The travel lockdown we are experiencing due to COVID-19 has been devastating. With the current travel restrictions in force, British Columbia’s air service was down over 93 per cent in April and May 2020. Traffic remains down 75-85 per cent. It is forecast that whatever is left of the aviation sector could take years to recover.
Regional scheduled services are decimated – with several small, remote and Indigenous communities losing substantial scheduled services. The effects are devastating. Regional airports like Prince George Airport generate opportunities for high-value tourism, trade and development, especially for smaller destinations. Residents also use their airports as their gateways to the world, connecting via Vancouver and other major hubs.
The increased demand generated by regional services boost airlines’ ability to fly to many destinations and supports the viability Canada’s entire air transportation system. Passenger revenues also help fund essential services that communities rely on, such as medevac, firefighting, and delivering emergency personnel and goods. But today, those revenues are no longer there to support these services.
British Columbian airports are also home to 172 air operators, 42 flying schools and over 100 highly active aerospace organizations that support local businesses and employment.
Without an immediate source of revenue, many of our airports are in peril of reducing or even ceasing operations. Other than rent relief to the end of 2020 for Prince George Airport as well as Vancouver and Victoria International Airports, and some direct support for four remote communities, our sector has received no direct assistance from Ottawa, even as U.S. airports have received $10 billion in grants – with another $10 billion on the way.
In fairness, some federal economy-wide actions have been helpful. Programs like the Canada Emergency Wage Subsidy (CEWS), has helped reduce the number of layoffs for some and allowed some airports to continue to serve their communities. However, municipally owned airports – 57 in B.C. alone- are not permitted to apply for CEWS or any other federal relief program. To make matters worse for these municipalities, the cost of supporting their airports, already high, is becoming prohibitive. The protracted loss of revenues caused by COVID-19 has made the spectre of airport decommissioning – as already being examined for the airport in Golden – far more likely.
In some ways, we are the victims of our own success. What we are seeing are the seams bursting on a user pay model for passenger air travel that has served Canada fairly well for the past 28 years, when Transport Canada transferred the operation, development and maintenance of most Canadian airports to local entities.
And for many years – in fact, until the impact of COVID-19 –the system worked. Our sector has largely operated without subsidies since privatization. Airports even delivered a financial return to governments: about $6.5 billion in rent. But that system is breaking down. Until now, user fees have been set at a level that pays for passengers’ services and allows for capital improvements that enhance the travel experience and increase flight options. But in the absence of government funding, airports have little choice but to raise rates for other purposes: to repay debt and interest incurred because of COVID related income losses. The cure may be worse than the disease in some markets, as these sharp rate increases will depress demand, and harm airports’ ability to regain commercial service.
And there’s an additional downside to our model when it comes to the ongoing viability of smaller airports. Regional airports have seen the user pay model begin to break down, even before COVID-19 struck. Aviation is by nature a very capital-intensive industry. In markets with low traffic volumes – fewer than one million passengers – it has always been a challenge to generate enough revenue to cover the cost of operations and ongoing infrastructure maintenance. Now with traffic volumes slashed due to COVID, the model is not sustainable without temporary government support.
But this has not stopped airports from doing their job. Even as passenger numbers and revenues have tumbled, airports implemented enhanced safety and cleaning measures and continued to stay fully operational to serve their travellers and communities. At the same time, they have had no choice but to reduce costs in other area: delaying or cancelling capital investment projects, laying off staff and reducing services.
The government of Canada must immediately support both our individual airports and network of regional and hub airports that connect us to each other and the world, including:
Allow municipally owed airports to access CEWS and other federal relief programs.
Extend airport rent relief until revenues climb back to pre-COVID levels
Provide interest-free long-term loans, particularly to smaller airports that do not pay rent.
Dave Frank is the executive director of the BC Aviation Council and Daniel-Robert Gooch is the president of the Canadian Airports Council.
