Fort McMurray airport ready to soar despite oilpatch's rough landing
The gateway to the oilsands will expand once again with $75M project
Fort McMurray is going full throttle as it embarks on another expansion of its airport in spite of a recent drop in passenger traffic and one airline ceasing operations in the oil boomtown of Northern Alberta.
The boom is certainly off the local and provincial economy since oil prices collapsed one year ago, leading to higher unemployment, postponed oilsands projects and huge cuts to spending by oil companies.
Still, the airport authority has sky high ambitions.
We're not alarmed. We're able to deal with it.- Scott Clements, Fort McMurray Airport Authority CEO, about the drop in traffic
The airport expanded just last year, a brand new $258-million terminal that's five times larger than the former building. Now the airport already has a shovel in the ground on a $75-million addition to expand the main terminal, runway and apron.
The project has the green light, although officials admit they are keeping a close eye on oil prices and the Alberta economy.
- Oilsands companies feel the pain as Canadian oil price falls
- Oil storage tanks filled to levels not seen in 80 years
"It'll be a four- to five-year project," said Scott Clements, president and chief executive officer of the Fort McMurray Airport Authority. "The project is going to go ahead, it's the phasing and timing of it that will be discussed."
The last 12 months have proved to be a trying time for the facility, which serves as the gateway to the oilsands. Once oil prices started to slip, so too did passenger traffic.
"We can handle that," said Clements. "But it is concerning and I'm having to make the tough decision on cost controls to be sustainable in this downturn."
The airport has cut costs by outsourcing security and custodial services.
In the first six months of this year, passenger traffic is down nearly 12 per cent compared to the same period in 2014. Charter flights are impacted the most, down 52 per cent.
The charters bring thousands of workers to the oilsands from all over Canada, most notably Alberta, British Columbia, Ontario and the Atlantic provinces. The charters represent 20 per cent of the airport's business.
"We're not alarmed. We understand where the economy of Alberta is right now," said Clements. "We're able to deal with it."
Commercial airline traffic is down about six per cent so far. WestJet and Air Canada both say they are maintaining their flight schedule to Fort McMurray. Although at times smaller aircraft are used because of low passenger numbers.
"There's a bit more to the story about air traffic at YMM. Charter traffic is down quite a bit, but scheduled service is still in good shape," said WestJet spokesman Robert Palmer in an email. "Obviously, with charters being cancelled, more workers are travelling on scheduled service so we see an opportunity there."
One carrier decided in March to stop operating out of Fort McMurray because passenger traffic was too low.
"Unfortunately after two consecutive years of operations and great support from the airport authority, there was insufficient local demand to continue offering our flights to Mexico from Fort McMurray." said Janine Chapman, vice-president with Sunwing, in an email.
Clements said he was not surprised by the decision, saying the airline's model wasn't sustainable largely because of the route it was taking. He's lobbying Air Canada, WestJet, Air Transat and American budget carrier Allegiant to offer flights from Fort McMurray to Mexico and other vacation travel locations.
The airport authority is banking on the oilsands to keep growing. Forecasts suggest oil production will increase from 2.2 million barrels per day in 2014 to 3.1 million barrels per day by 2020.
"It's almost certain we'll hit 3 million barrels by 2018," said Clements. "That growth is invested, funded and going ahead. What happens after 2018 is far less certain."
The new airport expansion project will be funded equally by the federal government, local municipality and the airport authority.