When Airline and Airport Relationships Sour…

While probably not something that will impact most of us, who doesn’t love a bit of airline/airport drama?

Airlines and airports obviously work really closely together. Airports are businesses, and their goal is to attract as many destinations and passengers as possible. Similarly airlines want to defend their business and increase/maintain their market share as much as possible. Often airports and airlines have the same interests, while other times they don’t.

The Edmonton Journal covers a case where an airport and airline relationship goes sour, specifically between Air Canada and Edmonton Airport.

Icelandair will be launching service between Edmonton Airport and Reykjavik as of March 5, 2014, and not surprisingly for such a route, the airport provided some financial incentives. Much of Icelandair’s traffic comes not from people actually traveling to/from Iceland, but rather those connecting to elsewhere in Europe, given the 20+ destinations they have there.

Air Canada presently offers year-round service between Edmonton Airport and London Heathrow, so not surprisingly they weren’t happy about this announcement, but can they really blame the airport for wanting to attract a new route?

The CEO of Edmonton Airport said this in regards to the new route:

“In nine hours, you can be in Paris from Edmonton,” Milley told reporters at the time. “The other thing is that going through Heathrow can be a bit of a challenge for people if they’re connecting on to go somewhere else, whereas Reykjavik will be a really friendly airport for them to be able to go through.”

Air Canada responded with a letter to Edmonton Airport:

Vanstone wrote: “We were specifically very disappointed with your comments reported in the Edmonton Journal, which promoted the Icelandair service at the expense of Air Canada’s LHR (Heathrow) service …. Frankly, we expect more from our partners.”

While they claim it’s not direct retaliation, they also decided to seasonally cut their nonstop flight between Edmonton and London before the Icelandair service even begins:

“Your recent announcement that Icelandair, with some financial and other support from YEG, will be commencing service between YEG and Reykjavik Airport (KEF) gave us cause to revisit our YEG international operations,” wrote Derek Vanstone, Air Canada’s vice-president of corporate strategy for industry and government affairs.

A spokeswoman said the airline made a “commercial decision” because the route has struggled with profitability during the winter months despite ongoing promotion. It did not mention Icelandair in its statement.

Vanstone wrote Air Canada will not immediately change its remaining summer service between Edmonton and London, but suggested the airline wants unspecified concessions to continue the service and notes that it will begin talks with other airports for the London-Heathrow service.

“We will be looking for a proposal from the Edmonton Regional Airport Authority that will ensure that our YEG-LHR operation can remain viable as a year-round service. This is not a decision that we are taking lightly, but it is one that reflects our profound disappointment in the manner in which this has been handled.”

Anyway, I found the story pretty interesting because I see both sides here. If I were Air Canada I wouldn’t be excited about Icelandair starting service to Edmonton Airport, given that it’s not a huge market and they will more or less be competing directly. At the same time you can’t blame Edmonton Airport for wanting to increase their business, and I don’t think Edmonton Airport was attacking Air Canada as much as the horrible airport which is London Heathrow (which is a perfectly valid criticism).

What do you guys think, eh?

(Tip of the hat to @EricGooden)

Comments

  1. Reminds me of the temper tantrum UA had in Houston when an entirely different airport that they don’t even use announced int’l service to Latin America. So what did UA do: cancel their service to NZ that they hadn’t even started yet from the airport that they actually use. Incredible.

  2. If the airport has provided Iceland Air with financial incentives that AC doesn’t get they have every right to be angry. Nobody likes financing their competition….

  3. Icelandair’s model actually works pretty well. Flights from all over the US arrive in Iceland in the AM then shuffle the planes and fly out to all their European destinations. Iceland is Schengen too so on your short layover you clear passport control for most destinations. Leave European destinations shuffle again and get everyone back to the US. Pretty good flight times to a lot of destinations at a reasonable cost. If you have to fly coach it is a reasonable option. Miles earning and burning not great however…

  4. AC actually announced that they were cutting the Jan to Mar flights quite a while ago, got a lot of flack from the business community in Edmonton and then decided weeks, if not months, later decided that it was because of Icelandair. They are just doing a bit of PR, pushing the blame onto the airport.

  5. Typical Air Canada whining. They were so used to being at the Government’s teat for so many years, that they forgot what real competition is.

  6. Icelandair is also ultra efficient for stopovers in Iceland. They have a super efficient network to go to the Blue Lagoon or into Reykjavik and then get you back to KEF for your connecting flight.

  7. Without BD at LHR, the Icelandair flight doesn’t compete with an AC flight to LHR, except on O&D to LHR/FRA/MUC/VIE/BRU/ZRH. But even that’s a pretty big stretch, because I doubt many folks are actually connecting in LHR from one *A to another. Practically, I think it competes not with YEG-LHR-EU, but rather with YEG-YYZ/YUL-EU.

  8. Shoot, it even competes more with YEG-EWR-EU than it does with YEG-LHR-EU, if I don’t miss my guess. You need a guy like CF to dig into the actual data though; mine’s just an educated guess.

  9. Many airports may sort of operate as a business but are actually part of a local government entity. As a result they sometimes make “business” decisions based on local politics or greed.

  10. This being my home airport I can comment that though our market is small at about 1+ million people, the average income for our province is one of if not the highest of all of North America.

    It sucks that AC is pulling service on that route because that route was often packed.

    We Albertan’s like to shoot ourselves in the foot… Emirates has been trying to operate flights out of YYC for a while now but the relationship between governments is sour

  11. Can you really fault Air Canada for not wanting to subsidize a competitor’s route? I sure cant.
    I find it hard to believe that Air Canada would seasonalize YEG-LHR if there wasn’t at least a bit of financial motivation to do so.

  12. Horse manure.

    The Icelandair flight will have almost no impact on AC’s operation. YEG-LHR is essentially a point-to-point route for business travellers and some VFR, while YEG-KEF will serve primarily the leisure market. Any business people needing to go elsewhere in Europe will be connecting through FRA/MUC via YYC/YVR/YYZ or will take a one-stop on an American carrier.

    AC also commented elsewhere that LHR will be a big loss because of the connections it offers to Asia etc. Who interlines through LHR when there are multiple direct flights by every alliance to every west coast gateway?

    This is AC making excuses and using Icelandair as a negotiating tactic, much like UA with Southwest in Houston. The airport spokesperson herself points that out in the article:

    “It’s not that Icelandair’s service is making it hard to fill that winter eight weeks because Icelandair isn’t operating at that time.”

    If YEG-LHR were financially sustainable year-round, AC would be keeping the flight. End of story.

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