Regional economic development corporation proposes $15 million fund to attract new flights, post-pandemic. The pressure is on municipalities to decide quickly.
Edmonton city council will debate a proposal Monday to contribute to a $15 million fund to attract new flights to the region. A regional economic development agency and the airport call it part of an “urgent” response to COVID-19’s impact on air travel.
“The Edmonton International Airport is a vital piece of regional infrastructure that impacts both our region’s quality of life and our region’s economic development,” reads a report going to council Monday. “The mission of the Edmonton International Airport is to drive the region’s economic prosperity through aviation and commercial development. Maintaining and increasing the number of direct passenger and cargo flights is essential to sustaining and driving regional growth.”
That mission suffered a serious setback due to COVID-19. The number of non-stop destinations plummeted from 52 to just 13. All international service to the airport stopped when the government brought in new border restrictions. Revenues collapsed along with passenger numbers and the airport lost almost $90 million in 2020. This year is only starting to shape up, with vaccination rates rising and spurring hope for the industry’s future.
But it will take a lot to rebuild markets and routes. Before the pandemic, Edmonton had service to the U.S. from Westjet, Swoop, Air Canada, Delta, United, and Alaska. Not a single transborder passenger has arrived or left from Edmonton since January.
Cancelled flights and knock-on effects
What’s worse, the council report notes, the loss of flights has effects across the economy. “As exporters’ cargo becomes more expensive and less competitive sitting on a tarmac waiting for a connecting flight, the Edmonton region becomes more isolated and less globally relevant if presented with a limited number of direct domestic and international flights.”
While cities rely on their airports for reliable air service, taxpayer support is less common. Large airports in Canada operate on a user-pay model, often paying property taxes and land leases. Edmonton has indirectly supported tourism marketing campaigns in the past. But this is the first time the city is being asked to contribute so much, and so directly, to air service development.
Edmonton is not the first region to look at ways to attract new service as the world recovers from COVID-19.
Kingston, Ontario Airport announced a plan to attract air service at the end of 2020. The airport manager said all options, including subsidies, were on the table.
Before the pandemic, Regina city council gave the airport a tax break to attract new U.S. flights.
Faced with a loss of flights in 2013, the Chamber of Commerce in Fort Wayne, Indiana offered airlines a deal. Fly there, and they would guarantee a minimum revenue of $2 million. “The community probably has to have skin in the game,” airport Executive Director Scott Hinderman said at the time.
In Edmonton, a regional economic development corporation called Edmonton Global would administer the money. The City of Edmonton would contribute the lion’s share – almost $10 million over three years. Other municipalities in the region would contribute based on their populations.
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Pressure to decide quickly
“The Air Service Opportunities Fund is intended to ensure that the region can remain competitive globally to attract investment, support the visitor economy and get goods to and from the market by attracting direct flights to key destinations,” the report says. “Edmonton Global has indicated the fund would only be leveraged once an airline has committed to restoring or developing a new flight.”
Typically, public agencies and airports use such funds to help market new flights. In this case, Edmonton Global is asking for the money with few strings attached.
“A key condition of success for an air service incentive fund is that it be used solely by Edmonton International Airport for the explicit purpose of maintaining existing direct flights, restoring flights cancelled through COVID-19 and the attraction of new flights,” reads the city report. “It should not be used to attract or subsidize retail, commercial and industrial investment to the Edmonton International Airport lands.”
Edmonton Global would report back to taxpayers regularly. “This would include a regular summary of the opportunities pursued, investments made and reports on the key outcomes,” says the report.
Time is of the essence, city staff argue. Edmonton Global wants a decision to establish the fund by June 10 to align with airline planning cycles. Edmonton city council could decide as early as Monday.
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