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When is an Airport Authority a Public Utility?
Published in the November 2008 issue of Transportation Notes - View Article
A public utility is required to provide its goods or services “without discrimination and for reasonable fees”. Whether an airport authority is a public utility or not could have a significant, even determinative, impact on any dispute between an air carrier and an authority arising out of fees imposed by the latter.
The issue of an authority’s status as public utility was litigated for the first time in British Columbia in the case of Perimeter Transportation Ltd. v. Vancouver International Airport Authority, and the trial judge’s decision was rendered on November 7, 2008. As the decision makes clear, the question of public utility status is nuanced. An entity may owe public utility duties to some parties it comes into contact with while it owes no such duties to other parties. In the words of the trial judge: “An enterprise is not necessarily a public utility in all aspects of its operations or in relation to all who might have dealings with it”.
The dispute in this particular case was between a company engaged in the business of transporting incoming passengers from the Vancouver International Airport to a popular tourist destination north of the city of Vancouver. This local bus line, Perimeter Transportation, had entered into a contract with the airport authority. Under the terms of that contract Perimeter enjoyed certain privileges, including favourable access to loading zones and a prominent display point within the terminal building. However, after enjoying these privileges for a number of years, it concluded the price being exacted was too high. Perimeter took the position that it was entitled to carry on its business without paying the fees defined in the contract. Central to its argument was the assertion that the airport authority was a public utility and, as such, obliged to permit the local bus company access to its facilities for the purpose of carrying on its business.
Perimeter’s claim was full of factual difficulties which are not, in our view, of any general importance. It failed in its assertion that the airport authority owed public utility duties to Perimeter. However, the more interesting issues canvassed in this decision have implications for the larger question of an authority’s obligations to other airport users, including airlines.
The court noted, we believe correctly, that no Canadian judicial authority has yet considered “whether terminal operators owe public utility duties or to whom such duties would be owed”. The position of the airport authority was that it “only ever professed to serve, and . . . only ever in fact served, the travelling public”. Although the airport authority did not admit that it should be considered a public utility in respect of services to the travelling public, the court stated, without concluding definitely, that the authority “might well be a public authority” in that respect.
So, what is the airport authority’s status with respect to an air carrier? The answer is not found here. However, any consideration of the question, in Canada, should begin here. Among the authorities cited, none of which are directly on point, we do find support for the suggestion that an important question is “Who does this entity profess to serve?” Can an airport authority maintain that it does not serve the air carriers who pay for the operation and provide the signature service without which there could be no airport? It remains to be seen.
Perimeter Transportation Ltd. v. Vancouver
International Airport Authority,
2008 BCSC 1515