Winnipeg/Grand Forks airport battle less important than it looks

Steep American Airlines take-off, 1986

Luggage in the bins will sure as hell have shifted during this steep 1986 departure from Washington, D.C. (© Robert M. Campbell/Airliners.net)

There’s been much ado recently about the growing numbers of Winnipeg travelers who are making the 240-kilometre trip to Grand Forks International Airport to catch their flights because of the lower fares available from south of the border.

Who can blame them? Some of the deals from Grand Forks are quite attractive. Avoid the sneaky Airport Shuttle add-on, and you can fly from Grand Forks to Las Vegas for the Victoria Day long weekend on Allegiant Air — if you’re able to make a Thursday departure and Sunday return — for a base fare of $401.

If you’re looking for a Friday night departure/Monday return, you can pay a bit more to take United from Fargo ($429) or Delta from Grand Forks ($486),  Bemidji ($509) or Thief River Falls ($616) and still pay less than the best currently available fare from Winnipeg for those dates and times ($727 on Delta).

Is this competition from south of the border hurting Winnipeg Airport?

Yes, says the Winnipeg Airports Authority. Winnipeggers boarding their flights in Grand Forks instead of Winnipeg make it more difficult for Winnipeg Airport to attract new carriers and maintain direct flight options, they told the Free Press recently.

Yet, research from Europe suggests that such competition from low-cost carriers and secondary airports “[generates] additional travel, rather than merely substituting for flights with legacy carriers”, while research of the U.S. market by a Japanese researcher concludes that “the gain in social welfare due to [low-cost carriers entering markets] is substantial” as a result of the benefits to consumers and the profits generated by these airlines.

Research from Monash University in Australia also concluded that “competition [between airports] can lead to better allocation of traffic to airports, and to pressure on inefficient airports to perform better”, though cautioning that “inefficiencies in allocation of traffic can come about when prices do not reflect costs, when major airports set prices above marginal costs to recover costs, or when prices at secondary airports are kept low by subsidies.”

And, as The Cranky Flier, one of the web’s top aviation-related blogs, pointed out in February, more distant airports are only competitive on certain longer routes:

“Those who are traveling on shorter flights are less willing to drive to airports that are further away. So people that live in the heavily-populated area around Long Beach will drive to LAX if they’re going to New York, but they’re less likely to do it if it’s just a jaunt to Vegas or San Francisco… Low fares are good, but it’s the convenience of the airport that makes it work best.”

Thus, Winnipeg’s airport is unlikely to suffer much harm from a little healthy competition from Grand Forks. For the business travelers who keep the traditional airlines in business, it will always be more convenient to use an airport a mere 20 minutes from downtown Winnipeg than one located three hours away.

The benefits to consumers and the effect of low-cost carriers in opening up travel to those who otherwise wouldn’t bother traveling at all are also important to keep in mind.

A bit of cross-border competition — Winnipeg vs. Grand Forks, Vancouver vs. Bellingham, Montreal vs. Plattsburgh and Toronto vs. Buffalo — could also open the door to a reconsideration of how the infrastructure that supports air travel is paid for in both Canada and the United States, though there are no easy solutions there: Do we stick with the status quo of requiring the airlines to collect a variety of surcharges over which they have no control, but take the flak for? Do we abandon the user-pay principle and revert to direct government ownership and taxpayer subsidy of airports, as is the case in much of the U.S.? Do we adopt the model recently abandoned by New Zealand, where international passengers had to line up to pay a separate “admission fee” before going through passport control and security?

So, shop around. And if you can get a better deal out of Grand Forks, go for it.

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About theviewfromseven
A lone wolf and a bit of a contrarian who sometimes has something to share.

3 Responses to Winnipeg/Grand Forks airport battle less important than it looks

  1. Drew says:

    There are other advantages to flying out of Grand Forks besides the cheaper fares. It’s an opportunity to do some shopping and take advantage of lower prices and taxes. Especially now that the Canadian and American dollars are near parity.

    Last time I checked, the sales tax in Grand Forks was 6.75%. In Manitoba, it’s 14% combined GST and PST. So right there, you save 7.25% on your purchases. Liquor and tobacco are also cheaper. North Dakota has one of the lowest state cigarette taxes at just 44 cents per pack. I believe motor fuel taxes are also less, giving Manitobans an incentive to fill up on the “other” side of the border. Add all of this together and it makes a strong case for flying out of Grand Forks.

  2. Not wanting to be an apologist for Canada’s air transportation sector, I would nonetheless like to take this opportunity to provide a little more insight into the competitiveness of our Canadian travel industry. Public discussion of this is critical to the competitiveness of our aviation supply chain and the subsequent ability of Canadian consumers to enjoy a reasonable standard of connectivity.

    A former Minister of Transport, when pressed to reduce the taxes airports, airlines and suppliers were required to pay simply responded that he judged the relative importance of the issue by the fact no one ever raised it with him while he was at the markets in his constituency. Therein lies the problem. As long as Canadians remain silent on the level of taxation applied to them, those with options available will justifiably chose to exercise them.

    The Canadian aviation industry operates under very different circumstances than our U.S. counterparts. Calin Rovinescu, the President of Air Canada, recently made comment that if his company were located in the US they would have paid one billion less in various costs, fees and charges, and he is correct.

    The Canadian aviation sector pays a lot of tax. In addition to the airport “rent” tax (nearly $300m across the country last year), there is the Air Travellers Security Charge (ATSC), municipal taxes, fuel excise tax, sales tax and border service fees all which contribute to the cost of buying a ticket within, to or from Canada. U.S. airports and security processes are subsidized by public sector dollars; major airports in Canada have received no government funding.

    The effects of Canada’s tax policy on aviation competitiveness can easily be seen in border communities where millions of Canadian passengers annually exercise the option to use U.S. airports where carriers operate with costs based on alternate tax policy. It is poor Canadian policy which would force such a choice on consumers.

    Canadian airports have joined others (National Airlines Council of Canada, Tourism Industry Association of Canada, Chambers and the Hotel Association of Canada to name a few) to put forward recommendations for improving the competitiveness of Canada’s aviation sector in ways that would improve our country’s overall ability to take advantage of trade and tourism opportunities.

    In Compete to Win, the final report from the Government of Canada’s Competition Review Panel, the panel notes that “Air transportation facilitates social and business transactions, thereby increasing economic advantage and opportunity. An airport air transport sector characterized by competitive choices, fares and costs will be critical for Canadian businesses to realize their ambitions in foreign markets.”

    Airports couldn’t agree more. The benefits of lower costs could be passed on to the public in lower fares and better service in a competitive environment.

    Ultimately, it is not about the airport, it is about connectivity in a globally competitive environment. It is about using our community voice to note the importance of improved transportation policy in a way that ensures a positive future for our citizens.

  3. Will Richards says:

    What we need is a reasonably priced shuttle service between Winnipeg and Grand Forks. Partnering with a reasonably priced bed and breakfast in Grand Forks.
    Someone needs to put up a website getting people together for rideshare between Winnipeg and Grand Forks! There are lots of people driving needlessly there and leaving their car in the elements for a week or two.

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