Preclearance at the Island Airport – A Long Shot, But Possible

Former GTAA Planner calls out infrastructure costs &  challenges to make Island Airport Expansion feasible. Preclearance is an arrangement negotiated between two countries that enables travellers to undergo border inspections prior to boarding their departing flights rather than upon arrival in the destination country. The terms used to describe the arrangements are “precleared” and “post cleared”. With preclearance passengers are able to arrive at a country as if they were on a  domestic flight. Since they do not have to undergo border inspections they can begin their trip purpose immediately. Without a border inspection the times to transfer to connecting flights can be shorter and bags are checked through to the final destination that also reduces the transfer time. Airlines are able to avoid the inspection process when arriving at customs-congested airports or provide non-stop service to airports that do not have a border clearance capability. The downside is cost. The facility requirements are substantial and costly. Although these are borne by the airport authority they must be financed and in turn flow through to passengers either directly through an AIF or indirectly through the airlines. It also makes terminals more complex to operate due to the requirement to separate arriving and departing passengers in some combinations of domestic, transborder or international flights. Unlike other airlines and airports neither Porter Airlines (PD) nor the Toronto Port Authority (TPA) issue monthly data on flight or passenger activity.  Fortunately by making a few reasonable assumptions, piecing together data from other airlines and airports and drawing from data in the public domain [i] we can create a good picture of total airport and preclearance activity for travel from Canada into the US.  The following tables show Porter’s activity at Billy Bishop (YTZ) and activity at other airports for 2013. Table 1: Porter Passengers to Major US Airports from YTZ in 2013 (000) Porter Pass to Major Airports Table – 2: Total Passenger Activity 2013 (000) Total Passenger Activity 2013 Canada’s arrangement with the United States is described in a treaty signed in 2001. Under this treaty the US conducts border inspections at the following Canadian airports: Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Montreal and Ottawa. Preclearance at Halifax began in 2006. The treaty also permits preclearance at airports in: London, Quebec and Victoria. It is unlikely the negotiators envisioned the possibility of preclearance at Billy Bishop airport. There is a reference to “multi-terminal complexes” but there are no references to multiple airports in the same city. Canada has not exercised its rights to preclear travellers at US airports. Some noteworthy provisions in the treaty are listed below along with a few comments following each paragraph. Article lll Preclearance Locations 2   Each Party shall take account of the following criteria when considering establishing preclearance, including at multi-terminal complexes: (a) the airport authority requests preclearance; In 2010 the Globe reported that the TPA’s application for preclearance had been rejected by the US. The National Airlines Council of Canada (Air Canada, Air Transat, Jazz Aviation LP and WestJet) opposed the application on grounds that it would drain resources away from Pearson. Undeterred, the article quotes Mr. Deluce as saying “None of these things are ever slam dunks," he said. "I would be really surprised if we don't have preclearance by the end of 2011. We haven't run into anything yet that has been anything more than a temporary speed bump." In spite of this setback the concept was still alive in Porter’s plans in 2013. A Porter representative is quoted in the publication TRAVELHotNews.com "Pre-screening is required since we are an international carrier and the smaller airports don't have customs onsite." (b) the airport authority attests that funding (consistent with the terms of Article IX Cost of Preclearance) is available for construction, operation and maintenance of the preclearance facility. The facility must be acceptable to the Inspecting Party. The requirements of the Inspecting Party shall be in accordance with its applicable inspection guidelines, unless clear reasons exist for modification. Where the Inspecting Party is the United States, the U.S. Department of Transportation Airport Federal Inspection Facilities Guidelines shall apply. Those facilities used by officers of the Host Party are subject to approval by the Host Party; All airports currently offering preclearance in Canada are operated directly by the airport authorities who make the investment so they are able to attest with certainty they have sufficient funding. For YTZ the situation is not clear since the terminal is owned and operated not only by a third party but by an airline. Would the TPA have to attest that Porter has the funds? Would TPA have to provide the funding? Would TPA have to backstop Porter in the event it made the investment and fell short on its obligations? Does TPA have the legislative authority to incur the level of debt? Most importantly who backstops TPA? As discussed in a previous article the TPA does not have deep pockets and YTZ is poised to become the most expensive airport in the country. Can it support added costs when most of its revenue comes from a single airline that has not provided comfort by revealing its financial position? This is particularly relevant since the TPA has not disclosed the full scope of the expansion program, its cost and the means of financing. As custodian of a publicly owned facility the TPA has the moral obligation to fully disclose its intentions. c. the airport authority and participating airlines agree that sufficient transborder traffic exists to make feasible the efficient operation of a preclearance facility, taking into account available inspection technologies and procedures. In order to agree that there is sufficient transborder traffic airport authorities and airlines need a standard or benchmark. The TRAVELHotNews article notes “Previously, the U.S. government required international airlines to carry 400,000 passengers per year in order to have U.S. Customs and Border Control (USCBP) at its airports.” As shown in Table 2 Porter carried 716,000 passengers to and from the US through YTZ so it could claim it meets the threshold.  On the other hand Pearson handled almost 14 times that amount. Would it be more efficient to add resources there than to establish a new facility at another airport in the same city?  Also, Porter is the only carrier of significance at YTZ and its load factors to the US are low. (around 60% compared to Air Canada’s 80% transborder load factor.) Does it have the staying power to warrant a USCBP commitment? TPA might also claim preclearance is justified since it carries more transborder passengers at YTZ than airlines serving Winnipeg and Halifax and could soon surpass Ottawa. One counter argument is that capital cities are a special case. In any event traffic levels are only one factor that will influence any decision by the US government to provide preclearance at a specific airport.  Article IX  Cost of Preclearance 2) The cost of preclearance services shall be allocated in accordance with the following principles: (a) Neither Party shall be responsible for additional cost attributable to preclearance facilities; The question arises that given the constraints on TPA to incur debt[ii], the existing and future cost burden, the short period remaining on the Tri-Partite Agreement, the dependence on a single airline for the major portion of its revenue stream and the practical limits of the airport is the TPA capable of absorbing the costs of preclearance? (b) The Inspecting Party shall be responsible for normal cost of its inspection personnel and may charge appropriate inspection user fees. This could be the proverbial straw that broke the camel’s back. USCBP has three options for staffing a new preclearance facility at YTZ:

  1. Request an increase in its budget to hire additional staff. This would be difficult given the pressure to reduce the deficit and the desire to establish preclearance facilities in other countries
  2. Close or transfer staff from lesser used facilities in Canada. Even though it would be manpower neutral it is likely a non starter. The loss of service and status in capital cities would raise the ire of the airlines, local citizenry and governments.
  3. Transfer staff from Pearson to Billy Bishop. It is also manpower neutral and could be viewed as merely shifting resources within Toronto. However, it would reduce the level of service that is already strained to the detriment of the city in the bigger aviation context. It would be a less productive use of staff. This option would undoubtedly be opposed again by airlines and the airport authority

All things considered, preclearance at YTZ is a long shot. Nonetheless given Porter’s and TPA’s penchant for incessant and unrelenting advertising and lobbying and the link between the Minister of Transport and the TPA, it cannot be ruled out. Remember, the objective is not to find a way of creating the biggest airport possible and shoehorning it into a confined space. Rather it is to define the size and type of airport most compatible with the best overall plan for the city and then live within those bounds. Perhaps those bounds have already been exceeded. [i] http://www.transtats.bts.gov/Data_Elements.aspx?Data=1 [ii] http://www.gazette.gc.ca/rp-pr/p1/2012/2012-08-11/html/notice-avis-eng.html ______________________ Background and Disclaimer:

Tom Driedger worked in the airport industry for over 40 years. Beginning with Transport Canada in Ottawa he held positions in Vancouver and Edmonton before moving to Toronto and later transferring to Greater Toronto Airports Authority in 1996. He retired in 2013 as Senior Manager, Strategic Planning. NoJetsTO met with Mr Driedger. In his view Porter’s project has its four distinct elements, each with it own set of problems (runway expansion, long haul flights, larger capacity aircraft and jet powered planes) making it inappropriate for the type of airport he envisions. In his words “the objective is not to find ways of creating the biggest airport and shoehorning it into a confined space. Rather it is to define the size and type of airport most compatible with the best overall plan for the city & local area and then live within those bounds.” Given the considerable common ground between our views and those of Mr Driedger, we are posting some of his background notes. These views are his and his alone. They do not represent the views of Transport Canada, and/or the GTAA .