dulles -* f National 1981 1982 1983 1984 Source: ICAO, Airport Traffic Statistics, Digest No. 315, 1984. M I L L I 0 N S M I L L I 0 N S U.S. AIRPORTS - WEST Enplaned & Deplaned Passenger Volumes 1950 - 1980 GRAPH 3 208 I • * : 1 I '/..I ./.. Y^-^r-— V ¥ ^ / ! Chicago •©• Denver Dalas/a Worth — Los Angels - Seatle 1980 1950 1955 1960 1965 1970 1975 U.S. AIRPORTS - WEST Enplaned & Deplaned Passenger Volumes 1981 - 1984 GRAPH 4 45-25 -15 -, .—-—• 1 -—• — } ; •* Chicago •©• Denver •* Daflas/Fl Worth — Los Angels - Seatle 1981 1982 1983 1984 Source: FAA Statistical Handbook of Aviation, 1950 - 1965, Stroud J . , Airports of the World, 1980 U.S. AIRPORTS - EAST Aircraft Movements By Airport 1950 - 1980 GRAPH 5 209 J.F. Kennedy LaGuardia -x- Newark — Atlanta -+- Dulles -^National 700 1950 1955 1960 1965 1970 1975 1980 U.S. AIRPORTS - EAST Aircraft Movements By Airport 1981 - 1 9 8 4 GRAPH 6 T H O U S A N D S 200 100 1 \ * — I . . , .!, , -: A I — ~ & * 1 " " 1 J.F. Kennedy -©- LaGuardia •x- Newark — Atlanta H- Dulles -x f Notional 1981 1982 1983 1984 Source: FAA Statistical Handbook of Aviation, 1961 & 1965. Stroud J . , Airports of the World, 1980. T H 0 U S A N D S T H 0 U S A N D S U.S. AIRPORTS - WEST Aircraft Movements By Airport 1950 - 1 9 8 0 GRAPH 7 210 600 -400 -200 J Chicago -©- Denver x- Daflos/FL Worth — Los Angels - Seatle 1950 1955 1960 1965 1970 1975 1980 U.S. AIRPORTS - WEST Aircraft Movements By Airport 1981 - 1984 700 -500 300 -100 GRAPH 8 v—  e j 1 1 1 — 1981 1982 i 1983 •x Chicago •0- Denver •x Dfllos/Fl Worth — Los Angels -f-Seatle 1984 Source: ICAO, Airport Traffic 1984, Digest No. 315, 1984. 211 APPENDIX 3: DEFINITIONS APPROVAL-IN-PRINCIPLE - formal presentation of proposals to the appropriate level of management to seek the authority to proceed with the detailed analysis required to develop a specific solution to a problem or opportunity. CAPITAL PROJECT - refers to the acquisition of an asset (e.g. buildings, roads, works, machinery, furnishings and equipment) and any major alterations or modifications to an asset which improve performance or capability. The term does not include the normal repair and maintenance of an asset. CONSTANT DOLLARS - dollars tied to a stated base year (i . e . excludes inflations). COST OVERRUN APPROVAL - must be sought from the appropriate approval authority when there is an expected or actual increase in the cost of a project following effective project approval. This increase onay either be over the estimated cost to which approval was given (total overrun) or where a project has already incurred approved overruns, over any subsequent approved cost (current overrun). An increase in total estimated project costs resulting from the development of successively more reliable estimates prior to effective project approval wi l l not be considered a cost overrun. CURRENT DOLLARS - dollars of the fisc a l year in which expenditures will be made; they are also called budget year dollars (i.e. includes inflations). DECISION DOCUMENTS APD - refers to the document through which management approval is sought prior to proceeding with the detailed analysis required to develop, a specific solution to a problem or opportunity. PAD - refers to the document through which preliminary or effective project approval is sought for those projects having a TEC within the Department's delegated authority-i.e., in Administration a PAD will be used when the TEC fa l l s within the range of S250K to $1M (inclusive). In AIR a PAD will be used when the TEC fa l l s within the range of $250K for projects under $250K. Note that i t is expected that preliminary project approval for projects within the Department's delegated authority will be rarely required. TBS - refers to the document through which preliminary or effective project approval is sought for projects having a TEC requiring Treasury Board approval. In AIR a TBS will be used when the TEC is greater than $3M. 212 APPENDIX 3: DEFINITIONS (continued) DIRECTIVE - a statement indicating the mandatory features of a policy. Prior approval must be obtained for non-compliance with directives. EFFECTIVE PROJECT APPROVAL - is the point at which a specific budget for a project is established and specific authority is given for the responsible manager to proceed with, subject to the allocation and a v a i l a b i l i t y of funds, the physical execution of the project (e.g. d e t a i l design, production/construction and commissioning), based on r e l i a b l e and up-to-date cost estimates (at least Class B). This authority level is a reference point for monitoring the overall program and against which a project and its management will be evaluated. GUIDELINE - a statement indicating an instruction which, while not mandatory, should be followed unless there is good reason not to do so. Non-compliance does not require prior approval. MULTI-YEAR OPERATIONAL PLAN (MYOP) - encompasses the development of program plans and the detailed assignment of resources to carry out approved policies and programs over a three-year forward period. The MYOP is designed to e l i c i t , among other things, the detailed forecasts of expenditure and person-year requirements over a three-year period. PRELIMINARY PROJECT APPROVAL - represents authority to spend only those project funds that are necessary to develop Class B estimates for a project. Physical execution of the project may commence under this authority, e.g. detail design, land acquisition and project management funds. PROGRAMMING - is the determination of the optimum means of achieving corporate short and long-term goals, the assignment of funding priorities and the development of the total Transport Program within the limits of projected resource a v a i l a b i l i t y . PROJECT - an approved aggregate package of activities specifically dedicated to f u l f i l l a program requirement, and having a defined set of objectives including performance and cost over a prescribed period. TOTAL ESTIMATED COST (TEC) - is the total estimated capital expenditure (stated in both constant and current dollars) to be incurred over time for a l l aspects of a project. It includes such items as site a c q u i s i t i o n and preparation, acquisition fees, design, legal fees, material, supplies, services, contingencies, capital person-year costs and, where applicable, post project evaluation costs. 

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