^What a difference the North runway makes!
YVR sees high-flying profits
Higher airport improvement fees boosted profits to $74.4 million in 2005
Bruce Constantineau, Vancouver Sun
Published: Thursday, May 18, 2006
Vancouver International Airport operations posted a record $74.4-million profit last year -- up from $44.5 million in 2004 -- as higher airport improvement fees boosted revenues by nearly $30 million.
The airport authority's 2005 annual report notes that airport improvement fee revenue rose by 51 per cent, from $57.6 million to $87.1 million, after a Jan. 1, 2005 increase. The fee for North American flights rose from $10 to $15 while the $5 fee for B.C. and Yukon flights, and the $15 fee for overseas flights remained unchanged. The increase affected about half of departing passengers.
The airport improvement fee was introduced in 1993 to pay for infrastructure development at the airport, and more than $670 million has been collected so far. With major capital improvements planned for the airport over the next 20 years, airport authority officials say the fees will remain a fact of life for a long time.
Airport authority president Larry Berg told a Vancouver Board of Trade audience recently the airport will need a new $1-billion terminal by 2015 and a third runway -- costing hundreds of millions of dollars -- by 2025.
That's on top of an estimated $1 billion the airport expects to spend over the next four years on the Canada Line, gate expansions to the international terminal, a new structure linking the domestic and international terminals, and other improvements.
Vancouver International Airport handled a record 16.4 million passengers last year, a 4.4-per-cent increase over 2004, and officials estimate the airport will attract 21 million passengers by 2010 and 30 million passengers by 2020.
"We're already at capacity at the international terminal in the summer," said Bob Cowan, the airport authority's senior vice-president of engineering. "We're having to depart international flights out of the domestic building and we're out of counters and we're short of outbound baggage systems. We're just coming to the point now where we need more space and more facilities and it costs money."
Cowan said the authority is nearing the end of a five-year phase-in period of increasing terminal fees to airlines to more accurately reflect the costs of services it provides the airlines. He noted the airport authority will pay reduced annual rents to the federal government in the future and those decreases should help the airport keep future terminal-fee increases "at inflation rates or less."
The airport authority's annual lease payment to the federal government is expected to drop from $78.8 million this year to $43 million in 2010 under a new lease arrangement that fixes rents as a percentage of gross revenues.
"The lower lease rates will allow us to be competitive against other airports," Cowan said in an interview. "It's important that we are seen to be offering good value at reasonable prices and this will allow us to stay there."
He said airports throughout the world use a combination of fees and charges to airlines and passengers to finance infrastructure improvements and airlines are eager for Vancouver's airport to expand.
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YVR FINANCIAL RESULTS
2005 2004
Operating profit $74.4 million $44.5 million
Revenue $329.8 million $276.9 million
Net assets $654.6 million $580.2 million
Passengers 16.4 million 15.7 million