Toronto Airport plans to convert offices into cargo facilities

MIAMI — Toronto Pearson International Airport is seeking $136 million in funding from the Canadian government to repurpose an underutilized office complex for cargo operations, as part of an effort to increase revenue streams outside of passengers.

Deborah Flint, the president and CEO of the Greater Toronto Airports Authority, told FreightWaves at an industry event here last week that the 11-acre package was “not fulfilling its maximum potential” and that its proximity to other cargo and airline operations made it a good candidate for a cargo facility.

The airport authority has applied for a grant from the National Trade Corridors Fund, an infrastructure program aimed at improving cross-border trade and making Canada more competitive. Transport Canada is expected to award several project awards later this week.

“If that happens, we can get that to market in the next year or two,” Flint said.

Airports have been brought to their knees during the pandemic as passenger airlines grounded operations and revenue dried up. A surge in freight traffic to offset supply chain disruptions was a silver lining. Many airports recognized the importance of a more diversified business and the multiplier effect of cargo on the regional economy.

“Every airport has learned how vulnerable the business is to fluctuations in volatility in all segments of the environment. So the focus is on being more creative,” said Flint during a panel discussion at the International Air Cargo Association show.

The office complex would have required large investments without the required returns, so Toronto Pearson officials considered converting the property into an airside cargo complex at the south end of the airport. It is expected to create 150 direct jobs and millions of dollars in economic impact, Flint said.

Flint understands the importance of cargo better than many peers because FedEx was the airline’s largest customer when she was Director of Aviation at the Port of Oakland, California.

She and two other airport executives in Canada wrote an op-ed in The Globe and Mail arguing that Canada has neglected investment in airport infrastructure. Canadian airports have had to rack up debt and postpone all but the most critical infrastructure work because the Canadian government did not provide the same kind of COVID relief that US airports received.

In the September issue of the Airports Council International newsletter, Flint said Canadian airports should be allowed to reinvest rental payments they pay the government into strategic projects. For Toronto Pearson Airport, 10 years of base lease could yield about $1 billion for infrastructure, decarbonization efforts, and technology upgrades to improve the passenger experience.

Deborah Flint, President and CEO of the Greater Toronto Airports Authority. (Photo: GTAA)

Toronto Pearson moved $31.5 billion worth of exports last year, according to its annual report. Cargo played a bigger sales role in 2021. Average daily freighter activity has more than doubled from 18 to 44 flights per day since 2019. Increased freighter volumes were offset by the decrease in belly cargo associated with the sharp drop in passenger traffic. Freight revenue, which is included in aviation revenue such as landing fees, increased 147% to $32 million in 2021 compared to 2020.

The airport authority said it expects e-commerce to continue to grow and plans to create the right facilities to cater to that demand.

Air Canada (OTCUS: ACDVF) is making major investments in cargo, including at its Toronto hub. In March, the airline completed the first phase of expanding its cold chain with various temperature functions for medicines, fresh food and other perishable goods. The company established an all-cargo division late last year and now operates three converted Boeing 767 cargo planes.

More FreightWaves/American Shipper stories by Eric Kulisch.

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