Airport exodus taking flight

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This article was published 19/09/2009 (5929 days ago), so information in it may no longer be current.

Winnipeg’s Richardson International Airport is getting some unlikely competition from its puny siblings in North Dakota, in a battle that’s giving Manitobans — and other Canadians living in cities all along the border — cut-rate fares to sunshine destinations and elsewhere.

Winnipeg Airports Authority says it’s starting to feel the effect of the growing trickle of Manitobans heading to Grand Forks and Fargo to take advantage of low-cost airfares to places like Las Vegas and Orlando for half the cost of the same flight from Winnipeg.

Return fares to Las Vegas from Grand Forks on Allegiant Air, for example, can run as low as US$206, while Air Canada’s lowest rate for the first week of October via Denver is C$464.49 (taxes and fees included in both fares).

The deals are only going to get better as the loonie rises to what some expect will be parity with the U.S. dollar.

Barry Rempel, CEO of Winnipeg Airports Authority, says it’s time for the federal government to level the playing field between Canadian and American airports.

The issue has been brought into focus for Rempel with the development of a new terminal at Grand Forks International Airport and the arrival of low-cost scheduled carrier Allegiant, with direct flights to Las Vegas. Later this fall, the airline will introduce flights to Phoenix and Grand Forks Regional Airport Authority officials say they’re hoping the niche airline will add more destinations in the future. The airline also flies out of Fargo and Bismarck.

Las Vegas-based Allegiant Air makes no bones about the fact it is already drawing business from southern Manitoba and has specifically targeted cross-border travellers as part of its business strategy. The airline flies from about 70 small centres — many of them small border area airports across the northern United States — to a handful of southern sun destinations.

"We get very good traffic out of Winnipeg for North Dakota flights, just like we get terrific business out of Vancouver for our Bellingham (Washington) flights and out of Montreal from Plattsburgh (New York)," said Tyri Squyres, a spokeswoman for Allegiant.

A new terminal about to open at Niagara Falls International Airport in New York was at least partly driven by the fact that 50 per cent of Direct Air’s Myrtle Beach, S.C., business out of Niagara Falls comes from Canada.

Rempel said he believes the phenomenon of low-cost flights from small U.S. airports is at least partly the result of the flawed Canadian airport-management model.

"Grand Forks is on our radar screen for all the wrong reasons," Rempel said. "Where possible, we should be co-ordinating in the region and doing things jointly. The unfortunate part is that it is extremely difficult when carriers that probably should be directly accessing a marketplace like Winnipeg, choose a market like Grand Forks."

To a great degree, they choose small markets like Grand Forks because of a myriad of costs Canadian airports must absorb that U.S. airports are not responsible for.

Rempel, who is also chairman of the Canadian Airports Council, said his organization has been hammering the federal government for some time for changes to the airport-management structure.

"In our attempts to be competitive with U.S. airports… the rules are different," Rempel said. "It is just not a level playing field in that respect."

Barry Prentice, a transportation expert at the University of Manitoba’s Institute of Transportation, said he has always believed it is wrong-headed policy to make independently owned and operated Canadian airports pay rent to the Canadian government.

"The federal government charges rent but does not put anything back," Prentice said. "Normally, a landlord would be responsible for fixing the property when repairs are required. It is wrong-headed in so many ways."

Rempel said every plane that lands in Winnipeg is responsible for generating about 23 person-years of employment and every airline that chooses to turn away from Winnipeg because of cost issues hurts the city.

"Allegiant has made it public that they go in where they can keep the total cost to consumer to a particular level," Rempel said. "Candidly, that level is lower than what we have to pay in federal rent on cost per enplanement (the per capita cost per plane)."

Although airline fares are structurally cheaper across the board in the United States than they are in Canada, Rempel and Grand Forks Regional Airport Authority chairman Rich Becker both said that the major attraction for Canadian travellers as far as Grand Forks is concerned is the Allegiant flights.

Ron Pradinuk, a Winnipeg travel agent, said the added hassle involved in driving several hours to a U.S. airport is not for everyone, but it becomes an attractive savings feature for groups.

"Some people aren’t prepared to drive several hours for the amount of savings we’re talking about, but if there is a group of say six to eight people, now you have some real savings," Pradinuk said.

martin.cash@freepress.mb.ca

 

Winnipeg’s new terminal

Size — 545,700 square feet

Cost — C$585 million

Funded — principally from the issuance of commercial bonds that pay interest at market rates to be repaid eventually by the collection of $20 airport improvement fees from every departing passenger.

 

Grand Forks’ new terminal

Size — 48,000 square feet

Cost — US$23 million

Funded — mostly through direct payments from the U.S. federal government and the issuance of municipal bonds that feature tax benefits and are guaranteed by the City of Grand Forks and Grand Forks County.

 

Canadian vs. U.S. airports

Canadian airports make substantial rent payments to Transport Canada — U.S. airports don’t.

Canadian airports have to pay municipal property taxes — U.S. airports don’t.

Canadian airports receive no federal money to support facility construction — U.S. airports do.

Canadian airports charge improvement fees for every departing passenger — U.S. airports don’t.

Canadian airports receive no government assistance in raising debt financing on the public markets — U.S. airports benefit from local government bond guarantees as well as tax benefits for those who purchase the bonds.