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Is it time to merge the airport authorities in Calgary and Edmonton?

Now departing: a bunch of angry letters

When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at mfawcett@albertaventure.com

Dec 3, 2013

by Max Fawcett

In late September, financial journalist and author Diane Francis came out with perhaps her most controversial idea yet: the merger of Canada and the U.S. In “The Merger of the Century,” she lays out the economic and geopolitical advantages of a plan that Jonathan Kay, her colleague at the National Post, described as having “many, many problems.” And while her book might be better described as long-form linkbait than a topic worthy of serious discussion, it got us wondering whether there was a similar subject here in Alberta. And rejoice, contrarians, because we found one: the merger of the Edmonton and Calgary airport authorities.

The Yea

Airports are scale-based businesses, and combining the operations at Edmonton International (YEG) and Calgary International (YYC) into one administrative entity would allow it to compete for some of the best routes and destinations in the world. At present, YYC processes approximately 12 million passengers a year, while YEG handles just over eight million. If combined, they’d boast over 20 million, a figure that would put them ahead of Vancouver International and just outside the top 10 busiest airports in North America. Those economies of scale would also mean lower marketing and administrative costs, savings on capital equipment through increased buying power and the elimination of the economic friction that comes from the two airport authorities competing with each other. More importantly, perhaps, it would mark a symbolic end to the rivalry between the two cities, and underscore the reality that they both enjoy more success when they work together rather than at cross purposes. Would it be easy? With two entrenched bureaucracies and a whole galaxy of people whose careers were built around the idea of separate airports, no. But like Francis’s own proposal, the difficulty associated with carrying out the idea shouldn’t count against its merits.

The Nay

On paper, the merging of the two airport authorities might make sense. But we don’t exist on paper, and in the real world, where human beings with emotions and feelings and agendas and biases make the key decisions, such a merger would never work – indeed, would never make it past the paper stage. The Edmonton and Calgary airports have both embarked recently on massive renovations, and both would be loath to surrender control of their operations, no matter what the apparent benefits might be. More to the point, there are no guarantees that the spoils of such a merger would be shared equally, and both parties would have legitimate concerns. Why would YYC, the larger of the two airports, submit to an arrangement in which it would become an equal with YEG? And why would YEG agree to a scheme in which it would almost inevitably become the spoke rather than the hub? More to the point, Calgary and Edmonton are very different places, with different needs, different people and different priorities. A single entity that tried to meet both would almost certainly end up satisfying neither. And given the success that both airports have enjoyed of late, it’s apparent that the competition between the two might be creating value rather than destroying it. As such, there’s no need to fix something that clearly isn’t broken.

The Results Are In

Last month in this space we asked if you should be concerned about an increasing amount of municipal debt in your city.

Yes: 71%
No: 29%

Want to join the conversation? Write to us @AlbertaVenture, Like us on Facebook or join us on LinkedIn today!

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