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Canada is the world’s only country where the largest airports are operated by non-profit airport authorities, who lease land owned by the government, a structure that constrains the ability to fund expansions and creates a disincentive for certain developments, according to the C.D. Howe report.

‘All-time high’

Pearson has emerged as the top candidate for sale, the people said. The country’s second-busiest hub, the Vancouver International Airport, is considered to be more complicated and less likely than the sale of a partial or full stake in Pearson, the people said.

“I think it makes a lot of sense to go down this road right now. The market for assets like this is at an all-time high,” C.D. Howe report author Steven Robins said in an interview. It’s essential that government set up its regulatory process correctly and not constrain long-term options — such as an agreement for Pearson that limits development of other airports around Toronto, he said.

Government would see annual airport revenue fall to $110 million in provincial and federal taxes, from $305 million currently collected in rent, Robins’s report estimated.

One risk is keeping airport authorities onside.

“If they don’t have buy-in from the airport authority board, this is a difficult transaction to do,” he said, adding that factor alone is a potential barrier for a Pearson sale. “Other airport authorities have been more open to the idea.”

Australian model

Brookfield’s Pollock said on a conference call Thursday it was unclear if either the Canadian or U.S. governments would seriously consider an asset recycling program akin to the one Australia adopted.