Toronto Pearson is a vital piece of regional infrastructure, providing easy access to the world for people in the Greater Toronto Area and across Southern Ontario. At the same time, the number of connecting passengers flying through our airport continues to rise, accounting for 29.2 per cent of traffic during the past year. Their decision to travel via Pearson speaks to the superior connections we offer over other hubs, as well as our reputation for delivering a convenient, smooth-flowing travel experience.
That millions more passengers every year are choosing to fly in and out of Toronto Pearson attests to our continued progress in delivering on the GTAA’s strategy. It’s also a tribute to the diligence, dedication and pride of nearly 50,000 people who work at our airport. But as demand for air travel continues to grow, we never lose sight of longer-term challenges. As forecast in our Master Plan, we envision serving 85 million passengers annually by 2037. And while the total number of aircraft movements will not go up proportionately (as the average number of passengers per flight rises to 140 from the current 110), we’ll face increasing pressure to optimize facilities while investing strategically in further enhancements within the airport’s prescribed footprint.
Building a strong foundation
As a non-share capital corporation, the GTAA constantly reinvests in Toronto Pearson to keep pace with future needs. In 2018, adjusted net income rose to $139.8 million, compared to $112.2 million in the previous year. This was a result of overall growth in passenger traffic and a corresponding increase in commercial revenues of more than 11 per cent, to a record $501.9 million.
Commercial revenues are mainly generated from ground transportation and parking fees, retail and dining concessions, and rent paid by carriers for check-in counters and kiosks. As Toronto Pearson’s fastest-growing source of income, they’re critical to funding the significant investments the GTAA has mapped out over the next few years for everything from additional gate capacity to new passenger amenities to further integration of automated baggage systems.
These and other commitments are detailed in the GTAA’s strategic plan, which the Board and management are currently updating to cover the five-year period through 2024. Moving forward, we’ll continue to enhance the passenger experience and the support we provide to carriers and other partners – as always, while upholding the highest standards of safety and security for both passengers and airport employees.
Equally important, we’re committed to maintaining a robust financial position and increasing capital strength to prepare for future growth. As total revenues rose over the past year to $1.5 billion, we once again took the opportunity to retire a portion of long-term debt ahead of schedule. At year-end, we had reduced gross debt per enplaned passenger by 3.8 per cent compared to 2017, strengthening the foundation of a company that must plan ahead over several decades.
Connected to our communities
Toronto Pearson’s performance is both an outcome and a driver of economic growth, as we provide the vital connections that help ensure our region and all of Canada are more dynamic, resilient and ready for the future. And as CEO Howard Eng notes in his message, the global connectivity that our airport provides also extends into surrounding communities. The GTAA has taken the lead on regional transportation initiatives such as the Southern Ontario Airport Network and the integration of bus and rail services through our proposed Regional Transit and Passenger Centre at Toronto Pearson.
These initiatives are anchored by a deeper sense of responsibility toward the communities we’re in business to serve – and in particular those neighbourhoods that are directly and indirectly affected by Toronto Pearson’s operations. The GTAA has committed to investing 1 per cent of annual net revenue in support of community organizations across our region. In 2018, we provided $1.02 million to support 24 not-for-profits that are working to advance social change in Toronto, Mississauga and Brampton – with a focus on addressing the problem of underemployment.
The Airport Employment Zone around Toronto Pearson is the second-largest employment cluster in the country. But among the nearly two million people who live within a 17-km radius of the airport, there is a significantly higher rate of underemployment than in the overall Greater Toronto Area. About 43% of our neighbours, despite having earned post-secondary degrees, hold jobs that are well below their education or skill levels. A high proportion of the underemployed are women; many are recent immigrants whose credentials and experience aren’t readily recognized in Canada.
This is an area where the GTAA can have a concrete and lasting impact. Through our community investment program, the Propeller Project – whose various initiatives are detailed in this annual report – we can help to bring about meaningful change while fostering longer-term social and economic well-being.
Representing all stakeholders
The Board of Directors provides oversight and guidance to management, helping set strategic priorities while collectively representing the interests of the GTAA and all of its diverse stakeholders. Three members will be retiring from the Board in 2019: we thank Paul Currie, Kathy Milsom and Danielle Waters for their valuable contributions and wise counsel.
The Board also welcomed three new members in 2018:
Peter Gregg is President and CEO of the Independent Electricity System Operator, the corporation that manages Ontario’s electricity market and directs the operation of the province’s bulk electrical system.
Doug Allingham is a transportation engineer with 40 years of experience in both the public and private sectors, most recently as an Executive Vice President of engineering firm AECOM Canada Ltd.
Michele McKenzie is the founder of McKenzie Business Strategies, an advisory practice focused on economic development, strategy, marketing and tourism, and is the former President and CEO of the Canadian Tourism Commission.
A legacy for the future
Howard Eng has indicated that he will be retiring in 2020 after eight years as President and CEO of the GTAA. Under Howard’s leadership, Toronto Pearson has experienced unprecedented growth, gaining an additional 15 million passengers since 2012. Our airport has emerged as a global mega hub, joining the 30 largest hubs worldwide and ranking fifth for international connectivity. Leading a handpicked management team, Howard has helped Pearson set new benchmarks in operational excellence while earning top marks for service quality.
On behalf of the Board, I want to thank Howard for his vision, determination and exemplary leadership. His wide-ranging accomplishments, from growing valuable international traffic to developing an integrated transit strategy to strengthening financial sustainability, will bear fruit for years to come. And his legacy will inspire GTAA employees and their colleagues across Toronto Pearson as they continue working together to connect Canada to a world of opportunity.
![Signature of David Wilson]()
David Wilson
Chairman
