For the past eight months the word recession has loomed large across the globe and Canada – the ninth richest country in the world – has not escaped the financial fallout. Despite the strength of its banking sector and a traditionally robust job market, Canada's proximity to the United States (the country perhaps feeling the greatest pinch in a shrinking global economy) has inevitably shaped Canada’s own fiscal misfortune.
Its automotive industry had to be bailed out by a C$4 billion government loan in mid-December because 80% of the vehicles it produced were historically exported to the US and demand had fallen away. Days later, the government released a statement showing that Canada’s gross domestic product declined by 0.1% in October 2008 after increasing by the same amount the previous month.
The New Year bought little consolation, with Canadian telecommunications equipment giant Nortel Networks filing for bankruptcy and analyst group the Conference Board of Canada predicting that unemployment would peak at 8% by the end of 2009 – all coming within the first fortnight of the year.
In the same timeframe, Airports Council International (ACI) issued a report stating that global air traffic had experienced a “major setback”, with total worldwide passenger numbers down 8% in November 2008 compared with the same month the previous year. The US, it said, was one of the hardest hit markets. Yet, interestingly, Canada did not appear on the list of key casualties. Could it be that the Canadian aviation sector has so far managed to weather the financial storm?
Senior managers at Canada’s key airports certainly seem upbeat about their passenger figures for 2008, despite the downturn.
“The first half of the year was extremely strong for us,” says John Korenic, director of aviation marketing at Vancouver Airport Authority. “Our growth was better than forecast, particularly on the domestic and Asian-Pacific side of the business. In January 2008, over all sectors, year-on-year, we experienced 9.2% growth, then 12.8% in February and 8% in March. Even in June we were up 5%, which, for a mature market like Vancouver, was a great result.”
He continues: “In September, we did start seeing a bit of a decline. That said, we’re still well on track to achieve our budgeted forecast for the year. In 2007, we had 17.5 million passengers. We anticipate the 2008 figure to be 17.9 million.”
Peter McCart, vice president of marketing and business development at Edmonton International Airport, is even more sanguine.
“We had forecast our growth for 2008 to be approximately 11%, based on a 16.3% growth in 2007,” he says. “Our year to date until the end of November 2008 shows that we are at approximately 6.1%. But we consider that to be a strong growth rate relative to our peers and in light of the global economy.”
“We’re particularly pleased with our US trans-border traffic,” he continues. “The year to date – to the end of November 2008 – shows 15.4% growth in that area on 2007. Our non-US and non-domestic traffic was even better, showing 21.8% growth by the end of November 2008.”
With Halifax Stanfield expecting a 3.7% increase on its 2007 figures, Toronto Pearson predicting a 2.5% rise, and Montréal-Trudeau looking to achieve parity, there is a definite contrast between Canadian airports’ experiences and those of their peers in the neighbouring United States. Their outlook for 2009 seems positive too.
“We do believe that 2009 will be challenging, but we remain optimistic,” says Jerry Staples, vice president of marketing and business development at Halifax Stanfield.
Reflecting the opinion of all five executives Routes News interviewed for this report, he adds: “The slashing of fuel prices from around C$147 per barrel over the summer down to about C$47 in the past few months has certainly helped the airlines. Plus, Canada and the European Union entered into an open skies – or Blue Sky – agreement in December 2008, which will provide huge opportunities by stimulating the development of new routes, without any of the old legislative constraints, between Canada and the EU.”
Interestingly, even without the bilateral agreement, Canada’s key airports appear to have done well in encouraging airlines to create new route connections in 2009.
For its part, Halifax Stanfield will be commencing a new weekly, seasonal service to Glasgow in May with Flyglobespan – a welcome addition following the loss of its connection with Glasgow when Zoom went into administration in August last year. Staples also says that Icelandair will be returning to Halifax after “a significant hiatus” this June – “most likely with a three flights per week service”.
Having lost an Air Canada Jazz connection last year between Montréal and Hamilton, Ontario, Luce Bureau, director of airline development at Aéroports de Montréal, is delighted with the planned introduction of eight new or expanded routes this year.
“Air Algérie will be doubling its flights between Montréal and Algeria, moving from two per week to four from June,” she says. “And there will be a new seasonal Air Canada route to Fort de France in Martinique, starting in July, plus Air Canada services to Rome and Geneva.”
The four other routes – Venice, Rome, Paris and Brussels – are all scheduled to commence in May with Air Transat, a carrier that appears to be prospering despite the downturn. Indeed, of the 11 new or expanded routes due to commence from Toronto Pearson this year, five are Air Transat flights to Europe. In addition to this, AeroMexico will be launching daily, non-stop flights between Toronto and Mexico City as of March, and WestJet will be expanding its services to Nassau, Fort Lauderdale, Tampa and Montego Bay as well as launching a new route between Toronto and Sydney.
“We did see Malév [Hungarian Airlines] cancel its service to Budapest from October 28, 2008,” concedes Steve Shaw, vice president of marketing and business development at Toronto Pearson. “However, they’ve indicated that they would like to return on a seasonal basis once they’ve seen the economy turn around. We hope the same might happen with Icelandair, which inaugurated a service in the summer but cancelled its winter programme.”
Vancouver’s Korenic is similarly hopeful for the return of a currently terminated Air Canada flight to Osaka, Japan, as well as an Air Canada Jazz service to Sacramento in the US.
In the meantime, a brand new near-daily Air Canada Jazz service commenced in January from Vancouver to Fort McMurray, Alberta. A second seasonal service to Fort McMurray will also start operating in May thanks to WestJet, alongside routes to Saskatoon, Regina and London Ontario. In addition, there will be four new Air Transat flights to Rome, Barcelona, Madrid and Paris.
Edmonton International will also be seeing its share of new or extended routes. WestJet, for instance, has announced that it will be increasing the frequency of its flights to Los Angeles; Yellowknife – the largest city in the Northwest Territories of Canada – and to the leisure resort of Kelowna in British Columbia. Air Canada is also due to increase its service to London Heathrow from seven to nine times a week as of May 2009. And these aren’t the only changes Edmonton International will be witnessing.
“We have recently completed the first phases of a C$1 billion expansion, working on car parking and aircraft apron expansion, and we are due to start expanding our terminal this year, with a completion date set for 2012,” says McCart. “In total, that should give us 30 bridged aircraft positions, as opposed to the 17 we have currently. This will complement the work we’ve been doing in the past year to double the number of food and beverage outlets on offer. That phase will be completed in the first quarter of 2009.”
In the neighbouring province British Columbia, Vancouver airport is also currently undergoing a capital infrastructure project to the tune of C$1.2 billion, which will be completed later this year.
“As part of the project, we’ve already expanded our international terminal, adding more aircraft gates, including two A380 gates so we’re ready when that aircraft starts flying to Vancouver,” says Korenic. “Other key moves we’re currently working on include the construction of the Canada Line – a rapid transit fully automated line that will link the downtown area to the airport – and a C$117 million link building project that will connect the international check-in area with the domestic one.”
With Toronto Pearson set to benefit in the long-term from a rapid rail link that will connect it with the city’s Union Station, Halifax Stanfield due to open a brand new 2,300-lot covered parking facility this March, and Montréal-Trudeau about to unveil its new trans-border check-in jetty (including numerous retail outlets and a 350-bedroom Marriott Hotel), Canada’s key airports could certainly not be accused of standing still in the face of recession.
As Halifax Stanfield’s Staples puts it: “I think it’s a huge mistake to stop, put things on hold or retreat at times like this. Yes, it’s important to be prudent, but you can still move forward with prudence.
“The drop in oil prices and the Canada–EU Blue Sky agreement have presented us with some fantastic opportunities,” he continues. “We need to take advantage of them to ride out the downturn.”
This article is featured in Routes News 2009 Issue 1