COVID-19 AND AIRPORTS IN CANADA

        Vancouver International Airport (YVR) January 23, 2021 at 2:46 PM, and there is not an airplane in sight.

      Photo by David Varnes

    Is the Vancouver Airport in peril?

     'We have cancelled or deferred 60 per cent of our capital projects.'

           YVRAA CEO Tamara Vrooman, interview on January 25, 2021

   

   The COVID-19 pandemic has devastated the revenues of the Vancouver International Airport (YVR). The Operating Authority's (YVRAA) new CEO, Tamara Vrooman, has had to revisit the 2037 Airport Master Plan and either cancel or reassess $9.7 billion in capital projects scheduled over the next three years.

    In March 2020, the world was alerted to a new virus in China, later to be categorized as a pandemic by the World Health Organization, and designated COVID-19. The pandemic spread world-wide, and air travel became restricted as a consequence. Throughout 2020, airports and airlines began to cut services, reduce schedules, defer investment, and implement staff reductions, in order to retain cash reserves. The Vancouver Airport has seen its activities reduced by almost 90 per cent as a result of the COVID pandemic, as evidenced by its November 2020 YVR Traffic update.

   The economic impact of COVID on the Vancouver Airport, its surrounding communities and upon the province has been far-reaching. 

     [The new YVRAA Parkade construction has been halted and no new date has been set for the completion of this project.

       David Varnes photo]

   Almost 13,000 people employed by the airport, the airlines, and ancillary services are out of work since the onslaught of the pandemic. The new YVRAA parking facility construction, with  state-of-the-art environmental features has ground to a halt -- construction suspended with only half of the project complete. A new wing of the international terminal, built in anticipation of increased trans-border traffic, is complete but sits empty. Multiple planned projects identified in the Airports Master Plan 2037 have been either stopped or are on indefinite hold.

   In a January 25 interview, YVRAA CEO Vrooman said ..."there has been a fundamental resetting of our capital plan going forward...we are suspending the parkade and cancelling the contract with Ellis-Don...[the parkade construction] was about half way [$450m spent]." The CEO also said that other major projects like the third runway have been shelved.  "Our forecasts show that we will be into 2024 before we are back to the volumes we saw pre-pandemic," said Vrooman.

   Vrooman also said the pandemic has allowed for much needed infrastructure repair within the terminals. Repairs are also happening on airport aprons and runways. Low passenger volumes have opened up the opportunity to digitize more processes to improve efficiencies. The CEO was also able to refinance the YVRAA debt over a three-year term with fresh cash reserves [$600m] at the lowest interest rate for an airport in Canada. The explosion of on-line shopping has created an opportunity for the airport to "significantly improve" its cargo infrastructure, noting that Amazon will soon become a major air cargo operator. Sadly, a brand-new wing of the International Terminal Building (ITB) sits empty, awaiting leisure travel to lead the airport recovery.

 

[Lead Station Attendant Wayne Lawson stands in an empty YVRAA Domestic departure hall and lounge January 21 at 0900 hours - Wayne Lawson photo]

     Wayne Lawson is an Air Canada Lead Station Attendant [LSA] with service experience at both Toronto and Vancouver airports. At Vancouver, Wayne has experienced major airport disruptions, including the 9/11 terrorist attack in New York, and the current COVID-19 pandemic. When asked what is the most dramatic change to his work-day, Lawson said it's the change in flights to and from Toronto. "We used to run Toronto flights, I'd say, between 11 to 14 flights a day just to Toronto and now we have three...it's incredible, there's only 40 people on these flights right now." 

   This situation is not unique to Vancouver or Canada's major airport -- Toronto. Calgary, another Canadian airport operating under a provincial authority, is experiencing the same grief. Chris Miles, VP Calgary Airport and Infrastructure, said passenger numbers are way down. "Our latest passenger numbers to the end of November [2020], show a 67.5 per cent decline for the year...I would note that cargo landings are up approximately 10 per cent over year, as we helped move essential cargo to and from our region."    

   Until 1992, Airports in Canada were under the control of the Federal Department of Transport. Airports rarely received federal government improvements. British Columbia led the way with a remedy that saw a provincially-controlled not-for-profit airport authority [YVRAA] assuming federal airport improvement responsibilities. YVRAA unleashed the economic potential of the airport for provincial benefit.

   In 2019, the Vancouver Airport generated an estimated $2.6 billion yearly provincial activity with 26,000 people employed either directly or indirectly servicing the travelling and commercial public. COVID-19 has caused both economic activity, and all types of air travel, to shrivel up.            

     

     Airports are not the only casualties of COVID. Airlines in Canada and worldwide have also suffered a massive blow, with several facing extinction. Smaller air carriers have also faced the same devastation and confront the same hard choices being made by mainline carriers.

 [Harbour Air seaplanes were removed from service and stored on the YVRAA tarmac South Terminal - Wayne Lawson photo]

   The numbers from the November 2020 YVR Traffic update tell the grim story.  Domestic traffic for mainline carriers is down 77.8 per cent from a year ago and international travel has dropped as much as 94 per cent from some regions.   

     YVRAA has historically been financed on very conservative terms. Vrooman was the deputy minister of finance for the B.C. government, and the long-time CEO of VanCity Credit Union. Financial institutions fully expect YVR to recover, Vrooman commented, and to return to the robust growth numbers for passengers and cargo that were reported up until 2019. Vrooman has a mandate to bring about a revitalization and a recovery of the airport to its pre-eminent place as one of the province's principal economic generators, once COVID-19 is brought under control. The consensus is, though, that the road will be long and the recovery slow.

     At a later time, in a second portion of this report on the economic effects of COVID-19, we will look at the nation's airlines, their current economic state, how their people have been affected, and what the future holds for air travel in Canada.