Airport pays out American Airlines to make up for weak sales
Published Saturday, June 15, 2013 6:34PM EDT
Last Updated Saturday, June 15, 2013 6:40PM EDT
It's been a year since American Eagle "checked in" to the region's airport connecting local passengers to Chicago.
Airport Manager Chris Wood says, “Chicago is one of the best hubs in the world really to connect, like I said 250 destinations once you're into Chicago the world is really there.”
Its carrier, American Eagle services is the only commercial flight to the US. In its first year sales have been weaker than expected and the region is paying for it.
Wood confirms that some flights are leaving only about half full and the airline is not breaking even on its Chicago route.
“The passenger numbers were lower however the average fare was higher so it did kind of balance out” says Wood.
Competition is fierce in Southern Ontario because of flights to Chicago from Toronto Pearson, Toronto Island and London international airports.
American Eagle customer Dan Dietrich says, “I very rarely have somebody sitting next to me, which once again is nice as a flier but a from business perspective I can understand how that might be an issue.”
Last year, the airport paid out $800,000 to American Airlines to make up for weak sales.
Wood says, that it isn't easy to get international airlines to set up camp in the area. To help, the region offers monetary compensation. This usually happens in the first year or two, to help the business take off.
Officials say the region is still making more money than it's paying out, about a hundred thousand dollars a year more.
Wood says, “All of the revenue that come in because of the American Airlines flight including parking, landing fees, car rental fees is more than what we've paid back out to them.”
Dan Dietrich uses the route as a connecting flight. He flies American eagle about 7 times a year.
“Takes 10 minutes to get to the airport, there’s no lineups, the flights are on time.”
In this case convenience comes with a price. The airport manager says they're willing to take the risk.
“WestJet had a very similar agreement to when they first started, and it was paid out, and WestJet’s been here for 5 years.” says Chris Wood.
There are 4 carriers at the airport servicing flights to 4 destinations including Ottawa, Calgary, Chicago and Cancun. Wood’s says they are in talks to acquire more routes for the region.
An American Airlines plane is parked at the terminal at O'hare International airport in Chicago, Wednesday, July 20, 2011. (AP / Robert Ray)
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