Supply and Demand Report – Pickering Lands Aviation Sector Analysis

Executive Summary

KPMG LLP (KPMG), in partnership with MMM Group Limited (a WSP Company), was retained by Transport Canada to carry out an Aviation Sector Analysis of the Pickering Lands. This Supply and Demand Report is the first of three reports to be completed as part of this engagement and presents an up-to-date projection as to whether aviation capacity constraints will trigger the need for an additional airport in the southern Ontario airport system within the next 20 years.

In 1972, the Government of Canada acquired approximately 7,530 ha of land within the municipalities of Pickering, Uxbridge, and Markham known as the “Pickering Lands”. Since acquiring the lands, several studies have been commissioned by Transport Canada to determine the need for an airport to support growing aviation demands in the Greater Toronto Area (GTA). The first of these studies concluded that an airport in Pickering would be required in the future and the lands should continue to be held by Transport Canada, while the most recent (The Pickering Lands Needs Assessment Study which was completed in 2010) identified a requirement for a new Pickering Airport as early as 2027, or as late as 2037.

More than 6 years have passed since the release of the 2010 Needs Assessment Study and the Government of Canada has requested updated forecasts of aviation demand and capacity within the southern Ontario airport system as well as an evaluation of a new Pickering airport’s potential role within the existing system (if required). This study fulfills these requirements with the main objectives of confirming when an airport on the Pickering Lands might be required based on an assessment of capacity and demand; what type of airport would be needed; how it would integrate into the existing southern Ontario airports system; and, if an airport would be financially viable and provide sufficient economic benefit to warrant the investment. This study answers the first question: When might an airport on the Pickering Lands be required? Two additional reports will be completed to answer the remaining questions.

As a starting point, the current roles and service types of existing airports in southern Ontario were documented to gain a better understanding of the capabilities and capacities of the region’s air transport system. The airports assessed as part of the southern Ontario airports system are those that were examined in the previous Pickering Lands Needs Assessment Study (Toronto Pearson International Airport (Toronto Pearson Airport), Billy Bishop Toronto City Airport (Billy Bishop Airport), Toronto Buttonville Municipal Airport (Buttonville Airport), Region of Waterloo International Airport (Waterloo Airport), Peterborough Airport, Lake Simcoe Regional Airport (Lake Simcoe Airport), Oshawa Executive Airport (Oshawa Airport), Burlington Executive Airpark (Burlington Airpark), John C. Munro Hamilton International Airport (Hamilton Airport), and Brampton Airport). For each airport, the project team profiled the airport role and location, runway facilities, activity history and destinations served, airport service types, passenger and cargo facilities, and ground access provisions. As demonstrated through these profiles, the southern Ontario airports system has a diverse range of airport service types and roles accommodating passenger, cargo, and general aviation activities.

Extensive stakeholder consultation was undertaken to gain a broad perspective of their opinions, concerns and needs. Stakeholders represented a diverse range of interested parties, including the ten airports that comprise the southern Ontario airport system, municipal representatives, industry associations and interest groups, and Canadian based air carriers operating from the system’s passenger airports. There were several common opinions discovered during the consultation process, including the need for better communication with associations and the public regarding the future of the Pickering Lands, the need for Transport Canada to make a decision in the near future regarding development of a new Pickering Airport, and the requirement to measure the economic impact and opportunities related to the potential development of the Pickering Lands. Air carriers were generally not in favor of a new airport on the Pickering Lands as they cited good working relationships with the Greater Toronto Airports Authority (GTAA) at Toronto Pearson Airport, and they were concerned about the cost of developing a new Pickering Airport if aeronautical fees collected at Toronto Pearson Airport were to subsidize the project. Airport operators were generally in favor of a new airport on the Pickering Lands, citing lack of general aviation capacity east of the GTA with the pending closure of Buttonville Airport. However, general aviation airports were concerned about the possibility of lost traffic to a new airport on the Pickering Lands, depending on the type and role of a new Pickering airport. All municipalities consulted indicated strong support for the development of an airport on the Pickering Lands. Industry organizations and local interest groups were also in favor of developing a new airport on the Pickering Lands.

The study identified several key regional developments in southern Ontario that could influence access to southern Ontario airports. Population growth in southern Ontario was examined and key road, rail, and transit infrastructure projects were identified along with the qualitative impact these developments might have on airports within the southern Ontario airport system. Although key regional developments are expected to improve overall access to the southern Ontario airports, these developments are not expected to result in dramatic shifts in passenger demand within the 20 year planning horizon of the study.

This report also describes aviation industry trends and requirements and how these trends might impact activity levels at the airports within the southern Ontario airport system in the next 20 years. Domestic, transborder, and international passenger trends were examined and it was determined that all three markets are expected to continue to grow in southern Ontario. Aircraft trends were also identified and discussed in terms of large ultra-long range, long range medium volume, medium, and short range aircraft including projections for fleet renewals and changes in regulatory policy that are currently promoting reduced greenhouse gas emissions. Trends in corporate aviation and flight training were also identified as they relate to operations at southern Ontario airports. Air cargo trends and requirements, aviation security, regulatory changes, industry growth limitations (pilot & aircraft maintenance engineer training) and overall airport congestion were also identified and described.

Forecasts of revenue passengers and aircraft movements were prepared in order to determine the potential levels of demand within the southern Ontario airport system over the 20 year study horizon. The study used two basic approaches for forecasting traffic: statistical patterns and scenarios. The study makes use of forecasts developed by Transport Canada, rather than developing new forecasts from first principles because of a lack of information about origin-destination traffic on domestic and international routes. Transport Canada’s forecasts were developed using the Passenger Origin/Destination Model (PODM). Transport Canada prepared low and high forecasts to 2030, and medium forecasts to 2035 and interpolations were used to determine values for the intervening years. As part of the study Transport Canada’s forecasts were validated and sensitized by constructing 5 alternate forecasts. The project team compared the assumptions used by Transport Canada to those of other sources, including the World Bank, International Monetary Fund, and airframe manufacturers. The growth rates presented by these sources were used to construct the new forecasts using the same key independent variables as provided in Transport Canada’s PODM model. The independent low and high forecasts developed by the project team were found to be very similar to the Transport Canada forecasts and, most importantly, the Transport Canada low and high forecasts were found to bracket all other estimates, validating the overall forecast results. The forecasts were also adjusted to account for the introduction of high speed rail services in the Windsor-Quebec City Corridor for use in scenario considerations later in the report.

It was found that with the introduction of high speed rail services, passenger demand would be reduced by approximately 2.3 million Passengers Per Annum (PPA) at the southern Ontario airports in 2036. Forecasts for future air cargo activity were not prepared as part of this study.

The forecasts call for relatively little change in the roles of the airports within the southern Ontario airports system. In 2036, Toronto Pearson Airport will continue to serve as the region’s leading gateway for commercial airlines, and Billy Bishop Airport will continue to serve intercity passengers. In addition, the forecasts suggest that neither Waterloo Airport nor Hamilton Airport will play a significant role in relieving Toronto Pearson Airport in 2036. Overall passenger demand at Toronto Pearson, Billy Bishop, Hamilton, and Waterloo airports is expected to reach almost 74 million PPA by 2036, and total aircraft movements within the southern Ontario airport system as a whole are expected to reach almost 1.3 million by 2036, with almost 50 per cent of the movements occurring at Toronto Pearson Airport. The Transport Canada medium forecast calls for more than 70 million PPA by 2036 at Toronto Pearson.

Capacities of each airport within the southern Ontario airport system were calculated to determine the overall supply for passengers and aircraft movements. The study differentiates between two distinct groups of airports: 1) passenger airports which provide frequent passenger air services to the traveling public (4 airports); and, 2) general aviation airports which support flight training, recreational, corporate and aviation related industrial roles (6 airports). Key infrastructure elements and operational practices were examined at the four passenger airports in order to estimate capacities, including: airfield infrastructure, terminal apron areas (number of aircraft stands), air terminal areas (available passenger processing space), and groundside parking facilities (number of vehicle parking stalls). The capacities of the six general aviation airports were estimated based on airfield infrastructure and operational practices only. The study considered both current infrastructure and operational practices, as well anticipated future capacity (in 2036) based on planned developments identified within the airports’ master plans and development plans, and anticipated changes in aircraft mix and Air Traffic Control (ATC) practices and procedures. Cargo capacity was also estimated by examining cargo uplift capabilities at Toronto Pearson Airport and Hamilton Airport.

Calculation of airfield capacity considered multiple factors, including number and geometric layout of the runways, ATC practices and procedures, weather conditions, mix of aircraft types and other restrictions such as noise abatement, hours of operation and slot controls. Airfield capacity values were obtained from the GTAA for Toronto Pearson Airport, and the Prototype Airfield Capacity Model (PACM), developed by industry through the Airport Cooperative Research Program was used to determine airfield capacities at the remaining 9 study airports. Airfield capacity definitions were prepared for use throughout the study including maximum runway throughput capacity, hourly practical runway movement capacity, annual practical runway movement capacity, annual runway passenger capacity, and annual terminal apron passenger capacity. Annual air terminal building passenger capacity and annual groundside parking passenger capacity definitions were also employed when determining the capacities of air terminal buildings and parking facilities at the passenger airports within the southern Ontario airports system.

In evaluating the capacity of the airports within the southern Ontario airports system, three conditions were assessed: 1) Base Condition – 2016 airport infrastructure, 2016 aircraft mix, 2016 ATC practices and procedures, 2) Condition A – 2016 airport infrastructure, 2036 aircraft mix, 2016 ATC practices and procedures, and 3) Condition B – 2036 airport infrastructure, 2036 aircraft mix, and anticipated 2036 ATC practices and procedures. At Toronto Pearson Airport, it was found that the GTAA applies an hourly cap of 90 movements per hour in planning its operations. Considering the base condition, a runway passenger capacity of 53.1 million PPA was determined for Toronto Pearson Airport in 2016. Under Condition A, it was determined that Toronto Pearson Airport has the capacity to support 61.4 million runway PPA, and under Condition B, the airport can accommodate 73.7 million runway PPA.

When considering all of the capacity definitions and calculations, Toronto Pearson Airport’s existing (2016) capacity and ultimate (2036) capacity was found to be most limited by terminal apron capacity (number of aircraft stands); however, it was determined that the GTAA has the ability to overcome these capacity shortfalls by undergoing facility expansions within the existing airport’s property boundary.

Billy Bishop Airport’s existing (2016) capacity was found to be most limited by terminal apron capacity (capacity of 2.5 million PPA) and by the number of commercial aircraft slots permitted under current noise restrictions and the Tripartite Agreement between the City of Toronto, Ports Toronto, and the Government of Canada limiting the runway passenger capacity to 4.3 million PPA. Billy Bishop Airport’s future (2036) capacity was also found to be limited by terminal apron capacity (capacity of 3.0 million PPA). Waterloo Airport’s existing (2016) and future (2036) capacity was found to be most limited by the air terminal facility with an ability to support only 250,000 PPA in 2016, and 2.3 million PPA in 2036. Hamilton Airport’s existing (2016) capacity was found to be limited by the air terminal capable of supporting only 850,000 PPA, and the future capacity of Hamilton Airport was also found to be limited by air terminal capacity (3.1 million PPA).

Overall, based on 2016 infrastructure, operational practices and aircraft mixes, the southern Ontario airports system is projected to have the capacity to support 94.7 million runway PPA. Based on anticipated conditions in 2036, the system is expected to have the capacity to support 119.6 million runway PPA. The practical movement capacity of the general aviation airports within the southern Ontario airports system was determined to be 903,000 based on 2016 infrastructure and operational practices, decreasing to 761,000 in 2036 based on the anticipated closure of Buttonville Airport in 2019.

In order to compare the capacity of the southern Ontario airports system against the forecast demand, scenarios were developed examining various factors that have an influence on both the capacity of airport facilities, and the passenger and aircraft movement demands. Four (4) scenarios were developed as part of the study to determine if there will be an overall capacity shortage or surplus within the southern Ontario airports system within the 20 year planning horizon: 1) Scenario 1 – 2016 Airport Conditions, 2036 Demand, 2) Scenario 2 – 2016 Airport Conditions, 2019 Demand (Buttonville Airport Closure), 3) Scenario 3 – 2036 Airport Conditions, 2036 Demand, and 4) Scenario 4 – 2036 Airport Conditions, 2036 Demand (With High-Speed Rail).

Scenario 1 results demonstrate that demand in 2036 will surpass the annual runway passenger, terminal apron, terminal building, and groundside parking passenger capacities at Toronto Pearson Airport. In addition, demand is expected to marginally exceed terminal apron capacity at Billy Bishop Airport. When examining general aviation airports within the system, it was found that there will be a capacity surplus of approximately 404,000 annual practical runway movements in 2019. Nonetheless, while current (2016) airport capacities are not sufficient to fully accommodate 2036 demand, capacity improvements can be undertaken within existing passenger airport boundaries to meet the demand, and a new airport is not expected to be required in southern Ontario prior to 2036 from a capacity standpoint.

Scenario 2 results indicate that forecast passenger demand in 2019 will not exceed the estimated capacities of the majority of the passenger airports, with the exception of Toronto Pearson Airport where annual terminal apron passenger capacity and annual groundside passenger capacity will fall short of forecast demand, and at Billy Bishop Airport where terminal apron capacity was found to be in deficit The closure of Buttonville Airport is expected to result in a system loss of 172,000 annual practical runway movements; however, a capacity surplus of 211,000 annual practical runway movements will still exist within the southern Ontario airports system under the parameters of Scenario 2. Provided capacity enhancements are undertaken at the existing passenger airports, it is anticipated that there will be sufficient capacity in the southern Ontario airports system in 2019 to support forecast demand, without the requirement to build a new airport.

Based on the medium forecast demand and considering the long term airport development plans incorporated in the parameters of Scenario 3, Toronto Pearson Airport is expected to experience a capacity deficit in terms of annual terminal apron passenger capacity and annual groundside parking passenger capacity. Billy Bishop Airport is also expected to have a capacity deficit in terms of terminal apron capacity. It is expected that these capacity deficits can be overcome by expanding facilities within the existing airport property boundaries. In terms of the general aviation airports, a surplus capacity of 262,000 annual practical runway movements was identified within the southern Ontario airports system, indicating adequate capacity to support general aviation activities to 2036.

Scenario 3 also considered the Transport Canada high demand forecast and it was determined that Toronto Pearson Airport is expected to experience a capacity deficit in terms of annual runway passenger capacity, annual terminal apron passenger capacity, annual terminal building passenger capacity, and annual groundside parking passenger capacity. This is the only instance identified within the study where runway passenger demand could exceed the estimated capacity for annual runway passengers at Toronto Pearson Airport. In addition, terminal apron capacity at Billy Bishop Airport was found to be lower than projected demand. However, it is expected that capacity shortfalls at Toronto Pearson Airport and Billy Bishop Airport can be overcome to support 2036 demand, indicating that there are no major capacity constraints, and a new airport providing additional capacity is not required in southern Ontario as per the parameters of Scenario 3 and as compared against the medium and high demand forecasts.

Scenario 4 results indicate that when accounting for a reduction in demand based on the introduction of high speed rail services in the Windsor-Quebec City corridor, annual terminal apron passenger capacity and annual groundside parking capacity are identified as capacity constraints for Toronto Pearson Airport. Similar to other scenarios, it is expected that these capacity shortfalls can be overcome through expansions within the existing passenger airport property boundaries. This suggests that adequate capacity exists within the southern Ontario airports system and an additional airport in southern Ontario would not be required (from a capacity standpoint) to meet 2036 demand, under the parameters of Scenario 4.

Although all four scenarios identify minor capacity deficits, these can be overcome with modest expansions in aircraft apron and air terminal facilities at the airports in the southern Ontario airport system. Therefore, a new airport is not expected to be required in southern Ontario prior to 2036 to meet the forecast demand. While the anticipated increases in the capacity of the southern Ontario airport system are expected to be sufficient to handle projected traffic demand within the 20 year planning horizon of this study, circumstances and industry trends can change. Also, the findings of this study do not preclude the need for a new airport in southern Ontario beyond the 20 year planning horizon.

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