Turbulence Ahead: Vancouver Airport Authority Accused of Abuse of Dominance

The Vancouver Airport Authority (VAA), an agency responsible for the operation and management of the Vancouver International Airport, has been accused of abusing its dominant market position, contrary to s. 79 of the Competition Act. In an application filed with the Competition Tribunal last week, the Competition Bureau alleged that VAA had refused to allow new in-flight catering suppliers to operate at the Vancouver International Airport by denying them airside access and tying access to the leasing of Airport land.

In-flight catering service consists of catering (the preparation of on-board meals) and galley handling (the loading, unloading, warehousing and transportation of catering products). While in-flight catering suppliers are directly selected by airlines based on pricing and service, VAA has the sole discretion to grant access to the airside, the area inside the security perimeter where suppliers must enter to operate and provide services. In essence, without permission to access to the airside, an in-flight catering service supplier would not be able to operate its business at the Airport.

The Bureau claimed that VAA has repeatedly refused to permit anyone to provide in-flight catering service at the Vancouver International Airport, other than the two existing firms, both of which have operated at the Airport since 1992. In addition, in exchange for authorization to access the airside, the incumbent catering firms were required to pay access fees and lease Airport land from VAA for the operation of their catering kitchen facilities. There are potential competitive concerns with the conditions that VAA impose on the suppliers because off-Airport land can be less expensive, and firms that provide only galley handling services who do not require kitchen facilities are entirely excluded from operating at the Airport. The Bureau refused to accept VAA’s explanations for excluding new entrants as legitimate business justification, and concluded that VAA’s refusal to grant airside access to in-flight catering suppliers has or is likely to have anti-competitive effects.

VAA has not filed a response to the Notice of Application at this time. The Bureau is seeking an order from the Competition Tribunal prohibiting VAA from engaging in its current practice of denying airside access to new-entrant suppliers and tying access with mandatory leasing, and requiring VAA to grant airside access to new in-flight catering suppliers that otherwise meet the health and safety requirements.