St. Albert will be kicking in cash as part of a regional effort to help support the Edmonton International Airport.
On Monday, St. Albert city council voted unanimously to hand over $145,154 as part of a regional ask to raise $15 million to attract international flights back to Edmonton after the blow the travel industry took during COVID-19.
Edmonton Global, an economic development organization for the Edmonton Metropolitan Region, has proposed the regional municipalities split the millions to help support the airport, and asked St. Albert to kick in $719,000 over three years.
The money will go to the Air Service Fund, created for Edmonton Global, who will manage the fund, to help incentivize airlines to re-establish direct international flights to and from the Edmonton region as pandemic restrictions are lifted. The fund will not support daily operations at the airport.
But council, recognizing the community is much further away than most municipalities in the region who were asked to support the airport, was torn between being a regional co-operator and balancing how much the investment into the Air Service Fund would actually benefit St. Albert.
Coun. Jacquie Hansen said the ask for cash put the city in a tough spot.
“Obviously the airport is important to us, however we don't have the same kinds of geographical closeness to benefit the same way as others,” Hansen said.
Leduc County kicked over more money than other municipalities because they get direct tax revenue from the airport, St. Albert Mayor Cathy Heron said, with the county offering up $1.5 million, some $1.2 million more than requested.
Heron said supporting the airport would benefit residents if the money can attract more direct flights, but the business and economic benefits of the investment may not be realized.
“I don't know if we really would be able to take advantage of the business travel. I don't know if CEOs in the region are not going to set up in St. Albert just because they can’t get a direct flight in and out or a direct flight to a business meeting,” Heron said.
The mayor said she would be more comfortable giving money if there were international flights approved by the federal government
Coun. Sheena Hughes said giving money to the Air Service Fund won’t mean anything unless the borders fully open up and without restrictions placed on vaccinations and quarantine rules.
St. Albert does not currently have a seat at the board of the Edmonton International Airport, although Coun. Wes Brodhead said the city passed up the opportunity to join the board years ago, likely because the council of the day also wondered what the direct benefit the airport would have on St. Albert.
“I struggle with the decision that, if funded … we don't get the direct return on our investment. However, the indirect return on investment, I think, is significant,” Brodhead said.
“I also think that here is the first big test around regional collaboration.”
But as a result of not sitting on the board, council doesn’t know how the $15-million figure was drawn up, how that money would be spent, and how flights would be attracted to the region.
Edmonton Global divided up the ask of $15 million by each municipality's assessment rate, rather than economic benefit the community would receive from the investment in the airport. Council said they would rather see a fairer funding formula.
"Obviously we don't want to lose an international link, but where is the fairness in the request?" Coun. Ken MacKay asked.
Coun. Natalie Joly proposed an amendment to only contribute the $145,154, if the funding formula for contributing municipalities is altered in the future, with no more than $15 million to be sought from communities for the fund, and the financial contributions reduced if grants and private-sector contributions are made.
The amendment failed, with only Hughes and Joly in support.
Heron said she and the city had pursued these changes for weeks with the airport and Edmonton Global, but they have declined to budge on their funding formula.
“I don't see it being successful in time of us even giving year-one funding, so then we're not giving anything, and I do think I want to exhibit some support for this, so I'm struggling with an all or none,” Heron said.
COVID-19 woes
The airport has struggled since COVID-19 began, especially after the federal government designated Calgary, Vancouver, Montreal, and Toronto the four official ports of entry into the country.
Pre-COVID-19, the Edmonton International Airport had 52 direct flights daily, and there are now only 13 direct flights. In 2020, the airport generated $103 million in revenue, which is a $128-million drop from 2019, and overall the airport recorded a net loss of $89.3 million in 2020.
In 2020 passenger demand fell by 68 per cent compared to 2019, with some months dropping as low as 95 per cent. Some 90 per cent of revenues at the airport are tied to passenger traffic and to deal with the reduction in revenue, operating budgets were cut by $50 million, capital spending was cut by 75 per cent, and the workforce was reduced by 30 per cent.
Instead of agreeing to the full demand for cash, the city's chief administrative officer Kevin Scoble has been directed to write a letter to the shareholder at Edmonton Global asking for further consideration of an alternative funding formula, a commitment that not more than $15 million in total municipal contributions will be sought after the fund is met, and that municipal contributions will be reduced if other levels of government or the private sector chip in money toward the $15 million.
Right now, if the airport gets grants or funding from the private sector, the $15-million ask from municipalities is not reduced.
Council will explore if they want to give more money to the company for the second and third year in a council meeting by the end of the first quarter of 2022.
Edmonton Global projects that the $15 million, alongside in-kind support by the airport, will result in the creation of 7,000 jobs and an economic impact on the gross domestic product of the greater Edmonton Metropolitan Region of $415 million.
So far the municipalities in the region have kicked in $13.2 million.
