Failure of Government and airlines leave regional and community airports on the brink of financial collapse

An urgent government cash infusion is needed by small community airports like Prince Rupert Regional Airport (YPR), Rick Leach airport manager said, regarding an Oct. 28 press release from the Regional Community Airports of Canada (RCAC).

“The failure of government and the airline industry to embrace a holistic approach to aviation support during the COVID-19 pandemic is leaving the regional and community airports of this country on the brink of financial collapse and airlines facing massive rates and fees increases in 2021,” the RCAC said.

According to the RCAC unless governments step in with direct financial support community airports will be unable to meet the operating costs as all airports have been hit with severe reductions in revenues and reduced or canceled air service.

READ MORE: YPR flights resume June 22nd

Leach told The Northern View that each airport is different depending on the level of service they are receiving or the level of service they have lost during COVID-19, as well as the general financial health of the airport. While Prince Rupert saw air service return in late June, there are many community airports that have had no service at all.

“They have gone for an extended period of time without any revenue,” he said.

According to the RCAC all airports have been hit with severe reductions in revenues and reduced or canceled air service leaving them unable to meet the costs of operating the airports unless governments step in with direct financial support soon.

“For airports, you get paid per seat. So a customer buys an airline ticket, the airport that they fly into gets a piece of whatever the rate was. So for all of the cancelled flights and empty seats that is just revenue that can never be recouped,” Leach said.

Despite a dramatic decline in airline passenger traffic since the COVID pandemic began in March, Canada’s smaller airports have carried the financial burden of maintaining their runways, air terminals, and emergency services without access to any previous or current financial aid, RCAC said in the release.

Leach said even when there were no flights coming in and out, the airport still has bills and expenses to pay. To assist the Prince Rupert Regional Airport he has just negotiated new terms of a Legacy Loan that the City provided several years ago to cover the redevelopment of the airport.

“If Prince Rupert goes back to pre-COVID levels and those levels of passenger ridership come back, we will be fine. We will have lost money, but we had a bit of a good balance to be able to drive through. With assistance from the city deferring some of the loan … it will help us get through. But, that said, we don’t know when this is going to end.”

“When governments and the public hear of dire situations in the aviation sector the focus tends to be on the major airlines and the major airports that connect Canadians in large urban areas to transborder and international destinations, and that is frustrating to the Regional Community Airports of Canada.”

Businesses like airlines can be creative Leach said, and find ways to increase costs to recoup lost revenue, like increasing ticket prices, lounge costs, or by giving fewer upgrades. But for community airports, like Prince Rupert it is a different scenario.

“I would just be cutting my own throat and putting our airport out of business,” Leach said. “I’m at a level where I can’t request too much more (from customers). Our costs (expenditures) are as low as I can get. I have a very small workforce, we really can’t do with any less people. And after that, it’s you know, my utility bills, so I gotta keep the lights on,” Leach said.

Brian Grant, Chair of the RCAC said smaller airports play a critical role in providing remote access and a quality of life that all Canadians expect.

“Movement of critical food supplies, emergency health care, essential cargo, emergency evacuation, forest fire fighting services are just a few examples of what regional and community airports deliver in addition to passenger air travel”.

“2020 has been a year of deep staffing cuts and reducing services, under the pressure of exceptional revenue loses, to meet fixed operational and safety costs dictated by government regulation along with new pandemic related costs to ensure the safety and confidence of travellers,” Grant said. “In 2021 these airports are estimating upwards of 45-60 per cent increases in rates and fees charged to airlines and passengers to continue operations as they exist today. In most cases reserve funds have been depleted and the only possible reductions left are closures of airport infrastructure”.

Apart from a government cash infusion to assist the struggling small airports recommendations from the national organization include:

“Ensure regional and community airports’ eligibility to all federal COVID assistance programs (i.e. emergency wage subsidy, debit relief and loans programs, and rent subsidy etc.) regardless of governance or ownership model.

Stabilize the Canadian Emergency Wage Subsidy for airports to not less than 75 per cent for 2021 to protect the employment capabilities of these airports for employees.

Provide financial assistance to cover fixed operating costs at 2019 levels to eliminate deficits and avoid rates and fees increases in order to bolster airline and travel activity.

Increase Airport Capital Assistance Program funding to $95 million annually (an industry request prior to the COVID-19 pandemic dating back more than two years).

Adjust the federal contribution limit to the ACAP to not less than 75 per cent of eligible project costs and relax the eligibility requirement of commercial schedule passenger service for current eligible airports for 2021 through 2025, to ensure the protection and maintenance of essential infrastructure and equipment during the post-pandemic recovery period.

The Regional Community Airports of Canada is a national organization dedicated to promoting the viability of regional and community airports within the air transportation system in Canada consisting of 59 members representing over 190 airports nationwide.”