Canada's pension funds could soon own the country's busiest airports
Canada's institutional investors have long eyed the country's federally owned airports and ports as ideal long-term infrastructure assets, and the Carney government just put them on the table.
CTV News reported that Prime minister Mark Carney confirmed Thursday he is open to selling federal public assets and recycling the capital into new infrastructure, singling out airports as an example already "out there."
A Transport Canada discussion paper released last week, first reported by the Toronto Star, also floats amalgamating "some key ports" and selling others.
The proposal extends a privatisation conversation that began quietly in November's budget and picked up pace with the April 28 spring economic update.
Transport Canada owns 23 large and mid-sized airports, including the country's six busiest in Toronto, Vancouver, Montreal, Calgary, Edmonton, and Ottawa, according to the Globe and Mail, which estimated the portfolio could be worth close to $100bn.
Michel Leduc, senior managing director at the Canada Pension Plan Investment Board, told the Financial Post that core national infrastructure such as a hub airport in a G7 country sits in the "sweet spot" for institutional investors looking to deploy more capital domestically.
The government frames both moves under "asset recycling" — selling or leasing existing holdings and redirecting proceeds into new projects.
Ottawa announced the $25bn Canada Strong Fund alongside the spring economic update as Canada's first national sovereign wealth fund, seeded with federal funding over three years and designed to invest alongside private capital.
Whether airport sale proceeds would flow directly into that fund remains unsettled; transport minister Steven MacKinnon said last month a decision has not yet been made, CTV reported.
The current not-for-profit airport authority model already raises commercial debt at rates close to Canada's largest provincial governments, and private ownership would likely push those borrowing costs higher, Mark McQueen wrote in a Substack analysis published this week.
The same analysis noted that privatization would eliminate the $236m in annual rent Pearson paid Ottawa in 2025, while leaving intact the $41m in payments in lieu of taxes owed to Mississauga and Toronto.
International precedent cuts both ways.
Rod Sims, former chair of the Australian Competition and Consumer Commission, told CBC News that Australia's late-1990s airport sell-offs drove consumer costs higher after regulators stripped price controls before privatization, giving buyers near-free rein.
On the other hand, a 2022 National Bureau of Economic Research study cited by Global News found private equity airport ownership was associated with an 84 percent rise in overall passenger traffic and a 20 percent increase in passengers per flight.
On ports, Transport Canada directly operates 34 port facilities and oversees 17 others managed by Canada Port Authorities, which handled around 351m tonnes of cargo in 2023, according to Hashtag Investing, which reviewed the discussion paper.
The paper stops short of announcing any sale, framing divestiture as one option among several governance reforms.
Carney told reporters port reform is not a "top priority."
Public consultations on both the airport and port papers are running on 30-day timelines, CTV reported.
