Toronto Pearson International Airport is embarking on a multibillion dollar expansion that will take a decade to complete. No shovels are in the ground yet, but so far it’s going better than the last one.
During the previous expansion, which kicked off more than two decades ago, Air Canada’s then CEO, Robert Milton, was accused by the Greater Toronto Airports Authority (GTAA) of masterminding an attack by carriers to protest rising airport fees.
This time, the airport’s major carrier is on board and the expansion project, called LIFT, or Long-term Investment in Facilities and Terminals, is ramping up with little fanfare or controversy.
But there are some looming — and unanswered — questions: For starters, how much will it cost, exactly? And will the passengers who use the airport end up shouldering most of the bill?
The GTAA, which runs the airport, operates like a non-profit and relies on revenue from user fees, such as landing and passenger fees, as well as commercial rents, to pay the bills and make upgrades.
Eric Tanner, chief commercial officer for Flair airlines, which is trying to compete on price with large carriers such as Air Canada and WestJet, said the expansion will “inevitably” result in higher fees for passengers, “given how capital-intensive the project is.”
“Every airport essentially has a monopoly over its terrain in Canada. There’s no competition,” said Tanner, referring to major airports in cities like Toronto, Vancouver, Calgary and Edmonton. “There’s nothing to keep them in check.”
The massive project, first announced by the GTAA in April 2024, will centre on the revitalization and expansion of Terminal 1, and upgrades to Terminal 3, with the possible construction of a temporary terminal.
The airport will incorporate new technologies — including biometric scanning of passengers — and add more bridges, through which passengers board and deplane. The project will also increase the number of remote “parking spots” for planes at the airport, which means passengers on those flights will have to use shuttle buses to get to and from terminals.
The work, which will take place over the next 10 years, is needed to meet a staggering projected growth in airline passengers, said the GTAA, with passenger volumes expected to double globally over the next 20 years.
This summer, following a competitive procurement process, the GTAA announced a consortium called Pearson Accelerator Construction Team, or PACT, to lead planning, design and construction of LIFT’s first phase.
Called “Accelerator,” that phase includes utility and building-systems upgrades, as well as improvements to the secure areas of the airport.
PACT is currently working with Toronto Pearson to finalize the Accelerator designs, but the GTAA said it couldn’t comment on any of the details without finalized designs.
The consortium includes Kenaidan Contracting, which has roots in Canada; Alberici Constructors, which was founded in St. Louis, Missouri; Amico Major Projects, which is Canadian owned and operated; and Obayashi Canada, an offshoot of a large construction company based in Tokyo, Japan.
The GTAA said it will issue a request for proposal (RFP) for the Terminal 1 and 3 improvement phase soon.
But the airports authority is being close-lipped on the details of the plan and won’t put a price tag on the LIFT project at all, other than to say it will be in the multi-billions.
“We have absolutely no idea at this point,” said Karen Mazurkewich, vice-president of stakeholder relations and communications for the GTAA.
The airport is using a progressive design-build model, which is fairly new to Canada, where the client — in this case the GTAA — collaborates with contractors on the project’s design and scope to reduce risks such as cost overruns or scheduling difficulties, which became more prevalent for large infrastructure projects during the COVID-19 pandemic.
Mazurkewich said the airports authority has talked to airlines about what it is willing to spend, but can’t release the details publicly.
“It would be like going out and buying a house and saying this is my price,” said Mazurkewich. “We will share what the cost is as the projects get approved.”
Unlike in the U.S., where airports have access to federal money for infrastructure, major airports in Canada rely on user fees to finance infrastructure projects and run the airport. Already, such user fees account for 30 cents of every dollar that passengers pay to full-service airlines, according to a Competition Bureau Canada report from June.
“To run an airport … someone’s gotta pay, right?” said Mazurkewich.
“In the U.S., the taxpayer carries a burden,” she said. “In Canada, the users carry a burden.”
The GTAA said it reinvests airport improvement fees in infrastructure to keep Toronto Pearson competitive with other global hub airports and meet the needs of growing passenger demand. It also pays rent to the federal government, which owns the airport land, based on a percentage of every dollar of gross revenue earned.
Airport improvement fees at Pearson are already going up: the fee is currently $37 per departing passenger and that will rise to $40 in January. Connecting passengers at Pearson pay an $8 fee.
Mazurkewich said it would be “purely speculative” to say whether fees will go up further to pay for LIFT. But Flair’s Tanner said fee increases for passengers are a given.
“Any time there’s a budget hole that needs to be filled, it’s very easy for the airport just to raise the fees because that’s a lot easier than having to cut budgets or find efficiencies,” said Tanner. “The customer ends up paying the price for that because the airports know that the customer doesn’t have any other choice.”
The GTAA counters that airport improvement fees don’t cover “budget holes,” but instead pay for necessary infrastructure improvements, “including many cost-effective technology upgrades that help increase capacity and efficiency and reduce costs for our partners,” according to Mazurkewich.
“Day-to-day airport operations are recovered through aeronautical fees, which are paid by airlines for the services they use to fly in and out of airports,” she added. But Tanner said airlines typically pass those fees along to customers by boosting ticket prices.
William Morrison, a professor of economics at the School of Business and Economics at Wilfrid Laurier University, said that while airport improvement fees may rise, he doesn’t expect them to jump as much as they did during the construction of Terminal 1. Morrison is also chair of the executive committee for the European Aviation Conference Institute.
Terminal 1, part of Pearson’s last multibillion dollar expansion, was constructed in stages starting in 1999. In 2007, three years after the first stage was complete, airport improvement fees went up a staggering 33 per cent.
Around that time, the GTAA’s other fees and charges were “perceived to be the highest of all the airports in North America,” according to a 2006 report by PricewaterhouseCoopers, which added the high fees were “largely due to the extensive capital program undertaken by the GTAA.”
Back then, the airport was losing money and paying millions of dollars a year to carry debt for the project, said Morrison, but that’s not the case this time around. Today, the airport improvement fees are more in keeping with those charged at other Canadian international airports, according to the GTAA.
Solomon Wong, president and CEO of InterVISTAS Consulting, notes that if the expansion is successful and there’s a sizable increase in passengers using Pearson, the cost would be spread out among more users.
Wong has been an independent consultant for 28 years and is currently working with the GTAA on a couple of projects.
“It’s not a forgone conclusion that there’s no option but to increase user fees,” said Wong. “But yeah, it is a challenging one because of the escalating cost of construction, goods, materials, waivers — and that type of thing has a set of pressure points.”
Pearson is only one of many airports around the world that is responding to a post-pandemic surge in air travel that has spurred billions of dollars of investments in new infrastructure in places such as Ethiopia, which plans to build Africa’s largest airport, and Dubai, where the Al Maktoum International Airport will be the largest airport in the world when it’s complete.
Expansion is also happening in Europe, but it’s not to everyone’s liking.
Heathrow has come under fire for a plan to raise passenger charges to an average of 33.26 British pounds between 2027 to 2031, about five pounds more than the average now, a proposal that Virgin Atlantic airline said demonstrated “Heathrow’s inability to invest capital wisely and efficiently.”
And Schiphol airport in Amsterdam recently drew ire for announcing the fees it charges airlines would go up 41 per cent this year in order to fund new projects over the next three years. The airport is considering cancelling another five per cent increase in 2026 after some airlines pushed back and said Schiphol was too expensive.
Montréal-Trudeau International Airport has also announced a 10-year-plan to increase its baggage-handling capacity, construct a new jetty with more gates and processing areas for passengers, and add new taxiways and tarmacs. Unlike the GTAA, airport operator Aéroports de Montréal has put a price tag on the project of $10 billion.
In the U.S., planned construction includes a $4.2 billion dollar terminal at JFK International in New York, and LAX in Los Angeles just announced that it was completely demolishing one of its terminals and rebuilding in time to host the 2028 Olympics.
“We look at our competition being JFK, Chicago, LAX, the big U.S. airports, because we are one of the most connected airports in North America,” said Mazurkewich, “and they’re investing billions of dollars into their airports right now.
“It’s really important for us and for the economic growth and impact of the country that this airport continues to build out its infrastructure.”
