Calgary

'Decimated' air travel industry will likely take 5 years to recover, says Calgary Airport Authority

The COVID-19 pandemic plunged the Calgary Airport Authority into debt and erased a quarter century of passenger growth, say CAA officials, adding it will likely take up to five years to recover.

COVID-19 pandemic erased quarter century of passenger growth, annual update suggests

The Calgary Airport Authority had budgeted for a surplus last year but instead it posted a $23-million deficit due to the pandemic. (Dave Gilson/CBC)

The COVID-19 pandemic plunged the Calgary Airport Authority into debt and erased a quarter century of passenger growth, and it will likely take up to five years to recover, officials said Monday.

Travel restrictions, quarantine requirements and advisories against international and domestic travel gutted the airline industry in 2020, and Calgary's aviation sector has been no exception, CAA president Bob Sartor told city council in an annual update.

The Calgary International Airport went from servicing 18 million passengers in 2019 to 5.7 million over just six months in 2020, which Sartor said represents a decrease in activity not seen since the mid-1990s.

And due in part to ongoing restrictions and a slow start to Canada's vaccine rollout, the airport authority is projecting that relief will not come to the sector this year — in fact, Sartor said that it is expecting further decline.

"As bad as 2020 was … we're calling 2021 at 5.1 million passengers," Sartor said. "Until we have significantly more vaccines in the arms of people, I think Canadians will be uncomfortable [with air travel]."

'Difficult decisions'

Before the pandemic, 21 passenger airlines served Calgary, and non-stop service was offered to 88 destinations in 2019, Sartor said.

Since the pandemic — and after passenger activity plummeted — there are now just eight airlines flying into Calgary, representing a 62 per cent decline. Meanwhile, its non-stop destinations have shrunk to 42, which is a decline of 52 per cent.

Compounding these blows are the aircraft now sitting unused on the tarmac, Sartor said.

"We are now a parking lot for 50 very expensive airplanes," Sartor said.

Terminal operations also dwindled to half of what they used to be, Sartor said, because of reductions in demand for parking, taxis, rental cars and ride-sharing, and closures of airport restaurants and retail outlets.

These factors led to a cash deficit of $23 million that had to be refinanced for an additional $68 million, he said.

And according to Sartor, attempts to offset the losses of these combined factors led the CAA to shed jobs.

"We were forced to make difficult decisions, and had to say farewell to approximately one-third of our colleagues," Sartor said.

Path to recovery

In spite of the grim update, a bright spot existed in the cargo industry, which grew by 11 per cent last year. Transporting personal protective equipment, supplies and now vaccines allowed it to grow, Sartor said.

The Calgary International Airport also remained a Canadian leader in connecting flights, and ahead of Vancouver and Toronto, in part due to its status as WestJet's hub, he said.

But the keys to the industry's recovery are healthy airlines with strong cash flows, the alleviation of travel restrictions along with the proliferation of vaccines, and the restoration of public confidence in air travel, Sartor said.

Without these factors in play, Sartor said the recovery will be slow, and hospitality and tourism industries will continue to be impacted.

Concerns are the affordability of air travel with its key players now buried under debt, and Canada's vaccination rollout that Sartor said has been "stop-start" — lagging behind the European Union, United Kingdom and United States.

"We have what we say is five years to full recovery, from the beginning of 2020," Sartor said. "And it won't be a light switch. It will be an initial surge, and then a trickle."

With files from Scott Dippel

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