Sound Fiscal Management at Ottawa International Airport
Ottawa – Ottawa International Airport Authority (OIAA) today released its financial results for the year 2002. According to President and CEO Paul Benoit, the Authority faced some of its biggest challenges since assuming responsibility for airport operations in 1997.
“The strong results are a credit to the entire Airport Authority team who were vigilant in their approach to cost containment, which was particularly challenging given that we also had the Airport Expansion Project to manage” said Mr. Benoit.
For the year ended December 31, 2002, revenues exceeded expenses by $11.4 million as compared to $18.2 million for the year ended December 31, 2001.
In 2002, the Authority generated $55.3 million in total revenues, compared to $53.0 million in 2001, despite continued effects of September 11, 2001 on the aviation industry. Revenues were generated from concessions, vehicle parking, aeronautical charges, and the airport improvement fee (AIF). The AIF was introduced in 1999, is collected under an agreement with the air carriers, and is included in the price of an airline ticket.
Total expenses increased by $9.1 million from $34.8 million in 2001 to $43.9 million in 2002. Ground rent paid to the federal government accounted for $2.2 million of the increase. In addition, interest expense was $6.3 million higher than 2001 figures due to the $270 million bond issue that was completed in May.
Strengthened expense controls in the aftermath of September 11, 2001 helped contain increases in the cost of materials, supplies and services. The Authority successfully brought these expenses in line with 2001 levels despite increased costs for insurance and employee benefits, and utility rates.
In accordance with the Authority’s mandate, all earnings will be retained and reinvested in airport operations and development, including investment in capital expenditures to meet ongoing operational requirements.
During 2002, excluding capitalized interest, the Authority made cash payments of $122.1 million for capital expenditures related to the Airport Expansion Project (AEP) and an additional $3.8 million for maintenance capital expenditures. The proceeds of the Authority’s $270-million bond offering in May 2002 provided sufficient cash to fund AEP expenditures until its completion.
Financial pressures on airlines resulted in capacity reductions by airlines serving Ottawa. By extension, passenger traffic also declined for the better part of the year.
“Passenger traffic, while not experiencing the growth of 2000 or pre-September 2001, began to show signs of picking up towards the end of 2002. Our records show a year-over-year decline of 5.1% on a prediction of -5% to -7%. An increase of 6.3% in passenger traffic in December 2002, compared with the same period in 2001, demonstrated that the situation is improving” said Benoit.
OMCIAA operates Ottawa International Airport without tax dollars under a 60-year lease transfer agreement with Transport Canada. The Authority’s mandate is to manage, operate and develop Airport facilities and lands in support of the economic growth of the National Capital Region. Its 40-year old terminal building was last expanded in 1987. Since that time, passenger traffic has increased over 40%.
The Ottawa International Airport Authority will hold its Annual General Meeting on April 30, 2003, at 4:00 PM at the Ottawa Congress Centre, Capital Hall 2B, 1st floor.
For additional information, please contact:
Krista Kealey (613) 248-2050
Director of Communications and Public Affairs