U.S. carriers adding capacity to Ottawa flights, boosting overall passenger volumes: Airport CEO

Embraer
Stock image, for illustrative purposes only

Fuelled by a strong local economy, passenger volumes and revenues at Ottawa’s airport soared to new heights in 2018 ​– but travellers hoping a spike in traffic to the United States will translate into more direct connections to cities south of the border will likely have to wait, officials say.

A total of 5.1 million passengers used the Ottawa International Airport last year, an increase of 5.6 per cent over 2017, the airport authority said in its annual report released Thursday.

Transborder routes saw the biggest increase in traffic, with more than 720,000 passengers travelling to and from the U.S. through Ottawa last year – an 11.3 per cent increase over 2017. Meanwhile, domestic travel grew by 4.9 per cent and traffic to other countries rose 2.5 per cent.

The airport authority noted that United increased its capacity to Newark, Washington-Dulles and Chicago airports in 2018, while American boosted the frequency of flights to Philadelphia and Air Canada added routes to Newark, Tampa and Orlando – although WestJet cut its total trips to Florida.

Airport authority CEO Mark Laroche said after Thursday’s annual general meeting he expects the U.S. to be the biggest driver of passenger growth for the next few years. But he said that won’t necessarily mean direct flights to places such as California and other markets not served in Ottawa any time soon.

Business case

While the airport can offer carrots such as discounted landing fees, Laroche said airlines will ultimately add trips to the city only if it makes economic sense for them to do so. He said the airport authority is slated to meet with Invest Ottawa and Ottawa Tourism soon to look at ways of making the case for more south-bound flights.

Airlines are “going to make the decision based on the volume of passengers that they can get in their aircraft every day and (if) they’re sure at the end of the day they make a profit on it,” he said.

“If they can’t, they will go to another airport. It’s a business decision by the airline. At the airport, we do our part by keeping our fees very low, but that’s just one thing that we can to ensure that we’re competitive. The rest belongs to the airlines to decide if the market requires a direct route.”

Noting that Ottawa is a “spoke” rather than a major air travel hub, Invest Ottawa CEO Michael Tremblay said it’s up to groups such as his organization and the airport authority to convince the airlines that more trips to the capital would be good for their bottom lines.

“I think it’s got to be based on data,” Tremblay said after Thursday’s meeting, adding he worked for JDS Uniphase back in 2000 when the airport briefly served direct flights to the tech hub of San Jose ​– trips that stopped abruptly just months later when the dot-com bubble burst.

“The thresholds are really high. I think that if we come at this with some very targeted areas where we really do think we can move that frequency up, there would be a shot. But you’ve got to do it based on facts. Airlines are businesses, and it’s got to make commercial sense for them. If it isn’t something that is sustainable, we’re wasting our time. It won’t last long.”

Revenues up 4%

The airport’s overall financial picture is also trending upward, the airport authority said Thursday.

Revenue rose 4.1 per cent to $138.1 million as higher passenger volumes boosted income from airport improvement fees, terminal fees and landing fees, which totalled more than $96 million ​– up from $92.6 million a year earlier. Total earnings from concessions ($15.3 million) and parking ($16.1 million) came in at nearly $31.4 million, a six per cent increase from 2017.

That extra revenue gave a healthy boost to the airport’s bottom line. The facility turned a profit of $7 million in 2018, nearly double its net earnings of $3.8 million the year before.

Laroche credited a rosy employment picture and continued population growth in the National Capital Region for the rise in overall traffic and revenues.

“If the economy of Ottawa-Gatineau goes well, you will have that type of increase,” he said Thursday during the organization’s annual general meeting. “People travel if they have money.”

Laroche
Mark Laroche is the president and CEO of the Ottawa Airport Authority.

In other news, Laroche said the airport authority is just “weeks” away from announcing the winning bidders for new concession contracts being awarded as part of a $25-million renovation of the 15-year-old terminal.

He said the overhaul is being financed out of airport improvement fees charged to passengers who begin or end their trips in Ottawa and profits from concession operators. Work on the project – which will include the construction of new food and beverage outlets as well as a modernized security screening area – is expected to take up to three years.

Laroche also said the agency is working with other airports across Canada to combat growing fears about cyber-attacks and other security threats.

Responding to a question from the audience about safety issues posed by drones encroaching on the terminal’s airspace, he said the airport is doing its best to remain “vigilant” in the hope of preventing incidents like the one that grounded hundreds of flights at London’s Gatwick Airport just before Christmas.

“There’s nothing that’s 100 per cent foolproof in security, but we’re going to put whatever’s available to mitigate and to counter any issues related to drones,” he told OBJ. “We’re very focused on it.”