Cross-border flights, reversed: With low loonie, more Americans flying out of Canadian airports

Many hands happen to be wrung in recent years about the countless Canadians who choose to save money by flying out of U.S. border airports. Senate committees happen to be struck to examine the problem, while stakeholders point fingers at each other over who’s to blame. As it happens the solution was breathtakingly simple: a lesser loonie.

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An study of passenger statistics indicates fewer Canadians are choosing to fly out of U.S. border airports because the weak dollar erodes their cost advantage. And anecdotal evidence from Canadian airports suggests the trend might be reversing, with more Americans coming north to take advantage of flights priced in Canadian dollars.

WestJet CEO Gregg Saretsky suggested this within the company’s earnings call this week, as he stated that Vancouver International Airport’s traffic increased five per cent in 2015, while Bellingham International Airport, across the border in Washington State, saw its traffic fall 14 percent.

“There’s less leakage, mostly the purpose from the bargains having gone away using the weakening from the Canadian dollar,” Saretsky said. “It’s great to determine Canadians flying at home and WestJet is benefitting from that.”

Later within the call, chief financial officer Harry Taylor added that he’s been told “we’ve licence plates coming another way now to fly out of Canadian airports, quite ironic.”

Data in the U.S. Bureau of Transportation Statistics shows that 4 out of 5 border airports popular with Canadians saw their passenger traffic decline within the first 10 months of 2015 (the most recent period of time for which numbers can be found). The typical exchange rate for that 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 International Airport in New York, 3.7 percent at Burlington International Airport in Vermont and three.5 percent at Plattsburgh Airport terminal in Ny (slogan: “Montreal’s U.S. airport”). The only border airport that bucked the popularity was Niagara Falls International Airport in New York, 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 using their services.

“We count licence plates within our parking area,” said Nick Longo, director of planning and development in the Burlington airport. “We’ve seen anywhere from a 10 to 15 per cent drop in Canadian licence plates.” 

Other border airports report similar findings.

“We track the customers that come through our various parking lots by asking them their postal code,” said C. Douglas Hartmayer, a spokesman for that Niagara Frontier Transportation Authority, which owns and operates both Buffalo and Niagara Falls airports.

“For December, 37 per cent of folks that parked in our long-term lot (in Buffalo) were from Canada. Time is usually in the low 40s, so we’ve seen a little bit of a shift, at least in that metric anyway.”

The benefit of U.S. border airports can mostly be related to their lower taxes and fees, which significantly lessen the price of travel once the dollar is close to par.

In 2015, the planet Economic Forum ranked Canada 124th out of 141 countries because of its travel cost competitiveness, and a 2012 Senate committee was told that Toronto’s Pearson Airport terminal is easily the most expensive in the world at which to land an airplane. Our prime costs are the effect 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 worth of the Canadian dollar, although Hartmayer said it’s still cheaper to fly from Buffalo or Niagara Falls, N.Y., than from Pearson. Information supplied by the Niagara Falls airport (slogan: “You can fly U.S.”) implies that, as of Dec. 23, a household of 4 flying roundtrip to Myrtle Beach, S.C., in July 2016 would save US$354.36 when they flew out of Niagara Falls rather than Pearson.

Those savings apparently haven’t stopped Americans from coming the other way, according to observations from Canadian airports.

“We do have U.S. vehicles coming up this way. It’s a good news story,” said Parm Sidhu, general manager of 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 several of his members, even though it might not be enough to compensate for the results of the weakening Canadian economy.

“We’ve heard anecdotally that there might be greater numbers of Americans travelling north to Canada to fly from Canadian airports, but probably not enough to offset the impact of the Canadian dollar and the souring of the economy that’s hitting Canadians’ propensity to visit – particularly towards the U.S.,” Gooch said.

kowram@nationalpost.com

Twitter.com/KristineOwram