The profitability of Victoria International Airport dropped by almost $17 million in 2020 because of COVID-19. (Black Press Media File)

The profitability of Victoria International Airport dropped by almost $17 million in 2020 because of COVID-19. (Black Press Media File)

Victoria International Airport revenues in a tailspin

While airport made $9.2 million in profits 2019, COVID-19 brought estimated losses of $7.5 million

Victoria International Airport is lobbying Ottawa for financial relief after seeing its profitability fall by almost $17 million.

Figures from the Victoria Airport Authority (VAA) board of directors submitted to Sidney council show that the airport is forecasting a loss of $7.5 million in 2020, a downward swing of $16.7 million compared to 2019, when figures show a profit of $9.2 million.

“In the wake of the COVID-19 global pandemic, 2020 was an unusual and extremely challenging year for Victoria International Airport (YYJ),” reads the report. “The impacts of the coronavirus severely affected YYJ’s passenger traffic, aircraft activity, revenues and overall financial performance.”

Looking at the big picture, the airport authority forecasts a drop of 69.3 per cent in total passenger traffic, a major hit to any airport, but especially YYJ where passenger and aircraft activity account for 90 per cent of total revenue.

“With passenger volumes down as much as 98 per cent and the number of daily flights decreasing from (100) to as low as eight flights, the impact to revenue was severe,” it reads. The report says the financial blow would have been worse if not for two ‘normal’ months at the beginning of the year and the Canadian Emergency Wage Subsidy (CEWS) from Ottawa, which the airport treated as revenue.

The report then goes on to say that the airport could not simply reduce operating expenses when faced with revenue decreases of that “magnitude and immediacy.”

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While the airport immediately implemented a series of cost-cutting measures to preserve “financial liquidity” with operating expenses dropping by a total of 25 per cent, the effects of lower revenues thanks to lower landing fees, terminal fees and airport improvement fees resulted in $7.5 million in losses at the end of 2020.

The report contends Ottawa’s decision to waive YYJ’s rent payments “amounted to close to zero” since the airport’s rent payment to Transport Canada reflect a percentage of revenue. “While appreciated, it did little to preserve liquidity,” it reads.

The report recognizes Ottawa’s plan to eliminate rent for airports of YYJ’s size for one year but questions its effect. “While appreciated, the value of this rent relief is approximately $350,000, which by itself is a large number but not in comparison to YYJ’s $21 million revenue decline experienced in 2020.”

Accordingly, the report lists several recommendations now part of discussions between Ottawa and the aviation industry.

“YYJ would like to see its rent requirements either waived in perpetuity or at least until passenger traffic is restored to 2019 levels,” reads a specific demand from the airport.

The airport also calls on Ottawa to show leadership to “avoid a patchwork of travel restrictions and health safety measures developed independently across provinces, which creates confusion and undermines consumer confidence.”

The airport predicts that passenger numbers in 2021 will be down 60 per cent, which would further damage the local economy, based on figures found in the report.

“YYJ is a vital economic engine for the Greater Victoria region generating over $880 million in economic activity pre-pandemic,” it reads. “It is estimated that at least half of that economic activity has been eliminated during the pandemic which makes it critical that safe air travel restarts quickly, that the overall industry recovers, and that YYJ is in a position to continue to drive growth for southern Vancouver Island.”

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wolfgang.depner@peninsulanewsreview.com

Victoria International Airport