© Dr. John D. Kasarda, 2019 1

John D. KasardaKenan-Flagler Business School

University of North Carolina – Chapel Hillaerotropolisbusinessconcepts.aero 1B U S I N E S S C O N C E P T S L L C T M

A Toronto East Aerotropolis:

Creating Regional Competitive Advantage

Toronto Region Board of TradeThe GTA’s Next Economic Engine

Toronto, ON09 April 2019

© Dr. John D. Kasarda, 2019 2

The Changing Roles of Large Commercial Airports

From just transportation infrastructure

to

regional engines for economic development that

1. Attract investment

2. Boost trade

3. Create jobs

4. Increase competitiveness of the region’s firms and places

Toronto Pearson as an example

(2016 economic impact study):

• 332,000 jobs generated in Toronto region

• US$42 billion in economic output of firms

• 13% of GTA’s GDP and 6.3% of Ontario’s GDP

Mississauga: Over 60 Canadian and international firm headquarters

© Dr. John D. Kasarda, 2019 3

Why are major airports’ economic impacts so great?

• High-value products and high-value businesspeople go by air.

• Examples of aviation-oriented products:

– aerospace components, biomeds, cross-border e-commerce, fresh

food products, medical devices, semiconductors, smartphones, etc.

• Examples of aviation-oriented businesspeople:

– auditors, consultants, corporate lawyers, engineers, fashion clothing

designers, investment bankers, marketing and media personnel, etc.

• 35% of the value of global trade moves by air (much greater

for high-tech products and exports of business services).

© Dr. John D. Kasarda, 2019 4

Toronto’s growing airport capacity constraints will negatively

impact the region’s highest-value businesses.

• Toronto Pearson is growing very fast.

– 38.6 million in 2014 to 49.4 million in 2018

– The latest master plan (December 2017) indicates that the airport may be able to handle up to 85 million passengers by the mid-2030s.

• Diseconomies will set in as this number is approached.

– Flight delays

– Crowded gate areas

– Landside ground congestion

© Dr. John D. Kasarda, 2019 5

How can Toronto address its increasing air capacity challenges?

1. Better utilize the Southern Ontario Airports Network’s

(SOAN’s) regional airports (11 + Pearson)*.

2. Build a major new commercial airport to meet future

regional air traffic demand and serve as a dual economic

engine with Pearson.

Airport economic benefits and airline network economies

both differ substantially by strategy selected.

*Sarnia Chris Hadfield Airport joined the SOAN in January 2019.

© Dr. John D. Kasarda, 2019 6

The Toronto region possesses an opportunistic site for a major

second commercial airport, should it be approved.

• The Pickering Lands

– 18,600 acres acquired by the federal government in 1972 for a new major airport

• Larger than virtually all airports in the world

• Thus, approximately 10,000 acres transferred to Rouge National Urban Park in 2015 for green space in perpetuity

• 8,700 acres remaining for airport and airport-linked economic development

– Approximately 3,500 acres targeted for airport infrastructure

– Approximately 5,200 acres targeted for economic development

© Dr. John D. Kasarda, 2019 7

If approved, what should the Pickering airport be?

1. A relatively small reliever airport serving primarily general aviation and short-distance regional jet travel to capture Pearson’s overflows

OR

2. Toronto’s second major commercial airport with an integrated outlying aerotropolis

© Dr. John D. Kasarda, 2019 8

What is an aerotropolis?

• An aerotropolis is a metropolitan subregion whose business,

industry, and tourism clusters are sustained by an airport and

its integrated highway, rail, and port infrastructure.

• It consists of two components:

1. the airport’s aeronautical, logistics, and commercial facilities,

anchoring a multimodal, multifunctional airport city as its core

and

2. outlying corridors and clusters of aviation-oriented businesses and

industries that feed off each other and their accessibility to the

airport and other key transport and urban nodes.

© Dr. John D. Kasarda, 2019 9

Aerotropolis Schematic with Airport City Core(compressed version)

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Common Locations of Aerotropolis Commercial Facilities(Selected Business Functions)

• Business Parks

• Corporate headquarters

• Conference and Exhibition

• Hotel clusters

• Leisure and entertainment venues

• Medical and wellness facilities

• Advanced and precision manufacturing

• Fashion clothing and accessories

• High-value agricultural production

• Semiconductors and integrated circuits

• Smartphone and ICT assembly

• Time-critical distribution

People-Oriented Goods-Oriented

• Airport hotels

• Business meeting facilities

• Car rental centers

• Office buildings

• Aircraft assembly and repair

• Cool-chain facilities

• Direct factory outlets

• E-commerce exchanges

Airport City Core

Greater Aerotropolis

© Dr. John D. Kasarda, 2019 11

But the aerotropolis is also a strategy.

That is, a successful aerotropolis represents a coordinated set of

infrastructure, commercial real estate, and government policy

interventions that

1. upgrade airport-region urban and employment assets,

2. reduce ground-based transport times and costs, and

3. expand air route connectivity

to attract investment and leverage aviation-enabled trade in

goods and services for municipal, provincial, and national

competitiveness, job creation, and economic growth.

© Dr. John D. Kasarda, 2019 12

Toronto East Aerotropolis Primary Value Propositions

• For firms: Provides businesses located near or with good

transport access to a new Toronto East airport with speedy

connectivity to their suppliers, customers, clients, and

enterprise partners, nationally and worldwide.

• For municipalities and the region: Will leverage the new

airport and improved multimodal surface transport connectivity

to draw tourists and attract investment in high-end

manufacturing, high-value agriculture and modern business

services.

Connectivity = Competitiveness

© Dr. John D. Kasarda, 2019 13

Creating a Toronto East Aerotropolis

The 21st-Century Airport, Airport City, and Aerotropolis

Leveraging Speed and Connectivity for Competitive Advantage

© Dr. John D. Kasarda, 2019 14

10 Reasons Why a Toronto East Aerotropolis Should Succeed

1. Ample land specifically reserved for a major commercial airport along with substantial adjacent land for economic development.

2. Strategic location in a metropolitan growth corridor near the center of the GTA.

3. Excellent regional multimodal surface transportation connectivity to the airport site and surrounding areas, with a port nearby.

4. A transforming east Toronto economic base that is increasingly populated by aviation-oriented firms.

5. A well-educated labor force who can staff the positions of these modern, aviation-oriented businesses and industries.

© Dr. John D. Kasarda, 2019 15

10 Reasons Why a Toronto East Aerotropolis Should Succeed(continued)

6. Local municipality leadership support (elected by their residents).

7. Broad industry support.

8. A unique opportunity to plan, design, and operate a state-of-the-art airport, airport city, and aerotropolis that is economically efficient, attractive, and sustainable.

9. Expressed interest from major multinational firms to locate near the new airport, should it be constructed.

10. Expressed interest from international airport investors to fund development of the airport and operate it at little-to-no cost to Transport Canada.

© Dr. John D. Kasarda, 2019 16

Airport Opposition

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Land Over Landings

• Believe the airport should not be built and that the

Pickering Lands should be dedicated in the short and long

term to sustainable agriculture.

• Among others, they provide two main reasons for their

opposition:

1. The airport’s negative environmental impacts via greenhouse

gas emissions.

2. Loss of prime farmland in the region.

© Dr. John D. Kasarda, 2019 18

Total Greenhouse Gas Emissions by Source

Agriculture & Forestry24.87%

Energy, Electricity, & Heat11.00%

Industry & Waste31.50%

Buildings18.37%

Other Transport2.71%

Aviation1.49%

Road10.20%

Transportation14.40%

Agriculture & Forestry Energy, Electricity, & Heat

Industry & Waste Buildings

Other Transport Aviation

Road

Source: Intergovernmental Panel on Climate Change (2014).

© Dr. John D. Kasarda, 2019 19

The addition of a Toronto East airport would be negligible in terms of

global greenhouse gas emission impacts.

• There are already nearly 18,000 commercial airports operating

worldwide and this number is expanding rapidly.

• China’s commercial airports will double in the next 20 years.

# of China flights Relative to # of US flights

2000 62 million One tenth of US

2017 551 million Two thirds of US

2037 1.6 billion 1.3 billion flights in USSource: International Air Transport Association

© Dr. John D. Kasarda, 2019 20

The Loss of Cropland Issue

50

60

70

80

90

100

(mill

ion

acr

es)

Source: Statistics Canada (2017).

Total Cropland, Canada, 1921-2016

© Dr. John D. Kasarda, 2019 21

Canada, Ontario, and Southern Ontario Cropland

1986-2016 (million acres)

Region 1986 1991 1996 2001 2006 2011 2016% Change

(1986-2016)

Canadaa 81.99 82.80 86.29 89.93 88.74 87.35 93.38 13.89%

Ontarioa 08.54 08.43 08.76 09.04 09.05 08.93 09.02 05.58%

Southern

Ontario03.18b 03.18c 03.32d 03.36e 03.34f 03.30g 03.44h 08.18%

Sources:a. Statistics Canada. (2017). Table 32-10-0153-01: Total area of farms and use of farm land, historical data. Retrieved April 2019, from Statistics Canada:

https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=3210015301b. Statistics Canada. (1986). Land Tenure, Land Use and Farm Size, 1986, Census of Agriculture, Statistics Canada. Retrieved April 2019, from Queen's University Library:

https://library.queensu.ca/madgic/free/agriculture/1986/CAN862.xlsc. Statistics Canada. (1991). Operating arrangements, Land Use and Land Management Practices, 1991, Census of Agriculture, Statistics Canada. Retrieved April 2019, from Queens

University Library: https://library.queensu.ca/madgic/free/agriculture/1991/CAN911.xlsd. Statistics Canada. (1996). T7 - Land Tenure, Land Use and Land Management Practices, 1996, Census of Agriculture, Statistics Canada. Retrieved April 2019, from Queens University

Library: https://library.queensu.ca/madgic/free/agriculture/1996/CAN967.xlse. Statistics Canada. (2001). Land use, greenhouses, land managements, 2001. Retrieved April 2019, from Queens University Library:

https://library.queensu.ca/madgic/free/agriculture/2001/allv2001c.xlsf. Statistics Canada. (2006). Tenure and land use: Mode d'occupation et utilisation des terres. Retrieved Mardh 2019, from Queens University Library:

https://library.queensu.ca/madgic/free/agriculture/2006/canada-2006-tenure-and-land-use-mode-d%27occupation-et-utilisation-des-terres.xlsg. Kulasekera, K. (2012, May 17). Farm Land Area (Acres) Classified by Use of Land, by County, 2011. Retrieved April 2019, from Ontario Ministry of Agriculture, Food and Rural Affairs:

https://web.archive.org/web/20181109215857/http://www.omafra.gov.on.ca/english/stats/census/cty32_11.htmh. Mailvaganam, S. (2017, October 24). Farm Land Area (Acres) Classified by Use of Land, by County, Ontario - 2016. Retrieved April 2019, from Ontario Ministry of Agriculture, Food and

Rural Affairs: https://web.archive.org/web/20181109215858/http://www.omafra.gov.on.ca/english/stats/census/cty32_16.htm

© Dr. John D. Kasarda, 2019 22

Comparative Land Sizes in Acres (2016):

Regional Cropland vs. the Pickering Lands3,435,217

215,6088,700

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Southern Ontario Cropland Regional Municipality ofDurham Cropland

Pickering Lands Total Area

(acr

es)

Source: Commissioner of Planning and Economic Development. (2017, June 09). 2016 Census of Agriculture, File: D01-03. Retrieved April 2019, from Durham Region: https://www.durham.ca/en/living-here/resources/Documents/EnvironmentalStability/2017-INFO-71-2016-Census-of-Agricultural.pdf

Regional cropland is actually growing.

• Between 2011 and 2016…

• The Regional Municipality of Durham added a

net of 6,038 acres of cropland.

• Southern Ontario added a net of 130,755 acres

of cropland, over 15 times the size of the

Pickering Lands.

© Dr. John D. Kasarda, 2019 23

Concluding Points

• A Toronto East airport would contribute negligibly to global greenhouse gas emissions.

• Increases in cropland in Southern Ontario far overshadow the size of the Pickering Lands.

• If approved, the Toronto East airport should not be planned and developed as a regional reliever airport, but as originally intended by the federal government as Toronto’s second major commercial airport, complementing and reinforcing Toronto Pearson.

• A Toronto East Aerotropolis has the potential to substantially improve the competitiveness of the entire region’s economy, including its agricultural and food processing sectors.

• A successful Toronto East Aerotropolis can generate hundreds of thousands of jobs and billions of dollars of economic activity if developed properly.

© Dr. John D. Kasarda, 2019 24

For follow-up questions, contact:

John_Kasarda@unc.edu

kasarda@aerotropolisbusinessconcepts.aero

http://www.aerotropolis.com

http://aerotropolisbusinessconcepts.aero

Twitter: @JohnKasarda

Aerotropolis Video: See YouTube, Kasarda’s Aerotropolis

John D. Kasarda, PhD

President & CEO

Aerotropolis Business Concepts LLC

San Diego, California

USA

Thank you!