Regina

‘I’m kinda down to my last million.’ How Regina International’s cash crunch epitomizes Canada’s aviation industry

Regina cash
The first Flair Airlines service to Regina lands August 28, 2020 (photo: Twitter/flyYQR).

Regina International Airport chief executive James Bogusz can count the days until his airport runs out of cash.

“I’m essentially down to about 45 days,” the President and Chief Executive Officer of YQR said in an interview. “I’ve basically bought another two months, to be generous.”

Regina International is emblematic of all that is going wrong in Canada’s aviation industry due to the pandemic. The airport, which welcomed 1.18 million passengers last year, will see a fraction of that number this year.

“I’m kinda down to my last million,” said Bogusz. “It sounds like a lot but it’s not in the airport context.”

Airlines have cancelled scores of flights. Passengers are staying home. And the money is drying up.

Regina’s passenger traffic was down 82% in October and November looks to be no better. Data released Thursday by Statistics Canada showed that a nascent aviation recovery over the summer has stalled this fall.

“While major Canadian airlines carried over four times as many passengers in September as at the lowest point during the pandemic in April, the recovery flattened out with a year-over-year decline identical to that in August,” Statistics Canada reported.

A stalled recovery

Canadian air passengers by month Sept 2017 – 2020 (source: Statistics Canada).

Just 900,000 people got on a plane in September across Canada, down 86.8% from the same month in 2019. The pandemic’s second wave threatened what little recovery there has been, the agency said. Load factors were under 44%. And airlines revenues fell 85% to just $315.7 million for the month.

Airlines aren’t the only ones dependent on passenger revenues. As a private, not-for-profit company, Regina International earns the lion’s share of its cash from passenger fees. If passengers stay home, those revenues disappear.

“When we run out, that means we’re going to be into our line of credit,” said Bogusz. “So we’ll be incurring interest.”

At the end of 2019, Regina owed just shy of $38 million in long-term debt. That works out to $64 per enplaned passenger… a far cry from the Canadian airport average of $200.

“I just don’t have the revenue right now or the passenger volume to pay back any debt,” said Bogusz. “All the money that’s gone out, I can’t replenish it. Taking on more debt doesn’t help.”

Regina has cut about 30% of its staff and put off buying new equipment to save cash. The problem is, there isn’t a lot of fat to cut. Runways still have to be plowed and the lights turned on, no matter how few passengers there are.

“All of the services they provide, such as passenger facilitation, operations and emergency services like firefighting or humanitarian relief, are paid for by users,” the Canadian Airports Council said this week. “But with virtually no users and no revenue, the system has broken down.”

‘We’re all holding our breath’

Staff in Regina will have to keep ageing sweepers working through the winter. “We had to buckle down and do some rebuilding of parts rather than replace them this year,” said Bogusz.

The situation has all eyes turned on Ottawa. The federal government announced earlier this month that help may be forthcoming. But discussions are ongoing and few details are available. The government will deliver a fiscal update at the end of the month.

“The government must move quickly in the upcoming Economic Statement with concrete measures to support the sector and the hundreds of thousands of jobs that are impacted by aviation in every region of the country”, said Mike McNaney, President and CEO of the National Airlines Council of Canada.

“We’re running out of options,” said Bogusz. “We’re looking at all those options now and be making some tough decisions if the government doesn’t provide some support.”

One of those options is raising land fees and airport improvement fees. Other airports have already announced fee increases, putting more strain on a struggling industry.

“I don’t know about you,” said Bogusz, “but I can tell ya, when you’re trying to generate more air service and encourage safe travel… raising the fees doesn’t help anything. It just reduces travel demand further when the price of travel increases.”

Which brings us back to those talks in Ottawa. “We’re all holding our breath,” said Bogusz, “waiting for, hopefully, Ottawa to provide some support.”

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