The Iqaluit airport project: why so big?

A view of some private facilities near the area, just past the old federal building in Iqaluit, where a private consortium will build and run a big new airport terminal building, part of a massive overhaul of the Iqaluit airport that will start in the spring of 2014 and take more than three years to complete. Some of the area’s current users may have to move hangars and other facilities to accommodate the new terminal, the GN said. (PHOTO BY JIM BELL)

The Nunavut government’s public-private deal for a new Iqaluit airport complex will trigger $250 to $300 million in design and construction costs — the biggest single construction project ever for the GN.

To pay for the complex scheme, P3 Canada has chipped in $77.3 million. The winning bidder, Arctic Infrastructure Partners, will put up the rest of the cash through an international investment banker called InfraRed Capital Partners Ltd. and carry at least part of the risk of building and running the facility.

In exchange, the GN will make payments — in amounts yet to be disclosed — to the airport operator for 30 years.

The rate of return on investment — or profit — that would flow to the private consortium is not yet disclosed either. It’s also not clear what would happen if interest rates were to rise sharply or if the global financial system were to endure another credit crisis.

But why so big?

Paul Mulak, a project manager for the Department of Community Government and Services, said it’s because the airport runway needs extensive re-paving and because a new airport complex must meet aviation regulations set by bodies like Transport Canada and the Canadian Air Transport Security Authority.

“Everyone’s talking about the new ATB [airport terminal building] but that’s just part of it,” Mulak said.

More than half the project’s cost will go towards paving work on the runways and aircraft parking aprons, he said.

That’s because the last major paving work was done about 20 years ago, for a cost of about $30 million in early 1990s dollars, when the Department of National Defence installed its now little-used forward operating location at Iqaluit.

Mulak said that old paving work “has stood up unexpectedly well,” but must be upgraded to last through the 30-year period covered by the GN’s public-private deal with a business group called Arctic Infrastructure Partners.

That work, and the two big new buildings planned for the airport site, must meet current regulatory requirements, Mulak said.

The consortium will build the new air terminal structure, about four times the size of the current yellow terminal, on a site just south of the old federal building, which houses government trades facilities and the old Ukkivik residence.

That means some of the companies that now use space in the area for hangars and offices will have to move those structures to accommodate the new building, Mulak.

For airline passengers, the new terminal would likely offer more comfortable and convenient services.

That includes an arrival area with two revolving luggage belts, and a better holding area — including bathrooms — for departing passengers who have passed through security.

The new terminal will also hold a restaurant, coffee shop, and souvenir shop, but not a bar, and the restaurant will not be licenced to serve alcohol, Mulak said.

Private business would operate those services through concessions.

To get there, airport users would gain access via Federal Road, now in an advanced state of disrepair. But upgrading that road is not part of the airport improvement plan, he said.

The other new structure, called a “combined services building,” will sit on a piece of land located between the current Iqaluit air terminal and the RCMP hangar.

That building will house an airport fire department, heavy equipment for runway maintenance and a storage area. Users would gain access to it via the current Airport Road.

P3 schemes in other jurisdictions are sometimes financed in whole or in part by user fees.

But on this project, Nunavut air travellers don’t have to fear getting slapped with the kinds of user fees that many other Canadian airports impose.

“No user fees are part of the plan,” Mulak said.

He said that even if the GN or the private operator wanted to collect user fees from travellers, the revenue stream wouldn’t contribute much to paying the cost of building and running the facility.

“Even if you charged a fee of $1,000 per passenger, it wouldn’t come close,” Mulak said.

As for landing fees for aircraft operators, that’s an issue between the GN and the airlines, he said.

Prior to the drafting of a conceptual design for the new airport complex, the GN consulted heavily with regulators and did “some consultation” with airlines, Mulak said.

But the GN does plan a round of consultations with airlines after a contract is signed and they have a detailed plan showing what the new structures will look like.

The four companies that form Arctic Infrastructure Partners are:

• InfraRed Capital Partners Ltd. — an international investment banking firm that specializes in big infrastructure and real estate projects. They’ll put up most of the cash.

• Bouygues Building Canada Inc. — Based in Montreal, Bouygues Building Canada is a Canadian subsidiary of a French multinational construction firm called Bouygues Bâtiment International. They’ll design and build the project.

• Colas Canada Inc. — A subsidiary of Bouyges that specializes in road construction and transportation infrastructure.

• The Winnipeg Airports Authority — A “community-owned” entity that runs Winnipeg’s James Armstrong Richardson International Airport. The GN describes them as the “service provider.”

Mulak said the Winnipeg Airports Authority will be involved even before the project is completed and will run the facility afterwards, including the hiring of airport workers.

Though a final contract won’t be negotiated and signed until later this summer, an under an “early works agreement,” the builder will ship some equipment and materials to Iqaluit on the sealift later this season.

That will allow construction to start in the spring of 2014, Mulak said.

A corporation owned by the British Columbia government called Partnerships B.C. is helping Nunavut manage the massive project.