Financial Overview

Funding

As an appropriated Crown corporation, CATSA delivers its aviation security screening mandate in accordance with the resources it is assigned by the Government of Canada.

Since 2015, CATSA’s A-Base funding has been supplemented with incremental funding in order to maintain its operations. As part of Budget 2023, CATSA received multi-year funding for 2023/24, 2024/25 and 2025/26. Additional sustainable long-term funding will be necessary in 2026/27 and beyond in order for CATSA to deliver its mandated activities⁴. Budget 2024 did not include any changes to CATSA’s budget.

⁴ The current funding shortfall for the planning period is estimated at $3.3 billion: $737.0 million for 2026/27; $790.4 million for 2027/28; $861.7 million for 2028/29; and $906.6 million for 2029/30. These amounts do not account for Transport Canada’s recent policy changes to the enhanced NPS program, specifically the phase 2 requirements effective April 1, 2026, as communicated to CATSA on November 28, 2024.

Financial Plan

The operating and capital budgets are presented on a modified accrual basis. The narrative that follows reflects the strategic objectives, subject to available funding.

Key priorities having a significant financial impact include, but are not limited to, the following:

• Delivering CATSA’s mandated activities, which include targeting a wait-time service level where 95% of all passengers wait less than 15 minutes to be screened at Class 1 airports on an annual basis;
• Ongoing replacement of current X-ray technology at PBS checkpoints at major airports with CT technology, and the introduction of new technologies and trials as part of CATSA’s lifecycle management plan;
• Implementation of enhanced non-passenger screening to address amendments to security measures set by Transport Canada;
• Deployment of supplemental FBS units in a primary screening position at Class 1 and 2 airports to enhance security effectiveness;
• Lifecycle management of other explosives detection systems (EDS) and non-EDS capital assets based on their estimated useful lives; and
• Modernization of CATSA’s IT service delivery through strategic investments and partnerships in key areas including cybersecurity, AI and cloud computing.

The following summarizes the financial results for 2023/24, the forecasted financial results and original budget for 2024/25, as well as the operating and capital budgets for 2025/26 to 2029/30 by program activity based on CATSA’s approved funding⁵ .

⁵ CATSA’s capital funding includes funds that have been submitted for reprofile, but are not yet approved. The annual amounts are as follows: 2024/25 - $16.5 million; 2025/26 - $3.5 million; 2026/27 - $7.2 million; 2027/28 - $9.9 million; 2028/29 - $8.9 million.

The following section provides highlights of CATSA’s financial plan. For the period 2026/27 to 2029/30, CATSA will require supplemental funding to continue to deliver its mandated activities.

2025/26 – 2029/30

Screening Operations

Screening services to carry out CATSA’s mandated PBS, HBS and NPS programs account for a significant majority of its operating budget. These costs consist mainly of payments to third parties for the delivery of security screening performed by screening officers.

The financial plan reflects an increase in screening services costs, which is mainly attributable to additional screening hours to accommodate increasing passenger traffic, the introduction of enhanced non-passenger screening in late 2024/25, and inflationary increases in screening contractor billing rates.

In 2024/25, CATSA introduced the Facilitator role at PBS checkpoints which emphasizes the organization’s strategic commitment to elevating the client experience. This role will further CATSA’s ability to ensure that screening procedures respect and uphold the dignity and diversity of all travellers, including those with various accessibility-related needs.

New/Ongoing Initiatives

CATSA’s financial plan emphasizes investment over the planning period in the accelerated adoption of new and advanced technology to enhance operations and improve the client experience, including the ongoing upgrade of existing screening equipment with the latest detection algorithms. In addition to these investments, CATSA will continue to collaborate with Transport Canada to explore opportunities for risk-based screening including enhancements to the verified traveller program.

In support of CATSA’s strategic pillar to drive innovation, CATSA will continue to make investments in corporate initiatives that have a profound impact on the organization’s operations. These investments include exploring the application of advanced analytic techniques and artificial intelligence to enhance oversight, screening operations and training programs, the modernization of CATSA’s IT service delivery through strategic investments and partnerships, and the introduction of additional cyber controls to strengthen cyber security defenses.

Capital Lifecycle Management/New Technology

A priority for CATSA’s capital plans over the planning period is the introduction of next-generation screening equipment to enhance security effectiveness and improve the client experience. In support of this priority, CATSA’s lifecycle management plans include the replacement of current X-ray technology with CT X-rays at PBS checkpoints in major airports over the planning period. This technology will reduce passenger divesting requirements as experienced or committed to in other jurisdictions. As part of this program, CATSA will also replace single-view X-ray machines with multi-view versions at NPS checkpoints and Class 3 airports.

In addition, CATSA’s capital plan includes the deployment of additional FBS units in a primary screening position at Class 1 and 2 airports to enhance security effectiveness, as well as upgrades to FBS software and hardware to keep pace with anticipated detection algorithm and hardware improvements in the coming years. CATSA’s capital plan also provides for the deployment of additional screening equipment to accommodate the 95/15 wait-time service level and the expansion of screening capacity for existing HBS systems at Canada’s largest airports, as well as the replacement of non-EDS equipment and systems as the existing assets reach the end of their useful lives.

When making capital acquisitions of screening equipment, CATSA follows its procurement and contracting policy, which ensures transparency and consistency in establishing operational requirements and procurement strategies for screening equipment. With respect to specific requirements for screening equipment, the equipment must meet Transport Canada detection performance standards, which are typically aligned with the TSA and/or ECAC. Key factors considered as part of a capital acquisition include technical, company and financial evaluations, which ensure the equipment meets CATSA’s functional requirements and provides good value for money.

It is important to note that unforeseen impacts, including uncertainty surrounding supply chain disruptions and potential delays on the part of industry partners, may affect the timing of capital projects and result in various delays beyond CATSA’s control. Consequently, the organization may require a re-profile of funds to account for any unexpected delays in capital projects.

Key Assumptions and Financial Risks

Passenger Traffic Projections — In 2024/25, CATSA expects to screen 70.5 million passengers, representing a 5.5% increase from 2023/24 levels. CATSA’s current passenger volume projections are based on a range of passenger forecast scenarios and reflect ongoing increases in passenger traffic levels over the planning period. Any significant deviation from CATSA’s passenger forecasts will have a material impact on the organization’s financial requirements.

Screening Officer Staffing — The financial plan assumes screening contractors will be able to hire and retain the necessary number of screening officers to address the increasing volumes of passengers and non-passengers over the planning period. In the event that labour market conditions make it challenging for screening contractors to hire the necessary number of screening officers, passenger wait times would be negatively impacted.

95/15 Wait Time Service Level — CATSA’s ability to deliver any given wait-time service level target is significantly impacted by the physical space allocated by, or available within, airports for screening lines. The financial plan assumes physical space at the airports will be available for additional lines that may be required, a key factor to the successful delivery of any targeted wait-time service level. In addition, the financial plan is based on current operations and does not consider unknown changes in CATSA's regulatory or operating environment, including possible future advancements in screening technologies, which may increase or decrease the efficiency with which screening is performed.

Inflation and Billing Rates — While CATSA continues to experience inflationary pressure across all areas of the organization, labour rates are the greatest source of inflation in CATSA’s ongoing operations. The contractual rates used in the financial plan are based on the terms of CATSA’s new and existing contracts, including the latest contract rates in the ASSAs and maintenance service provider contract, and anticipated contractual rate increases in contracts to be signed or renewed over the planning period. Any significant change to inflationary assumptions may have a material impact on CATSA’s financial requirements going forward.

Foreign Exchange Rates — Financial projections reflect a projected USD exchange rate of 1.37 for the planning period, except for maintenance costs that have been hedged at approximately 1.36 for 2025/26. CATSA will continue to monitor its future commitments and will enter new hedging contracts as per its approved hedging strategy. Significant fluctuations in the exchange rate for any unhedged amounts may have a material impact on CATSA’s financial requirements.

Re-Profiles — Re-profile requests have become a necessary part of CATSA’s annual financial management process. The financial plan assumes CATSA will continue to receive approval of capital re-profiles, including the possible transfer of capital funding to a future financial period based on a revised spending profile for major projects.

Refocusing Government Spending — CATSA continues to seek opportunities to maintain or reduce spending levels whenever possible. In addition to the reductions of $10 million per annum identified in Budget 2023 for 2023/24 to 2025/26, CATSA’s financial plans reflect the implementation of several cost saving initiatives, including the associated reductions in spending.

Internal transfer — The financial plan assumes that CATSA will receive approval for internal budget transfers if required, from capital to operating in order to align the organization’s reference levels to its budget. Approval of internal transfers in any given year are critical for CATSA to offset incremental operating requirements with available capital funding where the organization’s capital requirements are lower than the approved funding for that fiscal year.

Cost Recovery

In 2024/25, CATSA will enter into a Cost Recovery Agreement with the Montreal Metropolitan Airport (MET) in Saint-Hubert, Québec, subject to the approval of Transport Canada. The costs and revenues associated with this arrangement are not included in CATSA’s financial plans and no amount is included in CATSA’s capital budget for MET equipment as it has been reflected as cost recovery. In the event that MET becomes a designated airport under the CATSA Aerodrome Designation Regulations, CATSA will face operating and capital budget shortfalls as the organization has not budgeted for this to occur.

The table below summarizes the anticipated cost recovery details using flight and passenger volume assumptions and equipment requirements provided by the Saint-Hubert Airport Authority. The amounts identified as a “Net Operating Cost (Revenue)” and “Total” reflect funds available for CATSA to cover administrative costs, as well as staff additional positions to support CATSA operations related to this arrangement.