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With so many uncertainties, now is probably not the time to spend more on Breslau airport

The federal government is currently soliciting input on the proposed runway extension at the Region of Waterloo International Airport in Breslau.

That’s the technical part. The bigger consideration for residents is whether or not the region should continue to put more into the money-losing operation.

The region’s airport master plan, approved in 2017, calls for spending of $375 million over the report’s 20-year scope, including $34.5 million for runway extensions. First up is the extension of runway 14-32 to a length of 2,134 metres (7,000 feet) from 1,250 (4,100) at a budgeted cost of $23 million. (The region has already spent some $10 million of land acquisition.)

It’s for that project that the Impact Assessment Agency of Canada is seeking public feedback until April 18.

A second proposed runway extension isn’t part of the current review. The region expects the $11.5-million work on runway 08-26 – which would include unbudgeted costs for some kind of realignment of Shantz Station Road – is still years away, as it wouldn’t be required until annual passenger traffic hit 500,000, more than double the as-yet-unreached 250,000 being used to justify extending runway 14-32.

The region argues the runway needs to be longer to accommodate larger aircraft, making the airport a more attractive hub for airlines.

Therein lies the rub: the region has spent millions of dollars upgrading the facility to largely little avail. A number of airlines have attempted to offer service from Breslau over the years, most eventually winding down. In operating losses alone, taxpayers are on the hook for about $6 million annually.

While some on regional council have shown reluctance to push ahead with expansion plans, the region continues spending in the hope, on a wing and a prayer, that airlines and passengers will choose to fly from Breslau, though there’s no end in sight to the capital expenses and taxpayer subsidies.

Right now, it makes no sense to be spending money on the airport given the extreme losses the industry is experiencing due to the pandemic. Some of the changes may be permanent, particularly when it comes to remote meetings replacing business travel, a practice that has also been hit by heightened environmental concerns.

As with a number of work-related practices in a post-pandemic world, business travel is expected to take a permanent hit, though how big the impact will be is up in the air. Bill Gates, for instance, has suggested business travel will decline by half, while the head of Delta Air Lines expects the new normal will be 10 to 20 per cent lower than the pre-pandemic numbers. Come what may, we’re talking significant figures, as  international business travel was a $1.3 trillion industry in 2019.

The local airport’s share of the business is a tiny slice, but the trend is likely to have an impact on every facet of the industry.

A number of the past airline services in Breslau have been aimed squarely at business travellers – vainly, in the end – which is less likely to drive passenger numbers. While the convenience is high for residents, the relatively few flight options means we have to look to flights from other locations, a situation compounded by ticket costs that were often much higher than comparable flights from even the likes of Toronto’s Pearson airport.

Cost being a significant factor for most travellers, Canadian airports are generally at a disadvantage in comparison to U.S. facilities. Pre-pandemic, millions of Canadians flew from U.S. airports each year, largely for purely economic reasons. Flying from, say, Buffalo to another U.S. city could be a fraction of the cost of taking off from Toronto, for instance. (The Canadian Airports Council (CAC) estimates a third of passengers at Buffalo-Niagara International Airport are Canadian.)

The pandemic has not been kind to the global airline industry as a whole. That’s especially true in Canada, which has been subjected to more stringent restrictions and lockdowns, particularly in relation to the U.S.

A CAC report in December projected revenue losses for Canada’s airports to top $5.5 billion for 2020 and 2021, up $1 billion from a previous report from last August. Canada’s airports expect to take on about $2.8 billion in additional debt in 2020 and 2021, the group predicts, calling on the government to do more.

While the federal government has been supportive, it is missing the sense of urgency to act quickly and decisively.  The reality is that these losses are unsustainable.  Without government action, air travel will not only become a lot more expensive, but Canadians everywhere will have fewer choices of routes and destinations, including at the four major hub airport,” said CAC president Daniel-Robert Gooch in a statement.

Prior to the onset of COVID-19, the majority of Canada’s airports were almost entirely funded through passenger and aeronautical fees, which have dropped catastrophically with passenger traffic at zero to 15 per cent of pre-COVID levels at most airports. Government mitigations such as ground lease rent relief and the Canada Emergency Wage Subsidy provided only minimal aid, he said.

“These measures provided some assistance, but not enough to help support airports dealing with higher costs and cratering revenues. In fact, our analysis shows that even their modest impact was far less than the government projected.”

The Breslau airport has long been in the market for additional routes that connect the region to other parts of Canada. The current situation won’t help with that goal. The facility is expecting a new carrier to begin operations in May, however. Flair Airlines is the latest carrier to offer up flights from the Region of Waterloo International Airport, looking to connect the area with six Canadian cities. The company will fly several times each week from Breslau to Vancouver, Calgary, Edmonton and Halifax, adding Victoria and Winnipeg to the itinerary in July.

It’s something of a leap of faith on the company’s part given the current economic situation and the many uncertainties that remain, but only time will tell if the gamble pays off.

That said, we’ve seen this movie a number of times, with no happy endings, which is an even bigger problem given outright subsidies that saw everyone in the region sharing in the pain.

 Whether there’s now actual stability and growth in the local market remains to be seen, but as taxpayers, residents have every right to expect that past performance will frame future results, their hard-earned money at risk.

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