Opinion

Monopoly Shouldn't Make Millions from Floatplane Passengers

Instead of highest ever passenger fees, let's have a non-profit terminal.

By Greg McDougall, Philip Reece and Mike Quinn, 12 May 2011, TheTyee.ca

Saltspring Air floatplane

Saltspring Air headed for Vancouver: non-profit terminals are the tradition.

British Columbia's floatplane industry is one of the most competitive, entrepreneurial businesses in this province.

We compete with each other to offer the best prices possible and we don't seek taxpayer subsidies to run our business. The result is a service that minimizes unnecessary overhead, ensuring affordable airfares for more than 300,000 British Columbians who fly floatplanes every year.

But that highly successful model is under siege in Vancouver Harbour. PAVCO, the government agency that runs the Vancouver Convention Centre, has awarded the rights to Vancouver's new floatplane terminal to a private consortium known as the Vancouver Harbour Flight Centre.

Built by Graham Clarke, former chair at the Vancouver International Airport Authority, and the construction giant Ledcor, this $22-million terminal seeks to make a profit off the flying public. It intends to begin charging airport fees that will add up to millions of dollars annually leaving the pockets of the public and going to a private developer.

To some degree, this standoff in the harbour has seemed like a quibble over whether the VHFC is going to charge $24-per-head to each passenger going in or out of Vancouver Harbour (as we believe the charges are) or perhaps $9.50 one-way (as the VHFC is suggesting) to the public.

New fees set far too high

However, there is a bigger principle at stake here. We are seeing a government agency hand a monopoly to a private developer. And that developer is setting passenger fees that the floatplane industry believes are much higher than they should be.

It's a great business model for the VHFC and its private shareholders. With more than 300,000 passengers flying in and out of Vancouver Harbour every year, we estimate the revenue stream will be somewhere between $3-million to $4-million annually.

This is the highest passenger fee ever charged in the history of the B.C. floatplane industry. In fact, it's a radical departure for our industry, which has traditionally kept airport costs rock bottom by operating such passenger terminals on a not-for-profit basis.

It's not only floatplane users who stand to be charged for this terminal, either. Taxpayers will be paying for the new floatplane terminal, too, whether they fly or not. That's because the developers who have built the $22-million facility are expecting more than $3 million in taxpayer subsidies from PAVCO in the form of rent rebates and rent deferrals.

If they don't get those public subsidies, the VHFC plans to pass on that business cost to passengers, too. That means the VHFC passenger fees could soar even higher.

Poor take-off for Convention Centre terminal

What it boils down to is this: PAVCO, an agency supposedly working in the interest of the taxpayer and the floatplane industry, has struck a deal allowing a private developer to extract millions of dollars in airport fees from the travelling public.

Given that the floatplane industry wants to keep the price of tickets low, it's no wonder the VHFC has been unable to attract the major floatplane operators to their facility.

When their Convention Centre floatplane terminal opens later this month, it will actually have only two operators, both of which are just now starting up a Vancouver Harbour service. The airlines that now transport more than 95 per cent of the 300,000 people who fly in and out of Vancouver Harbour each year aren't moving in to the new terminal.

Why don't we move in? First, we don't believe a $24 or higher airport fee is justifiable or necessary. We also don't like handing a private developer the power to increase those fees with each passing year for services we have traditionally delivered at a much lower, or even zero cost to our customers.

A non-profit terminal instead

We believe there is a simple way to avoid these hefty and unnecessary passenger fee hikes.

Floatplane operators have proposed to the provincial government and PAVCO that we establish a not-for-profit floatplane terminal in the harbour, either at the Convention Centre or east of Canada Place, which we believe is a preferable location. That not-for-profit-model would eliminate the need for exorbitant and unnecessary airport fees, keep costs down to help our tourism industry and passengers who shouldn't be forced to send their money to an unnecessary monopoly.  [Tyee]

25  Comments:

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  • rac

    1 year ago

    Just Use the New Terminal

    It is time the industry grew up. The current terminal is a disgrace. Old trailers and a bunch of other junk. Looks like it is held together with duct tape and bailing wire.

    Even worse, it is blocking the Seaside Path one of the jewels of Vancouver.

    The new one actually looks good.

    Just get rid of the old terminal, move into the new one and be done with it.

    Flying is not sustainable anyway. The higher fees will cut down on fuel usage and greenhouse gas emissions.

  • rac

    1 year ago

    Free PR

    Even worse, why is the Tyee giving these companies free PR. Let them pay for it.

  • zalm

    1 year ago

    rac

    Don't forget how the old terminal got there. They were evicted from their water lease by the Province who thought it would be a good idea to build a nice shiny new convention centre to host 20,000+ person conventions - not a single one of which has been booked yet.

    But you're right - flying's not a sustainable activity. There's hardly much business going on any more out of Vancouver harbour - no loggers flying out to remote camps any more, no bush nurses flying to remote villages to offer children's clinics.

    Mostly just a bunch of weekenders who want to get to Saltspring as fast as possible to consume leisure time as conspicuously as possible. Or "bedroom commuters" hell-bent on turning Nanaimo into Maple-Ridge-by-the-sea as they "commute" (read burn fuel needlessly) to their big business jobs in Vancouver

  • jcolvin

    1 year ago

    Keep it public

    $22 million on the new terminal? There are lots of reasons Gordo got the boot and here's a prime example. Sweetheart deals for private consortia, overpriced infrastructure, inadequate stakeholder consultation. BC Ferries is in a death spiral on its minor routes and this looks to be another example.

  • Cyrille

    1 year ago

    Cartels, carbon and competition

    Regarding "British Columbia's floatplane industry is one of the most competitive, entrepreneurial businesses in this province.":
    I'd like HA, WA and SA to prove this. These three operators only overlap for 2 of 21 destinations (Saltspring and South Pender Islands). This doesn't seem competitive - more like a Cartel planning destination monopolies. It will be interesting to see if the new operators can match HA, SA, WA prices including surcharges.

    Regarding C02 emissions from comments above:
    Harbour Air purchases carbon offsets (COs) as part of ticket prices (SA and WA do not make any mention on their sites). HA is theoretically carbon neutral. I cannot find any info about BC ferries providing COs.

    Regarding "rent rebates and rent deferrals":
    Yes public money is being forfeited in exchange for future tax income from businesses. Not a big deal. If the terminal (CXH) were transformed into a non-profit dock this would still be the case I imagine; with potentially lower rents/revenue in the future.

    RE "this $22-million terminal seeks to make a profit off the flying public":
    Yes well so do you - don't be acrimonious.

    At the end of the day I'm fine with the situation as it stands. The more expensive flights will leave from a more accessible CXH terminal location while the cheaper flights leave from a slightly farther location. Eventually perhaps the CXH terminal will reduce its fees to welcome the 3 additional carriers. The question is whether the 'potentially' lower prices of HB, SA and WA is enough to lure people away from the CXH terminal. Operators at the farther terminal risk losing market share to those operators in the CXH terminal. Especially if HA, WA and SA are operating as a cartel.

    All this debate is simply part of a required bargaining strategy to get public support for decreased fees in the new terminal and provide awareness of the alternative dock.

    I would warn, however, against ever closing the alternative flight dock as this would give the terminal operators a monopoly. If there is to be only one dock then the ticket price surcharge MUST be regulated by the government.

    Personally I'm just interested in investing/flying with a locally owned operators.

  • dehav

    1 year ago

    Seaplane base fees

    The Harbour seaplane base has been an eyesore for decades. Now that there is an alternative where the users will have to pay for decent infrastructure the legacy operators are complaining about the costs? Have the legacy carriers considered turning their companies into not-for profit like they are proposing for the new seaplane base?

  • Chris Keam

    1 year ago

    @RAC

    "Even worse, why is the Tyee giving these companies free PR. Let them pay for it."

    That would set a dangerous precedent. Pay to play isn't a good model for a news source in terms of the public's right to information about the issues that affect them.

    Seaplanes are surprisingly efficient if you take Harbour Air's own calculations at face value.

    http://www.harbour-air.com/offsetting.php

    (scroll to bottom for graph comparing air/heli-jet/ferry GHG emissions for downtown to downtown travel)

    I do tend to agree with Zalm that this is a service mostly for those who 'have', but I would say that could be said of all airports. They are mostly used by those folks who travel a lot and the average punter might only fly once a year or less. My feeling is that we are all subsidizing the jet-fuelled lifestyles of a small, privileged coterie of high-flyers.

  • cboo44

    1 year ago

    Easy

    Don't fly. OR realize that a very large number of passengers are "government people" and we the taxpayer, are forking over their travel expenses.

  • rac

    1 year ago

    @Chris That is not what I

    @Chris

    That is not what I was suggesting. The Tyee should not have published this self-serving piece of spin at all and of course, they should not be able to pay for such a piece. These guys should have to buy ads to get this type of publicity.

    And after this piece of spin, how can you take these guys emissions calculations at face value. Having all their passengers walk on to ferries would not really increase emissions unless BC Ferries had to put on extra boats which is extremely unlikely given the relatively low number of passengers on the planes. Bottom line is the planes increase overall emissions in BC. As well, many people would simply not make these trips if not for the planes.

  • tdav

    1 year ago

    float planes

    greg douglas you are a nut bar. the free enterprise system has worked for years. It overpays you consistently.

  • Jeffrey J.

    1 year ago

    Brilliant Article

    It is always heartening when small business runs into large monopolies and starts to question the ever-moving goal posts. Kudos to Mr. MacDougall for daring to speak out against monopoly capitalism.

    The lesson that most democratic socialist countries learned long ago (think Norway, Sweden, Denmark) is that you CAN have a mix of non-profit, socialist features in society, next to small and medium sized businesses. It's not a perfect system, but to use Churchill's term , it's better than all the others.

    Aristotle explains the difference between democracy and rule by an oligarchy.

    Mr. MacDougall is finding out what that looks like.In the end, we need people like Mr. MacDougall to understand what is at stake when we become canibalized by monopoly capitalism. The end of free competition is just one of the victims. Unrestrained monopolism immediately joins with the state to take over. Read Naomi Klein's Shock Doctrine.

    May he and other thoughtful business owners have the courage to remain engaged in this issue. It won't be long before he realizes that in fact the majority of people feel just as he does: powerless and angry in the face of injustice.

    We can use all the help we can get.

  • Fish-counter

    1 year ago

    This reminds me of the fee schedule proposed for kayak guides...

    ...to use provincial parks. The government decided that kayak tour operators should be treated like forestry companies, and that charges for the use shoreline parks should be $10,000 per year. It was just some ex-forestry dead-head acting like a log. The trouble is that they keep gouging at every opportunity.

    All government workers should be turfed out every five years and replaced with fresh blood. Otherwise they become fossilised, like our politicians, in fact.

    [OFFENSIVE COMMENT REMOVED. -MODERATOR.]

  • terminalcitygirl

    1 year ago

    Are you commenters kidding

    Are you commenters kidding me?! Do you work for Pavco? Are you the developer? I think its great that the Tyee published this and thanks you to the industry pioneers for taking your concerns on this public. This model of public tax subsidies + biz profit to developers for building infrastructure is wrong wrong wrong and will screw the public over for a long time.

  • Jeffrey J.

    1 year ago

    terminalcitygirl

    What terminalcitygirl said.

    What has been obsured for some time now is that the world is a little more complicated than the Fraser Institute understand. Case in point: the interests of small business CAN overlap with the public interest. Not always, and not necessarily, but they can.

    It is a factual question which all of todays corporate rhetoric washes away. Because ANY talk of the public interest is a bad thing. So it's never mentioned.

  • alive

    1 year ago

    They provide nothing!

    What exactly are they providing with this new "service"?
    Maybe a more fancy waiting shelter?
    Imagine if your local busshelter suddenly became a pay-to-use shelter?
    All these people have going for them is that they managed to get a monopoly on a bit of foreshore.
    That translates to "they have connections"!
    Just like all the P3 's, this is another payoff to friends of the elite!

  • perplexis

    1 year ago

    The Public Already Pays

    I have enjoyed the harbour to harbour service from Vancouver to Victoria, several times. However, I seem to remember paying $48 return in the late seventies, vs $270 now. FYI: most fliers appear to be Crown attornies, contract attornies doing Administrative law for the government, judges and government officials, who let the public pay. Forget free enterprise; the public effectively pays for most fares. I only use float plane service because it allows me to be on the ground in Victoria, by 7:35 AM. I am happy to return by ferry, and I pay my own way.

  • TTIOT

    1 year ago

    What a bunch of Turkeys

    Did no one notice that it is "Built by Graham Clarke, former chair at the Vancouver International Airport Authority, and the construction giant Ledcor,". This is the real issue. I am willing to bet that behind the scenes there is some sort of trade off between government and Ledcor...perhaps with the construction of the conferencwe center; or???
    It is yet another example of the fact that you and I nor our elected representitves really make the decision or run the Province.
    Do we as the common folk really have achance to "live the dream" as ong as our politicians are mnotivated by money and not doing what is best for you and I the people of BC.
    Kristy has implied that she wants to put family and jobs first. perhaps shwe should get better advisors as it is small business and you and I that keeps the Province running ...not some megacorp that indicates they spend billions however they pay little if no taxes, get financial considerations you and I do not and swnd akk the money outside of BC.
    The BC economy sucks...i wonder why.
    Oh by the way as high as gas proces are now they will go up by more the 5 cents on July 1.
    I wonder what ever happened to government for the people by the people

  • marine1941

    1 year ago

    Floatplanes are an essential service

    I use the various float plane services between Vancouver and Island locations several times a month, and have done so since the 1970's.

    I am NOT wealthy, dont work for government, but have a small business that requires efficient and cost-effective travel. Comparing the 3-4 hour travel time by ferry to float planes, the floatplane costs me less per hour than the ferry does.

    However I absolutely object to the new terminal and how it has been set up. There is no need to add an additional set of service costs on top of the current charges.

    I would much prefer to have an efficient, barebones service at both ends of my trip, than have any additional costs loaded on...when there is NO improvement to the flying service provided.

    We should all be boycotting the new terminal, it adds nothing but costs to this essential service.

  • rbleuer

    1 year ago

    A viable float plane service

    A viable float plane service is essential to British Columbia. These companies have been in service for a long time. If you think they are unnecessary, just wait until we have the next coastal emergency.. If it helps them to stay in business and keep a good schedule, it should be studied whether both types of bases can be maintained.

  • Iwonder

    1 year ago

    Float Planes

    These planes are the only way to get to some communities. I get enraged by citysnickers who bitch at any attempt to make life a bit easier for the people of the wilderness.

    Oh Yes spend billions on roads and buses for the cities but the hell with other people.

    You are greedy, ignorant and stupid.

  • bicycleboy

    1 year ago

    Just get rid of the trailer trash!

    Whatever the purveyors of air travel decide to do with their businesses, would someone please explain to the industry that they are no longer welcome at the foot of the convention centre where their trailers are an eyesore and they are blocking the way for us to use OUR Seawall? We taxpayers paid big bucks for both the centre and the waterfront pathways and I would very much like to use that pathway NOW.

    Private enterprise and governments will always have hand-in-glove arrangements and there will always be winners and losers in the game of "Who Gets More of the Rich Guys' Money?". Y'all have fun figuring out who gets to profit the most from people squandering our natural resources flying off for a weekend of surfing at Tofino. But in the meantime, please dismantle and remove that butt-ugly "terminal".

  • Shane

    1 year ago

    "Don't fly" is insufferably glib.

    I'm a freelance journalist with a very modest income. I live in Comox and occasionally travel to Vancouver on business. To cover a recent conference at the Vancouver Convention Centre, I flew harbour to harbour in a Beaver for a discount rate of about $90 each way. The alternative would be 285 km of driving (Comox-Nanaimo, HS Bay-downtown Vancouver, return) consuming 30+ litres of gas, plus whatever the ferry guzzles.
    Add parking and/or taxis, food etc. and the ferry starts to look like the tycoon's choice.
    That road/ferry trip takes upwards of four hours each way, vs 50 minutes by seaplane. For a one-day assignment, it's a no-brainer.

  • Chris Keam

    1 year ago

    "I'm a freelance journalist

    "I'm a freelance journalist with a very modest income."

    That's redundant! :-)

  • cfvua

    1 year ago

    Private Get Rich Club

    What is wrong with you people. Can't a few of Campbell's well connected friends pull off any kind of scam any more. Sheesh. Since some of the folks coming in are perhaps going to spend some money while there, why not have a public facility like oh...lets say an airport. Sorry, bad example(big never ending user fee) since the YVR airport is a never ending construction bonanza for.....guess who?? Well friends of Gordon of course. Don't ask when it will be done as it never will be. Best project that company L has had on its books ever including diamond mines and oilsands projects. The float plane base is essential but not the way it is being put forward with the out of touch user fee.
    You'd think after a look at how Edmonton sacrificed its municipal airport in favour of some private developers the lesson would have been learned, but apparently not. Toronto learned and kept its downtown airport and it is a raving success. Bad for a few slimy property developers, but a success for everyone else. All travellers should boycott the thing and maybe company L can use it for office space or seagull watching. Sounds like they'll get paid whether anyone uses it or not.

  • bhglennie

    1 year ago

    Gordo giveth and the government taketh away

    Just because Gordo gave his buddies a monopoly on the new harbour terminal, does not mean we have to accept that. Kick them out and make it 'just enough profit' for upkeep, or is that concept a sin.

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