Air Canada

Edmonton council approves $10 million for air service development

‘This is the ballgame’ mayor tells council in support of a $15 million regional fund to attract new flights as the pandemic subsides

Edmonton air service
An Air Canada CRJ900 on departure. The type’s route from Edmonton to San Francisco was held up as a success story in air service development (Brett Ballah).

“Tray tables up, seat backs up, please vote.” With a nod to the industry, Mayor Don Iveson called for a decision that could shape the future of Edmonton’s air service development.

“This is the ballgame,” Iveson told a council meeting Monday. “For our business community, for trade, for tourism, for investment attraction, for talent retention.”

The $15 million fund will be used to strike partnerships with airlines for new air service from Edmonton. There are few restrictions on how it can be used, except that it cannot fund land development or to attract new ground tenants. The goal is to take on the risk of starting a new route so airlines are more willing to give it a try. It normally takes about two years for a route to establish itself. An airline would not receive any money until they commit to the flight.

“We are not a natural hub,” airport President and Chief Executive Officer Tom Ruth told council, referring to the city’s northerly location. “We have to be at the ready to be able to attract these flights for the recovery. And then eventually that becomes an opportunity for future flights.”

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Unusual in Canada

These types of air service development funds are unusual in Canada. Airports operate on a user-pay model. They rarely share risk with airlines, except through breaks on landing fees and other such inducements. During the depths of the pandemic, however, Swoop called for airport partners to help restart aviation. It received more than 70 proposals.

Iveson pointed to an Air Canada non-stop flight to San Francisco as one of the airport’s success stories. Pre-pandemic, the airport would work with the city’s tourism agency to market new flights. Ruth said key markets on the U.S. East and West Coast would be a priority, along with destinations in Europe and Asia.

Edmonton’s market is mostly driven by outbound traffic. Pre-pandemic a healthy percentage of non-stop international flights departed to sun destinations as people looked to escape the northern winter.

A sense of urgency

Malcom Bruce of Edmonton Global, however, said businesses are driving the urgency at this point.

“I’ve had conversations with a number of CEOs,” said Edmonton Global CEO Malcom Bruce. His economic development corporation will manage the money. “Many of them are dependent on, as you know, a fly in fly out economy. And if they cannot reach their international markets that they service through their businesses then they will consider moving their business. And I’m talking about CEOs that have told me that directly.”

“They’re driven quite a bit as well as you know by the business community and the needs of our region,” said Ruth. “So that’s another area when we look at flights that we’re targeting, it’s all driven by business community. After all, this is what will create the catalyst for growth.”

A key consideration will be the federal government’s decision to re-open Canada’s borders to foreign citizens. In one of its first actions when the pandemic hit, Ottawa closed the border to most non-Canadians. It further clamped down in January this year, taking away Edmonton’s ability to handle international traffic.

“One of the things that we are still working on is, what are the criteria to reopen the airport the international traffic?” said Bruce. “And that’s one of the key considerations. So until we see that, we think it’s best to be pre-positioned. Because I suspect that when [the federal government decides] to reopen international flights, it will happen quite quickly. So what we’re trying to do is be very proactive in our work here to make sure that we’re able to launch the recovery. And then hopefully move to acceleration quite quickly.”

An investment in the region’s economic future

The mayor said the money would be an investment in the city’s economic future.

“If we do not protect our airport’s competitiveness and intervene strategically here, with our neighbours, air service in the aftermath of COVID, we will consolidate in Calgary,” said Iveson. “That’s already beginning to happen as a result of COVID. And if we don’t step up to fight with our neighbours for the best connectivity for our citizens and businesses, we will never recover. It’s time for this city and region, to put our money where our mouth is on this on this front and give the airport the tools they need to keep doing the excellent economic development work they’ve done on our behalf.

“And that does require some incentives and some de-risking, particularly in this in this environment,” said the mayor. “Which is tricky for all businesses, including airlines. We have to be very strategic about this. We have to be decisive about this and we have to be bold about this.”

Council voted 11-2 to establish a new fund that could help Edmonton International’s air service development efforts. The city’s share will be just shy of $10 million. Other municipalities in the region are being asked to contribute based on their size.

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