Flying the sponsored skies
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The announcement of new air routes to and from Richardson International Airport always crank up the afterburners for Winnipeggers with wanderlust.
The latest news came May 11 when Calgary-based airline WestJet announced it will debut a five-times-a-week direct air service between Winnipeg and Atlanta, scheduled to begin Sept. 6.
Atlanta’s international airport is the world’s busiest and offers more than 100 new American and international connections for Winnipeg travellers through WestJet’s codeshare partner, Delta Airlines, which uses Atlanta as its main hub.
The new route also offers a boost to Winnipeg businesses such as Price Industries Ltd, a heating, ventilation and air-conditioning (HVAC) parts and equipment designer with a production facility in Atlanta that employs 1,500 people, and to city manufacturer Winpak Ltd., which also has a sizable operation in an Atlanta suburb.
WestJet isn’t doing this out of the kindness of their hearts however. Airlines are bottom-line businesses — travellers who groan about fees for checking their bags or reserving seats know this fact all too well — and the airline wouldn’t supply planes, pilots, attendants and other personnel and equipment to make this new route happen if there wasn’t a profit to be made.
The provincial government is doing its part to ensure the Winnipeg-Atlanta connection succeeds. It’s kicking in up to $5 million in direct-flight incentives to WestJet, should passenger counts fall short of projections.
A similar arrangement, announced in August 2022 that includes a $4.8-million provincial incentive, subsidizes a three-times-a-week direct service between Winnipeg and Los Angeles International Airport, which officials in Manitoba’s flourishing film industry have called a game-changer.
The province has also contributed $5 million to the Winnipeg Airports Authority for its own efforts to attract new routes.
The airline wouldn’t supply planes, pilots, attendants and other personnel and equipment to make this new route happen if there wasn’t a profit to be made.
The Saskatchewan government has signed its own deal with WestJet earlier this year for direct flights between Saskatoon and Minneapolis-St. Paul, while the airline has also bolstered its presence in airports in Calgary and Edmonton recently as well, also owing to provincial government support.
Manitoba Premier Heather Stefanson says the $2.2 million of economic activity the Winnipeg-Atlanta route is expected to create shows the value in the direct-flight incentives.
Direct-flight incentives are more common in the United States, which has a more competitive airline industry than Canada. Airports across the U.S. waive landing fees, cut rents and provide other financial incentives to airlines to bring new airlines and routes, particularly international destinations that are attractive to passengers.
The deals cloud over the fact that the risk of the two new Winnipeg routes falls squarely on Manitoba taxpayers rather than WestJet, which along with rival Air Canada, dominates air travel in Canada.
WestJet owns Swoop, an ultra-low-cost carrier also based in Calgary and on May 1, WestJet significantly increased its presence in Canada’s vacation-travel market when it completed the acquisition of Sunwing Vacations and Sunwing Airlines, which specialize in snowbird destinations in Mexico, the Caribbean and Europe.
In an Oct. 26, 2022 report focusing on the Sunwing purchase, the federal Competition Bureau said the deal would likely result in a lessening or prevention of competition in the sale of vacation packages to Canadians.
While projections suggest the incentives will be a good deal for Manitoba businesses and travellers, the provincial government should cool its jets and proceed carefully with further direct-flight incentives.
Business subsidies have burned governments many times, and the best way for the province to avoid future turbulence is to ensure the benefits of the new WestJet routes outweigh the costs and risks taxpayers are liable for.