The announcement by one of the largest U.S. budget airlines to offer flights between Ogdensburg, N.Y., and Florida starting this fall is “absolutely … a threat” to Canadian carriers, says a Carleton business professor.
Las Vegas-based Allegiant Air is targeting customers from Ottawa and Eastern Ontario, as the Ogdensburg International Airport is a 45-minute drive from the capital, less than 10 kilometres from the junction of Highways 416 and 401. Parking at the Ogdensburg airport is free.
Non-stop flights from the newly upgraded airport and Fort Lauderdale will begin on Oct. 6, and a second route linking Ogdensburg with Orlando will begin on Oct. 7. One way fares start at $57, plus tax (although air travel taxes in the U.S. are far lower than in Canada.)
Allegiant is already listing the new routes on its website, identifying the airport as “Ottawa ON/Ogdensburg NY” to make it easy for residents of the nation’s capital to find the departure point.
“That’s a very smart marketing decision,” said Ian Lee, an associate professor with the Sprott School of Business at Carleton University. “Clearly Allegiant has someone who is good at analytics and realizes, ‘Here we have this small market right next to a very big market.”
Lee says the airline’s arrival in Ogdensburg spells big trouble for airlines now servicing Florida destinations out of Ottawa, chiefly because of Ogdensburg’s proximity compared with other New York airports such as Syracuse and Massena.
“There is absolutely no question that this is a threat,” he said. “This is one of the most affluent regions in all of Canada. Very high disposable incomes. People who are more affluent take holidays. One of the things we grouse about all the time is the cost of the flights.”
In an email, Krista Kealey, a spokesperson for the Ottawa International Airport Authority, said the arrival of Allegiant Air reveals the difficulty of competing with U.S. airports.
“The cross-border leakage situation highlights the need for a more level playing field where Canadian aviation competitiveness is concerned; it’s challenging to compete with U.S. airports as they’re government subsidized,” Kealey said. “Unlike Canada’s major airports who pay taxes and fees to the government, U.S. airports receive government funding thereby making them less dependent on airlines and passenger-related revenue.”
As for whether the new flights from Ogdensburg pose a danger to the Ottawa airport’s business, Kealey said any erosion of their customer base is a threat to revenue. However, she said the extent of what that erosion will be hard to quantify and noted that low-cost airlines usually aren’t as cheap as the price tag suggests.
“With a lower Canadian dollar, a heavy emphasis on ancillary fees (baggage, priority boarding, seat selection, etc.) by the low-cost carriers, plus the longer drive and uncertainty of land-border wait times, the perceived savings may not be as attractive with all things considered,” she said.
According to the Conference Board of Canada, five million Canadians are already driving across the border every year to fly out of American airports.
In a presentation prepared for the Standing Senate Committee on Transport and Communications in 2012, the Canadian Airports Council, a lobby group that represents 120 airports, estimated that Canadians are paying, on average, $428 more per round-trip fare than an American would in the U.S. once taxes, fees and surcharges are factored in. That disparity has worsened in recent years due to increases in airline fuel taxes and airport improvement fees.
Canadians’ bubbling resentment over the cost of airfare is something that isn’t lost on U.S. Sen. Charles Schumer, who has been a strong supporter of the Ogdensburg airport expansion.
“In 2014, I urged the FAA to approve the runway expansion at the Ogdensburg Airport, knowing that Allegiant Air service would be a huge boost for the regional economy,” the Democrat said in a statement released Tuesday. “These flights will not only increase travel options for residents, it will also bring more travellers seeking to come enjoy the St Lawrence River’s scenic beauty and the countless other tourist attractions we have to offer.”
In 2014, the U.S. Federal Aviation Authority (FAA) announced a $26-million U.S. expansion project at the airport to include extending the existing runway to accommodate larger aircraft. The expanded runway will be able to accommodate 177-passenger Airbus A320 aircraft, which is one of the aircraft used by Allegiant.
The budget airline employs about 2,800 people, and is valued at $2.8 billion U.S.
In a release, Allegiant said the new Ogdensburg flights are part of a company expansion that will include new Allegiant flights out of Newark and Denver this fall.
Ottawa Citizen
Allegiant to try and attract Canadians with flights from Ogdensburg
