POLL: Transwest says it’s losing money over airport’s service

Additionally, when the airport is unable to clear the runways of frost and snow, this has “directly” resulted in the six-figure losses over the last two months, Lawless wrote in the letter sent on Tuesday.

Via telephone on Wednesday, Lawless, who has been with Transwest since August, said he wrote only about winter issues. Transwest has been dealing with winter operations since December, and its planes have lost three wheels due to runways and ramps not being cleared adequately. The runways and ramps were also not cleared to the extent that the airline was told they’d be prior to its aircraft arriving at the airport.

As a result, Transwest lost three wheels, at a cost of $12,000 each, for a total of $36,000.

“Other, more profound, losses, which are a little more difficult to account for, in strict financial terms, are days when we take off out of Saskatoon believing we can land in Prince Albert, only to be told en route, or while doing the approach, that the airport is, in fact, unsuitable for landing,” Lawless said.

The runway and ramp issues don’t pose a safety risk to passengers because if the runway isn’t adequate to the point it would cause a safety issue, Transwest’s planes just won’t land or take off, he said.

“I’m not here to blame any safety concerns on the City, because I won’t operate into this airport when it’s not safe. Of course, my not operating into this airport because this airport is not safe is affecting me greatly, financially.”

Transwest then has to take the passengers bound for Prince Albert to other destinations and figure out how to get them back to their point of origin, Lawless continued.

“Also, there are days when we lose an entire day of operations into the Prince Albert Airport or a half day into the Prince Albert Airport, when we’re not losing anything at the other locations that are experiencing the same weather.”

On these days, Transwest has to refund the cost of the tickets passengers buy. Lawless said this is disappointing for the passengers, and it makes the airline look bad, since the passengers can’t be expected to understand the entirety of the situation to see what the problem really is.

The airline is therefore returning revenue that it previously took in by issuing these refunds.

“When you look at those figures, just since December, the losses to Transwest Air alone are easily over six figures,” Lawless said.

He first publicly raised these concerns at Monday’s city council meeting, as council approved a host of airport lease agreements which raised the tenants’ monthly rents. The agreements are four years in length and will take the per square metre rent to $1.50 in 2015. The per square metre rent will rise incrementally until it reaches $3.00 per square metre in 2018.

Tenants who rent hangars at the airport – from airlines to the RCMP – will be affected by the rate increases.

Lawless said his communications with City staff prior to the approval of the lease increases stated or implied that the funds would be put towards improved service at the airport.

“So, I had no reason, I don’t think, I had any reason going into Monday night that city council was ignorant to the needs that are existing presently at the airport,” Lawless said on Wednesday.

At council, Lawless asked that the City spread out the increase for Transwest over five years instead of four. He later explained that with the airline industry’s “razor thin” margins, every little bit helps. The request came with a warning, however.

“If you don’t raise them over five years, I’ve also promised the angry mob at the airport, I will then turn my attention to their issues and I will fight on their behalf and I will come in here at a different time in a more angry state and I will say ‘listen, there were drifts on the runways numerous times since December. I’ve had to replace three wheels and each wheel costs $12,000, add it up,’” he said.

Members of council responded, but they wanted to get more information about the problems at the airport. For example, Coun. Lee Atkinson, said it is difficult to discuss issues that you’re not aware of. He said he hasn’t seen a report from the operator’s point of view.

Council moved forward with the four-year rate increase for Transwest.

On Tuesday evening, Lawless also sent his response to the other members of council, the media, city manager Jim Toye, the Prince Albert and District Chamber of Commerce, and the airport’s manager, Corey Nygaard.

In the letter, Lawless also addressed his concerns about what he feels to be council’s lack of awareness about the service levels at the airport. He wrote that that Transwest is in regular contact with the airport manager (Nygaard) to ensure that he’s aware of the issues and they formally meet with Toye.

“If City Hall really has until now been ignorant of these issues, then I must presently question the relevance of either the airport manager or city manager to our operation. This is disheartening.”

On Wednesday, Lawless said he thought the 250 per cent rate increases were aimed at offsetting the cost of improving airport maintenance.

“I wanted them to get the money. I wanted the City of Prince Albert to have the additional funds, because I do recognize that to increase service levels requires money, and to increase the service levels in the way that I needed them to do that, they needed money,” he said.

But for the City, the increased lease rates at the airport are just the beginning of something else.

“The airport leases [were] the first thing we tackled in the revenue stream,” Dionne said on Tuesday. “And the reason that we tackled that is that some of those leases were at the same rates and haven’t changed since 2008.”

According to city manager Jim Toye, some lease rate agreements have been in place since 1989, others in the last six years. He described the rates charged as “woefully low.”

The City had an appraiser help it figure out what that fair market value is. As Toye told council on Monday, the City is losing tens of thousands of dollars for each year it puts off increasing the lease rates.

Dionne said council is making moves to check all of its revenue sources and to make sure anything the City leases is at market value. “By bringing up to market value the things that we do, we’re going to increase our revenue, which will help us in the 2016 budget to keep the [tax] increase down.”

The leases remained at the levels they were at because the City didn’t have anyone assigned to look at them. Other departments have lease agreements in place – which could soon be re-evaluated. Dionne is looking to have cost of living adjustment clauses built into the agreements, which would tie lease rates to cost of living indices.

As for the mayor’s response to Lawless’ presentation at council and the letter, Dionne is promising a detailed response on Thursday. He said he’s taking his time to “crunch the numbers” because residents need to know about “the money that was left on the table”.

Lawless is expecting to meet with Toye next week. He said he is open to meeting with anyone on council or within City administration that would like to speak with him. He now feels that the elected officials will be aware of the issues operators face at the airport.

“Because I believe they were sincere in their not knowing about the issues at the airport, I now have every confidence that they will give the airport the attention that it deserves.”

When initially reached for comment, airport manager Corey Nygaard said he was unable to provide one because he had yet to be media trained and permission would need given by the city manager. paNOW will continue to seek his comment.

tjames@panow.com

On Twitter: @thiajames

by Thia James

POLL: Transwest says it’s losing money over airport’s service

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