Carney's idea to privatize airports could unlock a rare domestic opportunity for pension funds, but politics, pricing, and regulation still stand in the way
It’s no surprise Canadian pension funds are among the most sophisticated infrastructure investors in the world as most of their holdings sit outside the country.
But with the Carney government pushing airport privatization as a pillar of its nation-building agenda, the question is whether the rhetoric will produce an investment opportunity that matches the scale of domestic ambition or whether political headwinds will stall it.
Andras Vlaszak, senior director, infrastructure, capital projects, and sustainability services lead at KPMG Canada, acknowledged that both provincial and federal governments have been pushing Canadian pension funds to invest more at home, but the funds - which rank among the most sophisticated infrastructure investors in the world – have struggled to find enough domestic assets that fit their risk profile. They tend to avoid construction risk, which narrows the field to assets that are already built, de-risked, and not buried in competition.
Airports notably fit that description.
"Their challenge has so far been that there are not enough assets for them to invest domestically,” Vlaszak said. Whereas “[airports are] already built. They're already substantially de-risked. There's no further step change in terms of capacity required at these airports. So they are ripe for private ownership," he said, adding selling them off also gives the federal government a way to free up capital for higher-risk projects tied to trade diversification and other priorities, "at a time where federal and provincial deficits are really high.”
Making airports available for private investment, he argued, lets the federal government recycle capital into higher-risk projects tied to trade diversification "at a time where federal and provincial deficits are really high," he noted.
Vlaszak framed airports as a three-party system where the owner is only one of several forces that matter. Municipalities and local governments care about the airport because it drives local economic activity, while airlines care about access, capacity, and predictable operating conditions so they can run their networks.
From an owner’s perspective, those relationships are both cooperative and competitive, but Vlaszak argued that the tension is easier to manage when the airport is already built and the ownership base is genuinely long term. In that setup, the owner’s incentives tend to line up with the region’s interest in a functioning gateway and the airlines’ need for throughput, because steady performance is what protects long-horizon cash flows, he noted.
He also suggested that alignment does not have to be engineered by pulling municipalities or airlines into formal governance.
Instead, the practical levers can sit outside the ownership structure through contracts and planning processes. He emphasized that airports typically work on forward-looking coordination with carriers, using annual coordination and multi-year plans so that airport capital programs and airline investment plans do not collide.
Adressing Carney’s nation-building agenda, Vlaszak underscored privatizing airports does not, by itself, advance productivity or climate goals as the strategic value of selling them is financial rather than transformational. He believes the nation-building link comes only if privatization generates upfront proceeds that the federal government then redeploys into higher-impact projects, particularly those tied to trade diversification, that can lift productivity and export capacity.
Meanwhile, Ryan Kuruliak, underscored how privatization frees up public capital, but whether that capital gets reinvested in productive nation-building projects or absorbed into general operations is a separate question and one that determines whether the rhetoric holds up.
"It creates an opportunity to advance on those items, but it doesn't necessarily mean it will. It all depends on what the freed-up capital gets then used for," he said.
Kuruliak pointed to markets like Australia, Europe, and the UK as useful test cases, noting that those jurisdictions are well ahead of Canada in treating airports as investable infrastructure assets. If structured the right way, he argued, Canadian airport privatization could draw interest not just from domestic pensions but from sovereign wealth funds and other global long-term investors, much as the 407 highway did.
Under the broader Invest in Canada theme, he sees infrastructure as the more natural destination for capital than Canadian public equities, given that pension plans of all sizes have a long track record in the asset class. Notably, the airports themselves carry the hallmarks investors look for: long-duration cash flows, inflation-sensitive pricing, and near-monopoly positioning.
That monopoly element does raise the need for regulatory guardrails, but Kuruliak noted that other jurisdictions have managed to balance for-profit ownership with consumer protection.
Yet, while airports look like classic infrastructure and can be an attractive asset, Kuruliak cautioned they don’t run on autopilot, emphasizing that the asset is “capital intensive” from day one.
“They require a lot of investment to build and maintain, with additional capacity through runways and things like that. So you need to be very aware of that going in,” he said. “Owning an airport isn’t writing a check and then collecting the tolls forever. It requires ongoing investment. As an owner, you need to be prepared to do that.”
He also flagged that returns can be shaped as much by regulation as by passenger growth. In some jurisdictions, governments have imposed price caps and service standards, which can limit an owner’s flexibility and push airport operators into a more political, stakeholder-managed environment. That makes government relations and regulatory management a core capability.
Additionally, Canada's fundamentals - from rule of law, court systems and stable and transparent government processes - make it as attractive a jurisdiction for airport investment as any in the world, at least on paper, Kuruliak suggests. And that matters more here than in liquid markets because the capital commitments are enormous and the holding periods stretch across decades particularly as political and regulatory environment carries far more weight when an investor cannot simply sell tomorrow.
Still, the pricing and structuring still need to be worked out before pension funds will commit capital at scale, no matter how strong the patriotic pull.
If privatization does ultimately move forward, Kuruliak emphasized access shouldn’t be confined to Canada's largest plans.
"It shouldn't just be the biggest of the big plans that get access to invest here. There should be opportunities for the middle market, pension plans, other institutions to also invest," he said, also noting that privatization has delivered tangible improvements at international airports where infrastructure funds have taken ownership - not just in capacity and technology, but in passenger amenities and overall customer experience.
"Some of the very large airports in Canada have had the ability to make big investments in the user experience. But I wouldn't say that's been universally the case across all of the different cities in the country," he added, suggesting that unevenness is another gap that private ownership could help close.
