EIA’s Expansion 2012 Gears Up
Current terminal operating at 20% over capacity
EDMONTON – Edmonton International Airport (EIA), Canada’s fastest-growing major airport for three years in a row, is continuing its $1-billion expansion to ensure the airport can keep pace with Edmonton and Northwestern Canada’s economic development.
The project is funded by the Airport Improvement Fee (AIF), which is collected with airline tickets for departing passengers. On September 1, 2009, the AIF will increase by five dollars, to $20 per ticket. Canadian airports are non-share corporations. Since industry de-regulation in 1992, Canadian airports stopped receiving tax monies for major facility upgrades or operational requirements, and therefore have been solely responsible for funding these projects.
The airport, which was substantially renovated in 2000, is presently operating 20 per cent above capacity. The terminal was built to accommodate up to 5.5 million passengers a year. In 2008, EIA saw nearly 6.5 million passengers use its facilities.
Over the last two years, the company has worked to maximize the efficiency of terminal and airfield infrastructure through the use of new processes and technologies. Thanks to these measures, EIA has extended the design capacity of the current facility.
Although the terminal is over capacity and new space is required simply to accommodate current passenger numbers and air services, EIA is experiencing lower than forecasted passenger numbers as a result of the current global economic slowdown, and that has required Edmonton Airports to review the AIF. While we continue to see very strong double-digit passenger growth in US and international flights, numbers are down somewhat for domestic flights.
Since 2002, Edmonton Airports has worked extremely hard to identify spending efficiencies and cost-savings, and develop its non-aeronautical revenues in order to keep the AIF flat at $15 per passenger. In fact, although industry standard is to increase an AIF with new major capital projects, EIA has been able to defer an increase since 2002. From 2002 to 2008, Edmonton Airports has invested $332.1 million at Edmonton International Airport, without an AIF increase. While EIA knows its customers don’t want to pay any more than absolutely needed to use the airport, the increase to the AIF is now required.
“Our efforts to keep the AIF fixed at $15 per passenger paid off for nearly seven years,” said Reg Milley, President and CEO of Edmonton Airports. “Now, in light of the global recession and lower-than-predicted passenger growth in our domestic sector, we need to raise the AIF to fund EIA’s expansion.”
Expansion 2012 is financed through the Alberta Capital Finance Authority, which allows EIA to leverage the Province’s excellent credit rating. Edmonton Airports is also able to draw funds only as required, rather than taking out one large loan at the start of the project. This keeps interest costs down and allows flexibility in financial planning.
In addition to more gates and new, efficient airline technologies, the expanded terminal will also include many new amenities including restaurants, shops and services for travellers at EIA. Not only do in-terminal concessions give more choice to travellers, they also provide non-aeronautical revenue, which helps hold down airline and traveller fees.
Before launching Expansion 2012, EIA used technologies and process improvements to increase the capacity of the current terminal to the greatest degree possible. While this allowed EIA to serve one million passengers more than the design capacity in 2008, the facility is now at the very edge of its capacity. A number of interim programs will be required to bridge the gap until new capacity becomes available at the end of 2012. For example, apron loading busses will take fliers to aircraft required to park away from the terminal until additional terminal gates open up in 2012.
“While it’s clear we need to move ahead with our expansion, Edmonton Airports is working earnestly to identify potential cost savings through value engineering and taking advantage of a cooled economy.” said Milley. “For example, we’re pursuing procurement strategies to lock in materials and supplies now, recognizing that the economy will shift again, and prices will follow.”
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