Pearson Int'l Expanding, Despite Ongoing Legalities
<B> Pearson Int'l Expanding, Despite Ongoing Legalities</B>
By Carolyn Green
Amid wrangling between Air Canada and the Greater Toronto Airport Authority, construction of a $2.15 billion mega terminal, which will be the centerpiece of a $2.9 billion airport redevelopment scheme, has begun. The first phase is scheduled to open in 2003.
"We're pouring the caissons, we've ordered the steel and work is underway," said Steve Shaw, vice president of corporate affairs and communications for GTAA, the not-for-profit organization that manages Toronto's Pearson International Airport.
The new building, which will be constructed in stages as demand requires, will replace the 35-year-old Terminal 1 and Terminal 2, and connect the nine-year-old Terminal 3 in a single mega terminal. But as construction crews don their hard hats, GTAA officials and the airport's largest customer, Air Canada, have engaged in a battle over a variety of issues.
In January, GTAA filed an application with the Ontario Court requesting it to determine whether Air Canada is entitled to a new 40-year lease at Terminal 2. GTAA argued that a lease Air Canada negotiated with the federal government's Department of Transport, which managed the airport before GTAA, is invalid because it never was formally approved by the government. A month later, Air Canada countered with a $162.5 million lawsuit, in an attempt to block GTAA's expansion plans.
"We're looking to the courts to establish reasonableness into the relationship between the GTAA and Air Canada," said Priscille LeBlanc, an Air Canada spokesperson who indicated that relations between the two parties have been less than cordial since GTAA took over airport management in late 1996.
Air Canada is claiming that the proposed terminal complex "imposes an unreasonable burden" on all airlines that use Pearson and on Air Canada in particular. Because Air Canada and its regional partner, Air Ontario, are the airport's largest users, representing approximately 48 percent of total traffic, the Montreal-based carrier is fearful that it would be forced to assume a hefty share of the cost of the new terminal. That, along with significant cost increases the airline already is dealing with, could impair its competitive position in the marketplace.
In 1996, when GTAA took over the airport management, per passenger enplanement costs were $7.63 compared with $11.60 in 1998 and a proposed charge of $12.83 this year. Air Canada contends that if GTAA's development scheme goes ahead unaltered, the cost could rise to $28.73 by 2007.
To ease the financial burden, Air Canada has submitted an alternative development proposal, which LeBlanc said, "provides for the same capacity within the same time frame for $650 million less. What our proposal does is save more of the existing infrastructure of Terminal 2 and the parking garage."
However, GTAA's Shaw said Air Canada's alternative development plan is "clearly not the right scheme. The airport authority has looked at many other schemes and this is the right plan. It meets the 30-year vision that's required. It allows for handling the unique traffic we have where we have three strong sectors (domestic, transborder and international traffic) and it serves as a regional center. It is a tried and true design; it fits into the limited space we have; it's able to be staged and it's very cost-effective in terms of other projects."
According to GTAA, the new mega terminal will be a single unified building with multiple piers radiating from a common, horseshoe-shaped passenger processing facility. To be built in three stages with 120 gates, the terminal will accommodate up to 50 million passengers annually. Last year, slightly less than 27 million passengers used the airport, and 1999 estimates call for a 4 percent increase.
Asked if the Air Canada suit could halt construction, Shaw said, "I'm not certain. Air Canada's suit is asking for money and I'm not certain whether there is a possibility of getting an injunction to prevent work. At the moment, we are just pressing ahead.