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Assessing the Economic Potential of Edmonton City Centre Airport

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Assessing the Economic Potential of Edmonton City Centre Airport Assessing the Economic Potential of Edmonton City Centre Airport Prepared for: June 2009 Peter Morris Andrew Charlton Jake Reppert TABLE OF CONTENTS 1 INTRODUCTION............................................................................................2 2 STRUCTURE OF THE REPORT ........................................................................6 2.1 KEY ISSUES .............................................................................................................. 6 3 THE IMPORTANCE OF BUSINESS AIRPORTS ................................................7 3.1 WORLDWIDE DATA .................................................................................................... 8 3.1.1 AIRPORTS COUNCIL INTERNATIONAL................................................................................. 8 3.1.2 EUROCONTROL AIRPORT STUDY 2007 ............................................................................ 10 3.1.3 US FEDERAL AVIATION ADMINISTRATION ........................................................................ 12 3.1.4 THE NATURE OF BUSINESS AVIATION- INFORMATION FROM NBAA IN USA .............................. 13 3.1.5 THE EUROPEAN BUSINESS AVIATION ASSOCIATION ............................................................ 13 3.1.6 STATISTICS CANADA ................................................................................................... 14 3.2 THE VALUE OF ECCA - INTERVISTAS’ 2005 REPORT................................................... 17 4 AN ANALYSIS OF EDMONTON’S AIRPORTS’ TRAFFIC.................................20 4.1 EIA ....................................................................................................................... 20 4.2 ECCA .................................................................................................................... 21 4.3 ANALYSIS OF DAILY TRAFFIC PATTERNS ...................................................................... 25 4.4 SHORT HAUL AND REGIONAL VS LONG HAUL................................................................. 27 4.5 MEDEVAC SERVICES................................................................................................. 28 5 THE BENEFIT OF TWO COMPETING AIRPORTS IN EDMONTON..................30 5.1 A REVIEW OF OTHER CANADIAN CITY AND BUSINESS AIRPORTS ...................................... 30 5.2 INTER-AIRPORT COMPETITION.................................................................................. 35 5.2.1 PREVENTING COMPETITION IN EDMONTON ....................................................................... 36 5.3 TWO AIRPORTS FOR TWO CORE MARKETS .................................................................... 38 5.4 PROBLEMS WITH MERGING ECCA TRAFFIC TO EIA ....................................................... 39 5.5 NEW BUSINESS MODELS ON THE HORIZON ................................................................... 40 6 THE VALUE OF ECCA TO THE BUSINESS COMMUNITY ................................44 6.1 THE VALUE OF AN AIRPORT ....................................................................................... 44 6.2 POTENTIAL LOSS OF BENEFITS FOR PASSENGERS TRANSFERRED FROM ECCA.................... 45 6.2.1 DRIVING TIME ANALYSIS .............................................................................................. 47 6.2.2 MEDEVAC SERVICES .................................................................................................... 48 6.2.3 IMPACT ON AIR SERVICE BUSINESSES OF THE TRANSFER....................................................... 48 6.3 LIMITATIONS ON AND COST OF FUTURE GROWTH AT EIA .............................................. 48 7 A VISION FOR EDMONTON ECCA................................................................50 8 APPENDIX...................................................................................................51 Prepared for: 23/06/2009 Page 1 1 Introduction We have been asked by Alberta Enterprise Group (AEG) to assess the current status and potential value of Edmonton’s city airport, Edmonton City Centre Airport (ECCA). This airport is threatened with closure. ECCA is a general aviation (GA) and business airport. It is ideally located for a business airport. In our opinion it has the potential to contribute significantly to the commercial and business life of the City of Edmonton. Airports are a key element in public transport infrastructure. One of the realisations of the current economic crisis is that such infrastructure provides a key competitive strength to cities and regions, enabling them to weather the downturn and take an active part in economic recovery. By contrast, those cities or regions with inadequate or insufficiently diverse infrastructure will lose out. Around the world, economic stimulus packages have stressed the need for investment in transport infrastructure of all types. In other words, investment in airports is precisely that – an investment. It is an investment in developing trade, encouraging economic growth and creating value and jobs. Consequently, the proposed decision of the Edmonton City Council to close the Edmonton City Centre Airport (ECCA) is a curious one. The decision is questionable on a number of grounds: It will substantially reduce the quality of air service options and customer choice for business and other travellers to/ from Edmonton. This will damage Edmonton’s competitive position in the region indefinitely, and is likely to have an impact on regional employment The economic benefit potential of ECCA is substantial, but is currently inhibited by the ownership structure and the restrictions on its development and operations Assessments of the ‘development potential’ of the ECCA airport land appear both naïve and short term in the light of the recent decline of the property market Many questions are unanswered as to how effectively the displaced traffic from ECCA can be handled and at what cost, in terms both of EIA’s costs, cost to the city and the cost to passengers of being required to travel to/from EIA The decision is an irrevocable step that will reduce air travel options in Edmonton in perpetuity There are many different users of airports, and different categories of airport cater to that range of requirements. ECCA is a general aviation and business airport. Edmonton voted to restrict the use of scheduled passenger services into and out of ECCA in 1995. AEG respects that decision and has no intention of re-visiting it. 23/06/2009 Page 2 Prepared For: However, ECCA has significant value as a general aviation and business aviation airport. As such, it has the capacity to be a significant transport asset to the city of Edmonton. Inter-Pro Property Corporation "It is inconceivable that we would really consider giving up this asset for any reason." Currently, the airport, which has had the threat of closure hanging over it for some years, does not get the investment it needs. Nor does it get the investment that it merits. It is not allowed to realise its full potential. The lack of investment drives a self-fulfilling prophecy as to the effectiveness of the airport. By starving the airport of funds, its detractors are allowed to claim that it is under-utilised. This is the wrong measure, assessing the wrong issues. It is time for the issues to be tabled correctly so a clear idea can be given of the value the airport can deliver for Edmonton. In this report we look at the economic value that airports, and particularly airports that best serve the specific needs of the business community, bring to the economy. It is our view that ECCA has significant potential to complement services from EIA. And the decision matters – the research is clear. Airports bolster economies. They create jobs, not only at the airport, but for the wider community. Connectivity with other cities is an essential element in selecting the location of businesses and thus employing staff. NWI Jet "If you consider the time and logistics alone of landing at the Edmonton International Airport and taking a ground ambulance to one of the major trauma hospitals, you can imagine how there is no reasonable comparison to landing downtown." We then look at the realities of the services being offered by the two airports in Edmonton. The facts, clear from the analysis of the actual services offered by airports last month, make for some very interesting and revealing truths. ECCA offers connections that EIA does not, and which for clear economic reasons should not. And it is clear that when offered a choice, passengers understand the choice, and are happy to support both airports. We then suggest that it is by allowing these airports to compete that Edmonton will be best able to see that support in action. That will then allow Edmonton to assess what the value of ECCA is to the community, and whether it is able to address the concern that it is an airport lacking purpose. To date, that proposition has never been tested. But until they have, Edmonton may be making this decision with its eyes closed. 23/06/2009 Page 3 Prepared For: Bruno Muller -- Caron Transportation "I'll be blunt -- closing the City Centre Airport will be yet another "kick in the teeth" for Edmonton area businesses." There are two distinct types of air service market for airports. First, the necessary economies of scale produce large airports served by scheduled airlines and offer connecting services. That is particularly true in Canada, with two triangles of airports, one in the east and one in the west, dominating all flown sectors. However there is also a
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