Many hands have been wrung in recent years about the millions of Canadians that like to save cash by flying out of U.S. border airports. Senate committees happen to be struck to look at the issue, while stakeholders point fingers at each other over who’s to blame. It turns out the solution was breathtakingly simple: a lesser loonie.
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An study of passenger statistics indicates fewer Canadians are choosing to fly from U.S. border airports as the weak dollar erodes their cost advantage. And anecdotal evidence from Canadian airports suggests the popularity may be reversing, with more Americans coming north to take advantage of flights priced in Canadian dollars.
WestJet CEO Gregg Saretsky suggested this in the company’s earnings call this week, as he pointed out that Vancouver International Airport’s traffic increased five percent in 2015, while Bellingham International Airport, across the border in Washington State, saw its traffic fall 14 per cent.
“There’s less leakage, mostly the purpose of the bargains having gone away with the weakening from the Canadian dollar,” Saretsky said. “It’s great to see Canadians flying from home and WestJet is benefitting from that.”
Later in the call, chief financial officer Harry Taylor added that he’s learned “we’ve licence plates coming another way how to fly from Canadian airports, which is quite ironic.”
Data from the U.S. Bureau of Transportation Statistics implies that 4 out of 5 border airports popular with Canadians saw their passenger traffic decline in the first 10 months of 2015 (the latest period of time for which numbers can be found). The typical exchange rate for the Canadian dollar was US78 cents in 2015, down from US91 cents in 2014.
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At Bellingham, passenger traffic plunged 18.9 percent in the very first 10 months of 2015 compared to exactly the same period in 2014. Other declines were more sensible: two per cent at Buffalo Niagara Airport terminal in Ny, 3.7 per cent at Burlington Airport terminal in Vermont and three.5 per cent at Plattsburgh Airport terminal in New York (slogan: “Montreal’s U.S. airport”). The only border airport that bucked the popularity was Niagara Falls International Airport in Ny, which saw its traffic jump 17 percent.
Although the airports don’t track the country of origin of their passengers, they are doing produce other methods for measuring the number of Canadians are utilizing their services.
“We actually count licence plates in our parking lot,” said Nick Longo, director of planning and development at the Burlington airport. “We’ve seen anywhere from a 10 to fifteen percent stop by Canadian licence plates.”
Other border airports report similar findings.
“We track the shoppers that come through our various parking lots by asking their postal code,” said C. Douglas Hartmayer, a spokesman for the Niagara Frontier Transportation Authority, which owns and operates both Buffalo and Niagara Falls airports.
“For December, 37 percent of people that parked in our long-term lot (in Buffalo) were from Canada. Time is generally in the low 40s, so we’ve seen a little bit of a shift, a minimum of in that metric anyway.”
The appeal of U.S. border airports can mostly be attributed to their lower taxes and costs, which significantly lessen the price of travel when the dollar is close to par.
In 2015, the planet Economic Forum ranked Canada 124th out of 141 countries for its travel cost competitiveness, along with a 2012 Senate committee was told that Toronto’s Pearson International Airport is the most expensive in the world where to land a plane. The high cost is the result of a combination of ground rents paid to the authorities, Ontario’s rising jet-fuel taxes and security charges.
The cost advantage that U.S. airports offer shrinks along with the value of the Canadian dollar, although Hartmayer said it’s still cheaper to fly from Buffalo or Niagara Falls, N.Y., than from Pearson. Information provided by the Niagara Falls airport (slogan: “You can fly U.S.”) implies that, by Dec. 23, a family of four flying roundtrip to Myrtle Beach, S.C., in July 2016 would save US$354.36 when they flew from Niagara Falls rather than Pearson.
Those savings apparently haven’t stopped Americans from coming the other way, according to observations from Canadian airports.
“We all do have U.S. vehicles approaching by doing this. It’s a good report,” said Parm Sidhu, gm from the Abbotsford Airport terminal near Vancouver. “We’re recording about 12 (U.S.) vehicles overnighting daily here.”
Daniel-Robert Gooch, president of the Canadian Airports Council, said he has been hearing the same thing from the 3 of his members, although it may not be enough to pay for the results of a weakening Canadian economy.
“We’ve heard anecdotally that there might be greater amounts of Americans travelling north to Canada to fly out of Canadian airports, but probably not enough to counterbalance the impact of the Canadian dollar and also the souring of the economy that is hitting Canadians’ propensity to visit – particularly towards the U.S.,” Gooch said.
kowram@nationalpost.com
Twitter.com/KristineOwram
