Final Technical Report GOVERNANCE REVIEW OF THE YELLOWKNIFE AIRPORT September 2015 The Lindbergh Group Inc. Yellowknife Airport Governance Review SC446825 i Yellowknife Airport Governance Review SC446825 TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................................................... iv 1. INTRODUCTION ................................................................................................................. 1 1.1. Background ............................................................................................................................... 1 1.2. Engagement Objectives ........................................................................................................ 1 1.3. Engagement Scope .................................................................................................................. 1 1.4. Overall Approach and Methodology ................................................................................ 3 1.5. Key Issues and Considerations .......................................................................................... 4 2. EVOLVING PRACTICES IN AIRPORT GOVERNANCE IN CANADA AND AROUND THE WORLD ..................................................................................................... 5 2.1. Introduction ............................................................................................................................. 5 2.2. Overview of Privatization .................................................................................................... 5 2.3. Current Situation .................................................................................................................... 8 2.4. Case Studies: Global Airport Privatization .................................................................... 9 2.4.1. The United Kingdom and Europe ............................................................................................ 9 2.4.2. Canadian Commercial Airport Privatization ................................................................... 11 2.4.3. US Airport Corporatization ..................................................................................................... 13 3. EXTERNAL ENVIRONMENT ......................................................................................... 18 3.1. Political Context ................................................................................................................... 18 3.2. Social Context ........................................................................................................................ 19 3.3. Economic Context ................................................................................................................ 20 3.4. Regional Transportation System ................................................................................... 23 3.5. Aviation Industry Trends.................................................................................................. 24 3.6. Policy Environment ............................................................................................................ 27 3.7. External Funding Sources ................................................................................................. 31 4. CURRENT SITUATION AT YZF .................................................................................... 33 4.1. History and Location .......................................................................................................... 33 4.2. Current GNWT Airports Governance Structure ........................................................ 34 4.3. Overview of Services and Facilities at the Airport................................................... 35 4.4. Airport Lands ........................................................................................................................ 37 4.5. Airport Management and Staffing ................................................................................. 39 4.6. Airport Operations .............................................................................................................. 40 4.7. Historical Air Traffic Analysis ......................................................................................... 41 4.7.1. Passenger Traffic ......................................................................................................................... 41 4.7.2. Aircraft Traffic .............................................................................................................................. 42 4.7.3. Air Cargo ......................................................................................................................................... 46 4.8. Historical Financial Assessment .................................................................................... 47 4.8.1. Operating Surplus / (Loss) ..................................................................................................... 47 4.8.2. Historical Operating Revenues .............................................................................................. 50 4.8.3. Historical Operating Expenses .............................................................................................. 52 4.8.4. Capital Expenditures ................................................................................................................. 53 4.8.5. Current Fees and Charges / Tariff Model.......................................................................... 53 4.9. Long-Term Capital Plan ..................................................................................................... 58 4.10. Summary SWOTCh ................................................................................................................ 60 5. CASE STUDIES .................................................................................................................. 61 5.1. Case Studies of Comparable Airports ........................................................................... 61 ii Yellowknife Airport Governance Review SC446825 5.1.1. Kelowna International Airport (YLW) ............................................................................... 61 5.1.2. Iqaluit International Airport (YFB) ..................................................................................... 65 5.1.3. Whitehorse Airport .................................................................................................................... 66 5.1.4. Nanaimo Airport (YCD) ............................................................................................................ 67 5.1.5. Fort McMurray Airport (YMM) ............................................................................................. 69 5.1.6. Thunder Bay Airport (YQT) .................................................................................................... 72 5.1.7. J.A. Douglas McCurdy Sydney Airport (YQY) ................................................................... 74 5.1.8. Key Information........................................................................................................................... 75 5.2. Case Studies from Other Modes and Infrastructure Intense Industries .......... 75 5.2.1. Port of Trois-Rivières ................................................................................................................ 75 5.2.2. PortsToronto ................................................................................................................................ 80 5.2.3. BC Ferries/BC Ferry Authority ............................................................................................. 85 5.2.4. ViaRail .............................................................................................................................................. 88 5.2.5. Fuel Services (Formerly NWT Public Works Petroleum Products Division) ..... 91 6. GOVERNANCE OPTIONS IDENTIFICATION AND ANALYSIS .............................. 95 6.1. Introduction .......................................................................................................................... 95 6.2. Governance Options ........................................................................................................... 95 6.2.1. Government Department (Status Quo) .............................................................................. 95 6.2.2. Special Operating Entity .......................................................................................................... 96 6.2.3. Government Corporation ........................................................................................................ 97 6.2.4. Airport Authority ........................................................................................................................ 98 6.2.5. P3 Concession ............................................................................................................................... 99 6.2.6. Privatization ............................................................................................................................... 101 6.2.7. Potential Governance Model Assumptions ................................................................... 102 6.3. Potential Opportunities & Revenue Enhancements ............................................. 104 7.3.1 Potential Opportunities .................................................................................................... 104 7.3.2 Illustrative