Fort McMurray International Airport gets $15M grant to help it survive pandemic's effects

The Regional Municipality of Wood Buffalo is giving a $15-million cash injection to the operator of the Fort McMurray International Airport to help it cope with the economic fallout of the COVID-19 pandemic.

At a council meeting Tuesday, councillors voted unanimously in favour of a $15-million sustaining grant for the Fort McMurray Airport Authority (FMAA), which owns and operates the airport.

The money will come from the municipality's emerging issues reserve fund.

FMAA officials told the meeting that the authority saw a 60-per-cent drop in passenger traffic in 2020, leading to a significant loss in revenue.

"In 2014, YMM had more than 1.3 million annual passengers," said Denean Robinson, the airport authority's chief financial officer.

"In 2020, as a direct result of the pandemic, YMM passenger demand plummeted … to 229,000 passengers."

In 2019, before the pandemic hit, the airport saw 595,000 passengers.

The airport will cost more than $32 million to operate this year. Robinson said it needs help if it is to remain fiscally sustainable.

Financial reserves have been depleted, from $44.4 million in 2019 to a projected $11 million this year.

Without intervention, the reserve fund would be empty by 2023, the authority's financial statements indicate.

Extra funding from the municipality would allow the airport to freeze airport improvement fees, making the cost of flying more affordable while the industry rebuilds, Robinson said. 

As well, the money would help rebuild air connectivity. In the grant application, the airport authority said airlines have been focusing on routes connecting major hubs, leaving regional airports with fewer services.

The airport is currently $173 million in debt — a cost that Mayor Don Scott said would end up being absorbed by the regional municipality if the airport authority ever failed.

"This is obviously no fault of the airport's," Scott said.

Coun. Jeff Peddle agreed that finding the money to help the airport is the right course of action.

"Unless the municipality wants to take over the airport itself, I don't think we have a big choice," Peddle said.

Coun. Mike Allen said having the responsibility of the airport fall onto the municipality is not a viable solution.

"The consequences of not moving forward with this is not palatable," he said.

'Still struggling,' says airport restaurant operator

Allen also emphasized that locals need to use the airport, instead of driving out of the community to catch a flight from a larger centre like Edmonton. The airport authority says that's leading to about $43 million a year in lost revenue.

The airport has also lost revenue from its local vendors, as it gave rent relief to tenants. Instead of charging normal rent, the airport authority charged a percentage of sales to keep the businesses open. 

Stu Wigle, director of Earls in Fort McMurray, spoke at the council meeting, saying the lowered airport traffic has been difficult for the restaurant industry. 

The chain has two locations in Fort McMurray, one in the airport and one downtown. 

"Unfortunately right now there's two different climates," Wigle said. "Downtown's business has been quite well; with the airport we're still struggling quite a bit." 

He said had the airport not offered rent relief, "we would actually be done as a business."