Growth of low-cost airlines giving boost to Canada's biggest secondary airports
The Calgary-based company (TSX:WJA) has been gradually revealing details of its new carrier since April. (Source: WestJet)
Ross Marowits, The Canadian Press
Published Monday, June 25, 2018 5:42AM EDT
MONTREAL -- Formerly sleepy secondary airports in Canada's two busiest air markets are in for a new lease on life thanks to the rise of discount airlines and projected growth in travel over coming decade.
Airports in Hamilton, Ont., and Abbotsford, B.C., that have traditionally played second fiddle to Vancouver International Airport and Toronto Pearson International Airport, were buzzing last week as low-cost WestJet offshoot Swoop launched service between the two, catering to the country's most price-sensitive passengers.
"It's been a crazy week," says Cathie Puckering, chief executive of John C. Munro Hamilton International Airport, which got an additional boost when Norwegian Air Shuttle ASA announced plans last week to enter Canada and offer direct service to Dublin next spring.
After an 80 per cent increase in passengers last year, the airport hopes renewed interest from airlines will help spur a return to its heyday in 2003 when it accommodated one million passengers.
Hamilton, which is also Canada's top domestic cargo airport, flew nearly 600,000 passengers last year, well short of its capacity to handle more than three million people. Interest waned after WestJet moved its eastern Canadian base of operations to Toronto Pearson following Air Canada's merger with Canadian Airlines and Globespan Airways ceased operations to Europe.
Established in 1940 as a military flight school, civil flights began in 1964 after military activities ended. Management of the airport changed several times before ownership was transferred in 1996 to the regional municipality of Hamilton-Wentworth, which in turn contracted a private company to operate it for 40 years.
Airlines are attracted to Hamilton due to fees that are 30 to 50 per cent lower than Pearson's. Its smaller size cuts the amount of time required for passengers to get to departure gates and allows planes to spend less time on the ground between flights.
"The emerging carriers are looking for partners that share the same philosophy and the same vision in growing the business opportunities," Puckering said.
Hamilton airport is not only a convenient alternative for people west of Toronto, it has a large catchment area of its own. More than two million people live within an hour's drive, and there are nine million Canadians and Americans within two hours drive.
Abbotsford International Airport offers similar advantages, which have allowed the airport to grow especially in the past few years, after the municipality purchased it from the federal government in 1997 for $10, says Mayor Henry Braun.
Traffic increased 38 per cent between 2015 and 2017, reaching 677,000 passengers last year, he said. The airport expects to surpass one million in a year or two, and has the capacity to accommodate more than 2.5 million passengers annually.
Braun said the airport is the lowest cost operation in Canada and likely North America.
The lack of an airport improvement fee alone saves about $3,000 per Swoop flight.
"The welcome mat is out and we're doing everything from a cost platform basis to make it enticing for the airlines," he said in an interview.
Braun said the low fares offered by its airlines is stimulating demand from people who don't typically fly and helping to repatriate some of the millions of travellers who cross the border to depart from Bellingham, Wash.
"We're not trying to become YVR (Vancouver International Airport)," he said, pointing to Abbotsford's spartan air terminal. "We are trying to service the region and we have the capacity to take on way more passengers here and we're happy to do that."
Canada doesn't have the same history with secondary airports as Europe and the United States. The country's low population and proximity to the U.S. have allowed border airports to effectively pick up the slack from larger hubs.
It's also been only about 25 years since the federal government spun off airports to local operators. Airports have begun to specialize as the country's largest airports are getting full because of strong traffic growth, said Canadian Airports Council president Daniel-Robert Gooch.
"The airports are starting to work together and saying how can we structure our offering so that we're able to serve the needs of this region, maybe in a more co-ordinated way."
Billy Bishop Toronto City Airport has expanded its offering of turboprop service, and debate continues on the potential construction of an airport in Pickering, east of Toronto.
There are also nearby airports in the Region of Waterloo and London, Ont., that offer year-round service to cities including Toronto and Calgary and seasonal flights to sun destinations. Among the airlines are WestJet, WestJet Encore, Air Canada, Air Transat and Sunwing.
Montreal has been primarily served by Pierre Elliott Trudeau International Airport since the closure of Mirabel as a commercial airport in 2004. However, efforts are underway to expand Montreal's original airport at St. Hubert on the city's south shore to accommodate smaller commercial aircraft.
The key to success for secondary gateways is to keep costs contained and attract a variety of airlines to strengthen their positions as airport alternatives, said Rod Hayward, an associate professor of business at University of the Fraser Valley.
"As more ultra low-cost carriers fly into a market you get better schedules, more options and more choices at the airport so it becomes a more credible choice for the consumer."