Ha ha ha the Feds are addicted to those sweet dollars squeezed from taxpaying citizens in this fine country. But their airport stooges say the Yanks are keeping them honest.
An ominous flight pattern: Canadians opting for U.S. airports
BRENT JANG
18:35 EST Friday, Nov 26, 2010
BUFFALO, N.Y. — When Joseph Fooks and his parents decided to fly to New York for a long weekend, they could have headed to Pearson International Airport, a mere 30 minutes away from their home in Richmond Hill, Ont. Instead, they packed up their new Lexus SUV and made the three-hour drive across the border to Buffalo Niagara International Airport.
The Fooks family wanted to take advantage of JetBlue’s $89.70 (U.S.) one-way fares between Buffalo and New York. They figured they would save a combined $600 (Canadian) on their round-trip by flying from the United States, compared with the cost of taking an Air Canada flight from Toronto.
“Every dollar adds up,” said Mr. Fooks, 25, clutching his boarding pass at the gate. “The savings on the plane tickets cover our entire three nights’ hotel stay in New York.”
In search of similar deals, one in six Canadians flying to a U.S. destination are now turning their backs on Canada’s airports and taking advantage of cheaper American fares.
The trend is picking up speed. Over the past decade, the number of trips taken at U.S. airports by Canadians has more than doubled, according to an analysis of 14 American airports by The Globe and Mail.
Last year, a record 2.3 million Canadians flew to or from the U.S terminals studied by The Globe. The loss of those passengers hurts Canada’s domestic airline industry, but it also has had a much wider impact. Local companies are losing the revenue that airport traffic generates. Businesses with far-flung operations are facing higher flying costs for employees who use Canadian airports. In an age where a top-notch air hub is seen as a vital ingredient in attracting enterprises to a region, Canada’s leading airports are finding it challenging to increase their passenger traffic.
The leakage of passengers to U.S. airports is costing Canada at least $1.1-billion a year in economic output, according to AirTrav Inc., a Toronto-based consulting firm. The drain is also raising questions about the federal government’s policy toward air travel. For years, Ottawa has treated large airports as cash cows to be milked for revenue. But the surging number of Canadian travellers flying from U.S. airports suggests that the government’s desire for airport revenue is ultimately self-defeating and a hindrance to economic growth.
The federal government has resisted pleas for change, although Kristine Burr, assistant deputy minister of policy at Transport Canada, told a Senate committee in October she recognizes that airports and airlines “feel the cost structure in Canada is onerous relative to what is in place in the United States.”
She said lower U.S. airfares are, in part, the result of assistance for airports from all levels of U.S. governments, and added that cheaper American ticket prices hold benefits for Canadians as well. “One could argue that the discipline of knowing that there are options across the border is to some extent keeping airport costs somewhat competitive here in Canada, too,” Ms. Burr said.
That viewpoint earns little sympathy from Fred Lazar, a business professor at York University’s Schulich School of Business, who blames Canada’s high airfares on the “ground rent” that Ottawa charges major airports, as well as layers of taxes and security fees imposed by government.
Mr. Lazar warns that Canada is at risk of becoming a backwater for international air travel, as high fares drive away travellers. Airports should be seen as spark plugs for economic growth, he said. With the United Arab Emirates, the United States and China investing heavily in their airports, he asks: “Where will Canada end up?”
Airports taking a hit
The impact of Canada’s airport policy can be seen from west to east. In British Columbia’s Lower Mainland, Canadians are driving to Bellingham, Wash., and Seattle in search of bargain flights. In southern Alberta, residents are taking a shine to Montana air terminals instead of driving to Calgary. In Manitoba, passengers are bypassing Winnipeg International Airport in favour of flying from Grand Forks, N.D., and Fargo, N.D.
With three-quarters of this country’s population living within roughly 160 kilometres of the Canada-U.S. border, it has long been easy for Canadians to nip across to seek cheaper fares. But the extent of the current exodus is unprecedented. The number of one-way trips made by Canadians at 14 key U.S. airports hit a record 4.6 million in 2009.
Airports across Canada are feeling the pinch. Despite surging levels of air travel worldwide, annual passenger traffic at Canadian airports has declined 3 per cent on routes between Canada and the United States over the past 10 years.
Even Canadian airports far away from the border aren’t immune to the trend. Air terminals in Minnesota are poaching passengers from Thunder Bay, Ont., despite the drive of more than six hours to get from the Northern Ontario city to Minneapolis.
Scott McFadden, president of the Thunder Bay International Airports Authority, said the rule of thumb used to be that a U.S. airport had to be within three hours driving distance of Canada to entice Canadians. That rule no longer holds. He worries about the effect on local businesses as more Canadians choose U.S. terminals. “As airport operators, we’re in the business of economic development. What you’re seeing is the Canadian government taxing our industry, driving away customers to find U.S. alternatives,” he said.
The parking lot of the Buffalo airport bears silent witness to the willingness of Canadians to go where travel is cheaper. On one recent afternoon, four out of 10 cars in the lot had Ontario licence plates. The Buffalo airport handled an estimated 1.9 million one-way trips by Canadian passengers last year, or about 36 per cent of its total traffic.
The success of the upstate New York airport comes largely at the expense of Toronto’s Pearson International Airport. “When people go to Buffalo to take planes, that’s not creating jobs at Pearson, that’s not cabs coming here and that’s not hotel rooms being booked here,” said Lloyd McCoomb, president of the Greater Toronto Airports Authority, which runs Pearson. “If you’re taxing people to the point where they’re leaving the country to use American airports, American pilots, American taxis and American rental cars, how is this helping Canada?”
Similar concerns are being voiced in Montreal, which faces escalating competition for travellers from the airport in Plattsburgh, N.Y., which opened in 2007 at a former U.S. air force base. The new airport has even erected bilingual signs to help lure Quebeckers away from the airports in their home province. “Canada treats us as cash cows, but the U.S. views their airports as enablers, as economic engines for local economies,” said James Cherry, president of Aéroports de Montréal, which is also losing customers to Burlington in Vermont.
An increasing number of travellers now barely set foot in Canada even if both their home and their destination are in this country. Cameron Johnston, a frequent flier based in London, Ont., drove to Detroit to catch a flight to Seattle, then flew a short connecting route to Victoria to attend a medical conference. His “cross-Canada” trip was conducted nearly entirely outside the country. “I always use the Detroit airport, unless there is no way I can avoid Toronto,” he said.
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