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Nov 2017 | The November Issue

HOW THE FORT MCMURRAY INTERNATIONAL AIRPORT HELPS DRIVE THE REGION’S ECONOMY
RJ STEENSTRA, FORT MCMURRAY AIRPORT AUTHORITY

Aviation has played an enormous role in the economic development of Fort McMurray, and the rest of the Wood Buffalo Region, even before the first airport terminal was built in 1986. In fact, aviation in the region began many decades earlier in the 1920s when the first flights to Fort McMurray landed on the waterways of the Athabasca, Clearwater and Snye rivers. It wasn’t until the mid-1930s that the first landing strip was built to accommodate light planes travelling to and from Edmonton. As travel to Northern Alberta and Canada became more advantageous, the demand for air travel grew. With this new demand came the need for infrastructure to support it. A succession of longer runways were built between 1936 and 1960, and a larger terminal – now known as the North Terminal – opened in 1986 to accommodate 250,000 passengers a year.

 

"Specifically, the study found that the airport supports 900 skilled, well-paying direct jobs, generates $46 million in direct wages and produces $354 million in total economic output. When indirect and induced impacts are included, the airport supports 1,860 total jobs and $96 million in total wages."

 

I. The Boom Years

 

Not only did the North Terminal connect residents of the Wood Buffalo Region to other areas of the province and the country, it also connected the entire world to the Athabasca Oil Sands Region – the economic powerhouse of Canada.

Investment in the region’s oil sands between the 1960s and the 1970s led to the unprecedented growth of Fort McMurray. When oil prices peaked again in the early 2010s, an exponential growth in population pushed Fort McMurray’s housing and transportation infrastructure to its limits, and a demand for skilled labour led to the heavy recruitment of workers from across the entire country. At the time, the demands of the energy sector led to the creation of fly-in fly-out positions – an employment structure that helped the Fort McMurray Airport grow into the state-of-the-art facility it is today.

As Fort McMurray became known globally as the economic engine of Canada, skilled workers from all ends of the country and the world sought employment in the area. The region saw tens of thousands of workforce passengers come through the airport’s North Terminal each year, quickly increasing overall passenger traffic, airline carriers and flight services. The airport experienced growth of 25 percent each year for 2012 and 2013, making it the fastest growing airport in Canada and the 16th busiest airport in the country.  In 2013, before the opening of the new terminal, the airport shattered new records as it served nearly 1.2 million passengers.

With over a million passengers travelling through the North Terminal each year, it was clear that the region needed a new facility that could better accommodate the area’s growing transportation needs. In 2014, the Fort McMurray Airport Authority opened a new $258 million, one-of-a-kind terminal that could accommodate 1.5 million passengers a year. This terminal, named the Main Terminal, is considered one of the best facilities in the region. With more than 161,000 square feet of space, four bridges, six gates and space for fourteen retail and foot outlets, the Main Terminal is a hub for both aeronautical and non-aeronautical business.

 

II. The 2014 Bust and the 2016 Wildfires
 

In late 2015, the region started to experience a disheartening economic downturn. Oil prices dropped sharply and many companies were forced to lay off workers. Employment opportunities, including fly-in fly-out positions, saw a drastic decline.

The effects of the downturn were exasperated in May 2016 when an out of control wildfire spread through the region. The blaze forced the month-long mandatory evacuation of 88,000 residents and destroyed approximately 2,500 homes and businesses. After the fire, a significant portion of the population chose not to return to the Wood Buffalo Region, and newly accepted population estimates for 2017 showed the population had decreased from 125,000 in 2015 to approximately 75,600-77,600 in 2017.

Passenger traffic at the airport also experienced a significant decline during this time. Passenger numbers fell below 1 million in 2016, and are expected to remain around the 700,000 to 750,000 mark for at least the next few years.

 

III. The Economic Impact of YMM

 

With a decreased workforce and a contracting population, the hard truth is that the Wood Buffalo Region is not as thriving and prosperous as it once was. This is why it is so important, now more than ever, to understand how all businesses in the area contribute to making a positive economic impact within the community.

In 2017, the Fort McMurray Airport Authority commissioned InterVISTAS Consulting Group to conduct an Economic Impact Study of the airport’s 2016 operations. Despite the challenging economic climate, the study found that the Fort McMurray International Airport is a source of stable, year-round employment and is a key economic driver for the local economy.

Specifically, the study found that the airport supports 900 skilled, well-paying direct jobs, generates $46 million in direct wages and produces $354 million in total economic output. When indirect and induced impacts are included, the airport supports 1,860 total jobs and $96 million in total wages.

 

 

Aside from jobs and global connectivity, income injection and economic output, the airport also contributes to the local economy through taxation revenues. In total, the airport contributes an estimated $25 million each year in taxes, $4 million of which goes directly to the Regional Municipality of Wood Buffalo to help support the community.

 

IV. Looking Ahead: Continued Economic Growth

 

While the Fort McMurray Airport Authority is not immune to the effects of the economic downtown within the region, it still provides significant economic value to the local economy. So perhaps the most important questions for the airport and the region as a whole to consider are these: How do we continue to make a positive impact in the local economy? How can we do more, as an airport authority and as a community, to boost the economy?

The answer is simple: use the Fort McMurray International Airport.

A microeconomic study that was conducted alongside the 2016 Economic Impact Study shows that every flight that arrives to, and departs from, the Fort McMurray International Airport, supports jobs, income injection and economic output for the Region of Wood Buffalo. The WestJet Q400 service to Calgary alone, supports 128 full-time equivalent positions, $8.5 million in direct wages and $27.4 million in direct economic output on an annual basis.

Those numbers do not only support air service positions like pilots, flight attendants and airline support workers, but a wide variety of jobs in a range of industries. These include food and retail, managerial and clerical, support trades, craft trades, freight, couriers and drivers and much more.

 

 

 

When compared to other industries in the region, the airport makes up 60 percent of the size of the Wood Buffalo-Cold Lake Region’s manufacturing sector. That means that while the entire manufacturing industry in the region employs 1,500 workers, the airport alone employs 60 percent of that.

To keep these numbers rising, residents and business partners alike must continue to use the airport. For residents, this means flying from Fort McMurray instead of Edmonton, attending events at the airport, and shopping at the restaurants and shops inside the Main Terminal. For industry, this means routing a fly-in fly-out workforce directly through the Fort McMurray International Airport, where it makes sense to do so. Workforce passengers accounted for 45 percent of the airport’s overall passenger traffic numbers in 2016. This in turn, accounts for a significant part of the airport’s economic impact in the region. Without the fly-in fly-out traffic at YMM, the airport would not have the variety or frequency of flights that it currently has to offer the entire community and region. It also wouldn’t generate the jobs, wages or economic output we currently see today.

Forming positive relations with the region’s business partners, maintaining fly-in fly-out traffic through the Fort McMurray International Airport and encouraging locals to use this state-of-the-art facility more frequently, will be key factors in not only the growth and diversification of the airport itself, but the growth of the entire region as well.

 

RJ STEENSTRA is the President and CEO of the Fort McMurray Airport Authority. He joined the FMAA in June 2016 after serving five successful years as CEO of the Red Deer Airport Authority. In just over a year as President and CEO of the FMAA, RJ has implemented recovery efforts and has re-established strong community relations following a sharp economic downturn and the May 2016 Wildfires.