Key Transportation Issues Affecting BCs Tourism Industry Mike Tretheway Vice President

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Key Transportation IssuesAffecting BCs Tourism
Industry Mike TrethewayVice President Chief
EconomistInterVISTAS Consulting Inc.

• Mike_Tretheway_at_InterVISTAS.com
• www.InterVISTAS.com7 November 2002

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Tourism and Transportation

• Touring only exists with transportation
• It provides access to markets
• COTA survey
• 45 transportation as top priority
• 2nd ranked, behind marketing
• Transportation can be the tourism experience

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The Four Transport Pillars of Tourism

• Highway / Ferry Access
• almost all tourism has a highway component
• Air Access
• high value customer
• Rail Experiences
• a premium product
• Cruise Ship
• consistent growth

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1980s Major Infrastructure

• Coquihalla highway
• SkyTrain
• Canada Place Cruise Ship terminal
• Fraser and Cambie Bridges
• Tumbler Ridge Access
• Rocky Mountaineer Rail
• Spirit vessels
• Sea to Sky improvements

1986
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1990s The lost decade

• Airport and Port transfer and investments
• Additional SkyTrain, but not focused on downtown
  core
• Fast Ferries
• ?

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The New Decade

• Make up for what was not invested in 1990s
• Plus what is needed for new decade
• A substantial transportation investment burden!

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Biggest Challenge Support

• Almost all nations view transport as supporting
  infrastructure
• re-invest all that is taken out
• US Air TransportTicket tax revenues reinvested
  as capital grants to airports, large and small
• direct subsidy where it creates significant
  economic benefit
• Port of Seattle/Tacomataxes residents to support
  port development

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Canada Cash Cow

• Air Transport
• Vancouver Airport
• value at transfer 167 million
• rent paid to date 427 million 65 for 2002
• cumulative rent in 2010 1 billion plus
• Total Airports
• from subsidy of 250 million
• to gross rents of 240 million in 2001
• plus no longer making capital investments or
  bearing any financial operating risk

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Canada Cash Cow

• Federal transportation taxes
• 750 million in BC
• what was reinvested?
• Fuel taxes dedicated to transport improvements in
  other countries
• Only some reinvestment in BC

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Impact of Transport on Tourism

• Example Cranbrook Airport
• Growing East Kootney skiing and 4-season tourism
• Proven ability to attract foreign tourists
• Fernie 30 from UK, 30 from US
• Kimberly 40 from UK/US/etc.
• Panorama 30
• Airport investment would support tourism
• 1100 jobs, 17 million wages
• incremental taxes 13 million per annum
• investment 13 million

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Impact of Transport on Tourism

• Port Vancouver Cruise Ship
• another record year!
• In spite of Seattle emerging
• 500 million in spending in 2001
• 3,000 direct jobs in BC
• additional 1,500 in Western Canada

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Highway and Ferry

• Major investments required
• Highway 99/91 link to Highway 1
• Upgrade Trans Canada Highway
• Sea to Sky corridor
• Ferry replacement
• New funding solutions are required
• re-invest what is taken out
• Public-Private Partnerships

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Rail

• Major Investment required
• Airport - Cruise terminal rail transit
• Additional tourism rail experiences

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Aviation Affordability

• Excessive airport rents are an impediment to
  carriers and airports
• What is taken out must be reduced and balance
  reinvested into community airports
• Air Traveler Security Charge
• a flawed approach which is devastating low fare
  and short haul travel

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Airports 2 Types

• National Airport System
• 26 largest airports Toronto to St. John
• Lease Airports from Transport Canada
• Pay rent
• 16 return to feds in 2001, 29 in 2010
• Regional Airports
• purchased airports from TC, no rent
• had been incurring major losses
• 250 million loss now break-even to Federal
  Government

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Regional Airport Viability

• The National Airports Policy had been designed
  to transfer NAS and regional airports, not to
  make sure they were successful
• By 2000, many communities were arguing that their
  airport was experiencing financial strains.

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Air Traveler Security Charge

• Government view only beneficiaries of improved
  airport security are airport users
• Thus airport users must bear full costs
• Other modes not asked to bear costs of new
  security
• fixed charge imposes disproportionate burden on
  short haul and leisure travel
• WestJet reduced service on short haul routes,
  deploying aircraft on long haul
• fixed charge is economically inefficient

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Nothing Comes Backto the System

• In the words of Globe Mail Columnist Jeffrey
  Simpson

Ottawa, therefore, has found the best of all
possible worlds. It privatized most of the
air-travel business but still collects healthy
revenue for a service it neither runs nor gives
much to in return.
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Ports Cruise Ships

• Level the competitive playing field
• US Ports enjoy huge advantages
• no limits on investment
• tax free financing available
• no payments to federal government
• taxation powers

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The Way Forward

• Change attitude
• Transport is key supporting infrastructure
• End cash cow approach
• reduce what is taken out
• Reinvest all that is taken out
• New financing solutions
• Never again fall behind in investing
• Focus on access to support tourism

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Thank You !