Saturday, 28 December 2013

Why Alberta Merits Two International Air Hubs

Source: dialogdesigns.ca
I've been meaning to write a response to Ed McDonald's opinion piece in the Edmonton Journal back on December 2 in which the self-described "professional airline pilot, professional engineer and aviation consultant" criticizes Edmonton International Airport's lofty ambitions to become a full-fledged global aviation hub to compete with Calgary International. In his article, McDonald alleges that Edmonton "never has been nor ever will be an airline hub, despite the promises and dreams two decades ago."

As a communications advisor for EIA, my job, among other things, is to iterate the opposing argument in keeping with the brand promise "more flights to more places." At least between 9 and 5, Monday to Friday, I have to do it because I'm paid to. But as an Edmontonian, and one fairly well acquainted with the issues facing the city's air transportation infrastructure, I also feel compelled to make the case in my free time. This, I should make clear, is not a piece of 'EIA' communication. These are purely my own views, albeit ones that are shared by a great many of the people I work with.

In his editorial, McDonald outlines two basic but different arguments. As one of Edmonton's die-hard City Centre Airport supporters (an issue that was finally laid to rest last month), he contends that Edmonton shot itself in the foot by closing its venerable municipal airport, and in doing so squandered an opportunity to establish itself as an important urban "spoke" airport akin to London or Toronto's City Centre Airports. He also makes the claim that Alberta, with its population of four million (as of this year), simply isn't big enough to support two major international airports, arguing that a single one requires a population base of at least three million.

Let's think about this for a moment. For starters, McDonald's argument appears to be self-contradictory in its allegation that Edmonton ought to have kept two airports open - in spite of the fact that the province as a whole doesn't have the population base to support two major airports. How does this make sense? Indeed, anybody well acquainted with Edmonton's modern history (and not emotionally over-attached to ECCA) will tell you that it was the city's failure to swiftly close and redevelop the Muni that both divided and undermined its status as an air hub, allowing Calgary to supersede what was once the undisputed air capital of the province, and hindered the city's downtown for decades by restricting building height, a factor in the mass exodus of corporate headquarters from the provincial capital to the province's now undisputed corporate capital to the south.

A Wagnerian opera finally over (source: Edmonton Journal)
Had the city of Edmonton closed City Centre Airport back in the 1960s following the construction of what was then (and still is) the second-largest airport in the country by land area, Edmonton might still be the province's primary air gateway. Certainly Edmonton's geographical position along the major transpolar air routes to both Europe and Asia and northerly position vis–à–vis Calgary (not to mention its proximity to major fuel refineries in Sherwood Park) still offer tangible benefits to air carriers, and had more corporate head offices remained in Edmonton, it's entirely likely that Calgary International Airport would have remained secondary to Edmonton had the city consolidated its air service early on and concentrated on building better transit links to the International.

But what's done is done, and with Edmonton's breakneck passenger growth over the past five years, it's clear that the airport's time has come once again. Which brings me to McDonald's second point, which is that Alberta, currently the fastest-growing province in the country, doesn't have the population base to support two international airports. Apart from the fact that his allegation is contradicted by the fact that Edmonton and Calgary are both enjoying both the fastest passenger growth in the country among major airports and the steadiest route expansion, this argument is also simply not supported by comparable international experience.

Three Overseas Parallels: Norway, Scotland and New Zealand

Were it an independent country, Alberta, with its four-million-strong population and thriving oil and gas economy, would be broadly comparable to Norway or Scotland. (Granted, the latter isn't technically an independent country, although it could potentially become one in 2014.) Norway, with its population of five million, its per-capita income of $55,000 and its booming energy industry, is arguably the overseas country that most closely resembles Alberta. It also, in stark contradiction to McDonald's assertion, maintains four international airports, each with passenger totals over four million, of which two (Oslo and Bergen) offer regular scheduled intercontinental air routes.

In the case of Norway, Oslo (Gandermoen) International Airport is by far the country's largest at 22 million annual passengers (and the second-largest in Scandinavia after Copenhagen), and offers routes to destinations all across Europe, as well as to intercontinental destinations like Bangkok, Cancun, Dubai, Goa, Islamabad, Lahore, New York (JFK and Newark), Oakland, Phuket, Seoul, Sharm el-Sheikh and Tel Aviv. Meanwhile, secondary hub Bergen (Flesland) International Airport, while significantly smaller than Oslo, carries nearly six million passengers a year to destinations that include New York, Tel Aviv and Tokyo as well as seasonal charters to Hiroshima and Gran Canaria. Meanwhile, third and fourth-rung airports in Stavanger and Trondheim offer extensive European connections.

The case of Scotland is equally instructive, and perhaps a better parallel to Alberta given the similar nature of the relationship between its two primary cities. At a population of 5.3 million, Scotland is also roughly comparable to Alberta population-wise, and its petroleum-oriented economy and northern latitude also makes it a logical comparison. It is also a country centred on two main urban regions, Edinburgh - the country's political and cultural capital, and Glasgow - its traditional economic hub. Scotland also has an important third city, Aberdeen, which, as the country's main North Sea oil industry hub, serves a role roughly analogous to Fort McMurray in Alberta.

Plenty to dance about at Glasgow International Airport
(Source: passengerterminaltoday.com)

Like Edmonton and Calgary, Edinburgh and Glasgow both have a metro areas of roughly a million people. And both cities also maintain thriving international airports, in spite of being far closer together geographically than Alberta's twin cities. With annual passenger totals of over nine million, Edinburgh International is Scotland's busiest airport and the sixth busiest in the UK - and the second busiest outside the greater London area. Edinburgh is also not hard up for intercontinental routes, enjoying non-stop connections to Cancun, Chicago, Doha, Marrakesh, New York, Orlando, Philadelphia and Toronto. Glasgow's airport is smaller, but only just (and growing faster than Edinburgh), serving over seven million a year - roughly the same number as Edmonton - to destinations that include Calgary, Dubai, Halifax, New York, Philadelphia, Toronto and Vancouver.

Another interesting overseas parallel to Alberta is New Zealand. At 4.5 million, New Zealand is only slightly more populous than Alberta, and is roughly the same size geographically. It is also a  prosperous resource-driven jurisdiction that shares Alberta's propensity for commodity-driven boom and bust cycles. In terms of air traffic, New Zealand has a primary international air hub in Auckland as well as a secondary international hub in Christchurch. As the main urban centre for New Zealand's South Island, Christchurch has maintained its role as an important aviation centre over various economic ups and downs (as well as two devastating earthquakes in 2011), and today enjoys non-stop connections to Bangkok, Dubai, Singapore, Tashkent and Tokyo, and with China Southern Airlines soon to commence non-stops to Guangzhou. So much for needing a minimum of three million people for a single international air hub.

What Edmonton Could Be: The Australian Example

So if size and location haven't held Edmonton back from becoming a bona-fide international hub, what has? The twin culprits, as many Edmontonians both inside and outside the industry know, are a hidebound national carrier determined to limit all of its international traffic in and out of Alberta to a single hub and a protectionist national aviation policy that has worked to limit international carriers' landing rights at Canadian airports. (These problems are further compounded by prohibitive landing fees and tariffs which conspire to make Canadian airports uncompetitive internationally - and drive as many as five million Canadians to stateside airports like Bellingham and Buffalo in pursuit of cheaper fares.)

What would Edmonton's airport look like were Canada to loosen its protectionist airline policies and ease the financial burden on its airports? While Bergen and Glasgow are still worthwhile points of comparison, the best parallel is to be found in the Asia-Pacific country most readily comparable to Canada.

YEG Down Under? (source: good-wallpapers.com)
Adelaide, the capital of the state of South Australia, is very much the Edmonton of Australia. It's the country's fifth-largest city and has a similar population at 1.2 million. Like Edmonton it is also home to the country's fifth busiest airport, and one that, like EIA, serves a strategically important function as the closest air gateway to the country's mining sector, largely concentrated in country's vast geographic centre, straddling South Australia, the Northern Territory and Western Australia. It is also similar to Edmonton inasmuch as the country's national carrier, Qantas, has always made it a policy to use Adelaide International as a "spoke" rather than a hub, opting to funnel international traffic through its main hubs in Sydney, Melbourne and Perth.

However, the Australian government's embrace of open skies legislation broke Qantas' monopoly on international flights to and from Down Under, and with that opened up opportunities for the city of Adelaide. Result? By June 2013 Adelaide was enjoying year-on-year international traffic growth of a staggering 14.8 per cent and now has non-stop flight to Dubai with Emirates, Hong Kong with Cathay Pacific, Kuala Lumpur with Malaysia Airlines and Air Asia X and Singapore with Singapore Airlines, as well as Bali (Denpasar) and Auckland with Aussie low-cost carrier Jetstar, which this year established a new pilot and cabin crew base at Adelaide - a clear sign of things to come at this growing air hub.

At the risk of milking the Edmonton-Adelaide parallel to death, the two cities share a remarkable amount in common. Adelaide, in spite of long being Australia's 'forgotten' city, is an industrial city known known increasingly  for its thriving arts sector and festival scene (the Adelaide Fringe Festival is the largest arts festival in the southern hemisphere). In terms of liveability Adelaide as been repeatedly listed in the Top 10 of The Economist's World's Most Liveable Cities index, and has also been repeatedly ranked as the most liveable city in Australia by the Property Council of Australia. In other words, it's the city people tend to forget about unless they actually live there, in which case they can't imagine living anywhere else. Sound familiar?

Conclusions?

Cities like Adelaide, Bergen, Christchurch, Glasgow and Edmonton all clearly have the demand, and the need, for good international air service. It's also colossally myopic - and frankly untrue - to assume that such air service necessarily comes at the expense of other centres, or in Edmonton's case Calgary. The numbers clearly indicate otherwise. Of Canada's major airports, Edmonton was the fastest growing in 2012 at 6.4 per cent. The second fastest growing? Calgary at 6.0 per cent. Similar trends can be seen elsewhere. In Norway, Oslo-Gandermoen grew by 4.8 per cent in 2011-2012 while Bergen-Flesland grew by 3.8 per cent over the same period. Meanwhile in Australia, overall traffic at Adelaide actually dropped in 2011-2012 (due to the collapse of domestic carrier Tiger Airways) but international traffic surged across the Big Five airports, even as the country's largest carrier continues to suffer labour difficulties and sliding profits.

Rovinescu: he's not your boyfriend (source: Toronto Star)
Last month in Vancouver, Air Canada CEO Calin Rovinescu rebutted Vancouver International Airport's calls for open skies legislation, arguing that unrestricted competition in the airline industry would harm Canadian business interests and reduce airports like YVR into 'feeder' airports for global carriers. In it he specifically mentioned the Australian case, in which he alleged that the country's open skies policies had effectively allowed Emirates to run roughshod over its airline industry. "Now, there is a choice for Australian customers (travelling abroad), as long as their choice is Dubai," he said. Personally I have my doubts that many Australians outside the Qantas board room share his sentiments, particularly in cities like Adelaide where, until recently, the only choices for international travel were Sydney, Melbourne or Perth.

This is the situation Edmontonians continue to face. Although a major victory was achieved this fall with Icelandair's new Edmonton-Reykjavik non-stop, our flag carrier's refusal to offer any international non-stops out of Edmonton (apart from the now-downgraded London-Heathrow service) and the federal government's still restrictive policies regarding international carriers, comes at a colossal disadvantage for non-traditional hub cities like Edmonton. Not only would we love to have more intercontinental non-stops out of Edmonton, but we've shown we can support it. Statistics from the UK's Civil Aviation Authority clearly show that Air Canada's Edmonton-London flights have remained competitive compared with comparable flights out of Calgary and other centres, in spite of claims to the contrary, and early sales for the Icelandair's services out of Edmonton were enough to persuade the airline to launch the route earlier than previously planned.

None of this need come at the expense of Calgary's steady aviation growth, and there is clearly a need for two major airports in this province. While YYC and YEG will invariably continue to joust for passengers and routes, at the end of the day the two airport authorities are on the same team, as both are important drivers of Alberta's economy. Ed McDonald's view of the Alberta aviation scene might have held water back in the 1970s when the province's population first cracked the two-million mark, but it's clearly woefully out of date now, contradicted by both local demand and international parallels.

More flights to more places: it's not just a corporate mantra. It's a raison d'être. And while we at EIA will invariably continue taking pot shots at our rivals down the QEII, at the end of the day what's good for Edmonton is also good for Calgary. Open skies legislation may not be good Air Canada share prices, but more choices for Canadian air travellers and overseas business people and tourists wanting to come to Canada is a good thing all around. And at the end of the day, isn't that the whole point of aviation?

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