May 24, 2015


Business

Cheap U.S. tickets, discount carriers on minds of Canadian airport execs

LAST year, Winnipeg's Richardson International Airport lost about 100,000 potential passengers to the Grand Forks airport and Allegiant Air's low-cost flights to Las Vegas and Phoenix.

That represented about 2.7 per cent of the 3.6 million total passengers who arrived and departed from Winnipeg last year -- but it's a loss, all the same.

KEN GIGLIOTTI / WINNIPEG FREE PRESS
Winnipeg Airports Authority�s Garth Smorang (foreground), Barry Rempel.

KEN GIGLIOTTI / WINNIPEG FREE PRESS Winnipeg Airports Authority�s Garth Smorang (foreground), Barry Rempel.

That's one of the issues aviation industry officials from across the country will address at the Western Canadian Aviation Forum in Winnipeg, hosted by the Winnipeg Airports Authority, (WAA) during the next two days.

Barry Rempel, the chief executive officer of the WAA, said this country's national transportation strategy needs a rethink. "Leakage to the U.S. is a real issue," Rempel said. "But you have to keep it in context."

At the WAA's annual general meeting Wednesday, Rempel said there continues to be growth opportunities from new Canadian discount carriers.

"Delta and United, the two largest U.S. carriers, say that growth in Grand Forks has topped out and there is greater potential for additional service here," Rempel said. "They believe yields and potential returns are significant in Winnipeg."

But that's not to say the WAA is banking on increased revenues from new routes from the big U.S. carriers.

However, in 2012 it was able to increase passenger traffic in Winnipeg by 4.4 per cent even though global passenger traffic was up only 1.5 per cent.

Cargo volumes held steady at the Winnipeg airport, which was not a bad result considering global volumes were off by as much as 10 per cent from some Asian carriers.

The operating entity of Winnipeg's international airport saw revenues increase 7.75 per cent to $87.5 million in 2012 and free cash flow or earnings before interest, taxes, depreciation and amortization (EBITDA) go up 6.2 per cent to $45.4 million.

The WAA's chief financial officer, Catherine Kloepfer, said that was more than enough to cover the $36.5 million it needed for 2012's interest and principal payments required to service WAA's $546.6 million in long-term debt. That debt was accumulated to allow the WAA to build its new terminal, which opened in October 2011.

The WAA uses its $25 airport-improvement fee to finance its long-term debt. That charge for every passenger starting their trip in Winnipeg accounts for 33 per cent of the WAA's total revenue.

Although principal payments only decreased long-term debt by $5 million in 2012, Rempel said the debt-repayment schedule leaves ample room to be able to have the 30- and 35-year bonds paid off by the end of their terms.

Earlier this month, the WAA sold off a new $100-million bond offering at 3.039 per cent for funds to be used for runway repavement. Rempel said the WAA has more money invested in runway capital costs than in its $585-million terminal.

Garth Smorang, the new chairman of the WAA's board of directors, said the airport is more than just the steel and parking lots and activities of the campus: "It's the 175 WAA employees, as well as close to 10,000 on-airport jobs and the significant impact the airport operations have on the local economy."

In addition to efforts to boost cargo and passenger service, the WAA continues to expand its airport campus. This year, two hotels will open: The Grand by Lakeview and Courtyard by Marriott. Also this year, Exchange Income Corp. will open its $10-million maintenance repair and overhaul facility for Calm Air, Perimeter Aviation and Keewatin Air. Demolition of the old terminal will be completed this fall.

martin.cash@freepress.mb.ca

Where the rubber

meets the runway

WINNIPEG'S Richardson

International Airport:

9,694 -- daily passengers

9,670 -- on-airport jobs

$3.6 billion -- annual economic impact

$390 million -- direct employee wages

$230 million -- taxes paid

$32.2 million -- spent on capital projects in 2012

$87.5 million -- annual revenue

3.6 million -- passenger traffic in 2012

174,924 -- tonnes of cargo in 2012

Republished from the Winnipeg Free Press print edition May 3, 2013 A16

History

Updated on Thursday, May 2, 2013 at 8:04 AM CDT: adds fact box

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