End of the Runway? Clever schemes are keeping small airports in business — for now
Financial Post Business Magazine, March 2008

Réal Patry, industrial commissioner of the Société de Développement Économique de Sherbrooke in Quebec's Eastern Townships, had a problem. In 1998, his city of 140,000 took control of its local airport, part of the long process in which Transport Canada transferred most of Canada's airports to local authorities. But by 2004, with just a trickle of income from private flyers' landing fees, Sherbrooke's facility was facing closure. That's when Patry got an idea: Start an airline. Air Sherbrooke took flight in 2005.

About the same time, in Stephenville, Nfld., the community airport, a key link for the town's 8,000 residents, went into receivership. Since then, management has been working on a plan to turn the airfield into a refuelling stop for trans-Atlantic flights. That would add to revenue it now gets from a training centre leasing space on its premises. "We operate day to day on a wing and a prayer," says manager Larry Smith, "but we're getting by."

These types of stories will be familiar to those in many towns and small centres across the country. As soon as the feds started the airport handover, local owners faced the chilling prospect of finding new ways to pay expensive overhead costs or lose their airports - and their vital role in business, tourism and economic development. In response, many places have welcomed the emergence of folks like Patry and Smith - municipal officials, non-profit board members and local business owners hatching innovative strategies and new services to try to keep their airports alive.

Air Sherbrooke is a prime example of what a bigger town can try. Patry believed a daily flight to Toronto would boost the region's economic growth, as well as bring some much-needed landing fees to the airport. The backing of local business owners made Air Sherbrooke a reality, and it expects to break even this year. The airport has benefited, thanks to an increase in landing fees, fuel revenue and a stream of customers at its restaurant. At the other end of the scale, local officials in tiny Digby, N.S., with just 2,300 residents, are putting out a request for proposals for developers to build a residential fly-in community adjacent to the airport. The idea is to attract plane owners from the U.S. or Ontario, who'll want to set up summer or retirement homes, which would boost air traffic, spending and the municipal tax base.

How many plans will succeed? Very few, says Joseph D'Cruz, professor of strategic management at the University of Toronto's Rotman School of Management. "The local airports will struggle along and lead miserable lives commercially," D'Cruz says. His advice to small communities: Close your airports and move on.

Patry, now secretary of Air Sherbrooke, respectfully disagrees. "The airport is very important in terms of economic development," he says. What's more, he believes the best way to ensure it and the airline remain viable is to expand. Look for Air Sherbrooke to add a weekend flight to Toronto soon.