Vol. 21 No. 8 • February 26 - March 4, 2015 In Our 20th Year Serving Greater Hamilton

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Sunk Costs At Stagnant Airport

by Don McLean
April 17 - 23, 2014
Local taxpayers have spent over $10 million buying land at inflated prices for an airport runway extension that may never be built. After pushing the city repeatedly to make the land purchases, Tradeport now says it has no timetable for the addition, and won’t build unless it receives federal monies that appear unlikely to be provided to a facility whose passenger and cargo volumes are stagnant or declining.

    When the latest $3.3 million was spent three years ago for 47 acres from George Chuvalo, councillors were told the purchase was required to allow work to begin in 2012. But under questioning last week by Chad Collins, Tradeport president Frank Scremin admitted that “we haven’t started formal approval processes” and went on to explain that it didn’t make any sense to begin with no prospect of federal monies.

    In the past eight years, the city has bought 308 acres for airport expansion at an average cost of over $56,000 an acre. The largest acquisition was 75 acres in 2009 from Frank Rosati, Vince Molinaro, Emilio Mascia and Anthony DeSantis for nearly $5.3 million and was also specifically to accommodate the runway extension.

    Scremin’s admission to the Airport Implementation Task Force, along with the “silence” of local Conservative MPs about possible funding, left Chad Collins barely able to contain his anger about the land purchases for the facility and the resulting loss in city taxes.

    “This is a $40 million investment that we’re looking at, of which we’re the first one in. We’ve now purchased land in competition with speculators and investors around the airport for a project that may never happen,” he declared. “We’ve also made a substantial investment in these lands to facilitate a project that has absolutely no political support at this point in time at the federal level.”

    Collins has repeatedly questioned the city’s purchases of airport–area lands including the Chuvalo purchase in August 2011, when he specifically asked what the timetable was for the runway expansion.

    “The runway construction is planned for the year 2016,” replied then director of growth planning Guy Paparella. “The approval, in terms of environmental assessment or design, is due to commence in 2012.”

    The stalled runway news was accompanied by gloomy predictions for airport passenger growth. Scremin noted that “there’s been a lot of volatility with respect to passenger traffic in Hamilton”, but argued Tradeport is limited in what it can do to increase the numbers by booking more flights.

    “The ultimate challenge right now is there’s really two airlines in Canada, and in a duopoly scenario it’s very challenging to get those folks to do a lot of activity in a regional airport 45 minutes away from their major hub because they want to put all of the assets that they can in a major hub to compete against their competitor.”

    He revealed that WestJet “increased capacity to Calgary by 14 percent from Toronto” last year — capacity that could have been provided Hamilton. The only daily service available year round at Mt Hope is two WestJet flights to Calgary. The airline expands destinations for part of the year but Scremin explained last year’s decrease in passengers was mainly caused by WestJet cutting flights three weeks earlier than the previous year.

    Passenger numbers have been falling for several years with a slight uptick in 2012, and have been below 500,000 since 2008. Cargo volumes last year were the lowest reported since 2009.

    Flight numbers have been falling for several years, and the airport business park is 93% empty — the same condition it was in when the lease was signed with Tradeport. V
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