The Canadian model of airport governance
Governments in many regions of the world have been engaged for several years in a process of privatizing their civil airports. They are using a variety of formulas, including the sale of assets to third parties, the transformation of public administrations into companies with share capital (corporatization), and the granting of concession or operation contracts to specialized companies.
In Canada, at the turn of the 1990s, the federal government opted for a unique model in which it retains ownership of the airport property. The management, operation and development of airports, including capital funding, are entrusted to local airport authorities created specifically for this purpose and whose primary mission is to provide airport services to meet the specific needs of the communities they serve.
Local airport authorities, such as Aéroports de Montréal (ADM), are not-for-profit corporations, and therefore without share capital, managed by a fully autonomous board of directors.
Obligations to Transport Canada and monitoring
Like other local airport authorities, ADM has a long-term lease with Transport Canada that sets out its obligations and certain aspects of its operations. In addition to meeting applicable regulations, ADM is required to pay rent to Transport Canada, which is a percentage of the Corporation’s gross revenues. Every year, ADM also has to invest to keep its facilities in good order and develop them based on the needs of customers, passengers and airlines, as well as the Montréal community.
The Government of Canada plays an active role as owner-lessor. Under the monitoring program of airport leases, Transport Canada closely regulates ADM and continuously reviews its activities. Every year, ADM is subject to a comprehensive audit (lease- monitoring report) regarding its compliance with its lease obligations.
Every five years, ADM’s performance is also subject to a review by an independent accounting firm that reports directly to Transport Canada. In addition, every 10 years, ADM has to submit to Transport Canada a master plan describing proposed development of its airports over a period of 20 years. Any changes to land use have to obtain prior approval from Transport Canada.
In addition to the provisions of the lease regarding governance, ADM complies with the principles of accountability set out for airport authorities by the Minister of Transport in 1994, which have since been incorporated into the bylaws of the Corporation. These principles cover a range of governance issues such as board composition, the process for appointing directors, the management of conflicts of interest, the behaviour of directors and the tender process for procuring goods and services.
Although not subject to the governance rules and continuous-disclosure requirements that regulate public companies, ADM complies with the practices required of public companies, adapting them to its status of corporation without share capital.
Board of Directors
ADM’s Board of Directors assumes responsibility for managing the Corporation. It exercises full authority and power, and executes all actions that the Corporation is authorized to take according to the law, its letters patent and its supplementary letters patent. The Board of Directors assumes responsibility for corporate governance and the accountability of the governing bodies to which the Corporation must report.
The Board is comprised of a maximum of 15 directors, two of whom are appointed by the Government of Canada and 13 by the Board in consultation with four nominating organizations. These are called upon to submit, at the Corporation’s request, the names of three candidates whose profiles match the qualifications being sought by the Board for each position that needs to be filled. These nominating entities, identified in the Corporation’s letters patent, are the Government of Québec (one position), the Communauté métropolitaine de Montréal (five positions), the Board of Trade of Metropolitan Montréal (three positions), and the main carriers operating at Montréal–Trudeau airport (two positions). The President and Chief Executive Officer is a director of the Corporation, and the Board may appoint a 15th director. The Directors are elected for a term of three years, which is renewable up to three times.
Candidates must meet very specific criteria:
- Be a Canadian citizen and resident of Québec;
- Not be an active elected official or an active employee of a municipality, nominating entity or an air carrier;
- Not be a shareholder of a company in which ADM has a financial interest or have an interest that could be perceived as undermining his/her ability to act in the best interests of ADM.
In addition, collectively, the members of the Board must have a set of key skills required by the Board to perform its duties.
This appointment method, based on consultation with many nominating entities that represent the Montréal community, ensures that ADM has a Board of Directors composed of professional managers with different backgrounds and diverse expertise. ADM’s Board of Directors is therefore able to make informed and impartial decisions, consistent with its fiduciary role, that are fully in line with the Corporation’s mission.
The Board has three committees comprised of members independent of management: the Audit and Capital Investment Committee; the Corporate Governance and Human Resources Committee; and the Pensions Plans Governance Committee.
ADM is required to publish an Annual Report that contains its audited financial statements and specific information on governance, including the remuneration of Directors and officers and contracts awarded outside the normal tendering process.
ADM must also hold an Annual General Meeting open to the public and to which ADM stakeholders are invited. A press conference is also held as part of the Annual General Meeting activities, where journalists are invited to ask questions on all matters affecting the Corporation.
ADM also holds annual meetings with Transport Canada and the above-mentioned nominating entities. During these meetings, representatives of these entities have the opportunity to ask questions, make suggestions, comment on decisions or make any relevant recommendations.
ADM’s policy is to be transparent in its relations with its customers and various stakeholders and to communicate openly with the public. In particular, it consults its stakeholders on relevant issues, either directly or through committees set up specifically for this purpose.
The main committees set up by ADM are the Community Advisory Committee, the Soundscape Advisory Committee, the Airline Consultative Committee and the Airport Operators Committee.
The Community Advisory Committee is a broad forum composed of representatives of about 20 socio-economic organizations in Greater Montréal. It is called on to advise on any relevant matter.
Representatives of the cities of Montréal, Dorval, Pointe–Claire and Saint–Laurent, as well as the Government of Québec, sit on the Soundscape Advisory Committee. In addition, every year, ADM tours the city or borough councils of neighbouring communities.
Any change made to the master plan of either airport must be subject to consultation with various groups deemed appropriate by ADM, but must necessarily include the Community Advisory Committee. As for land use (airport zoning of any kind), a consultation plan must be filed with Transport Canada prior to any change. These consultations must be carried out with the Community Advisory Committee as well as with various other organizations, authorities and departments.
The public has a variety of ways to communicate with a representative of ADM or to access information on the Corporation’s activities. These include a telephone information service and a website. In addition, ADM conducts surveys on a continuous basis to ensure that airport services adequately meet the expectations of all its customers.