More airport subsidy spending planned in 2022

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Another $400,000 in city spending is being made available to help prop up airport operations in Sarnia this year.

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The sum approved at December budget deliberations is a bit of a jump from the $360,000 offered in 2021 to tide over the struggling Sarnia asset as the search for a commercial carrier to resume passenger service continues.

The timeline for re-establishing that service is unclear amid industry disruption caused by the COVID-19 pandemic, said Sarnia economic development director Kelly Provost while noting talks are ongoing with a number of companies.

“The continued travel restrictions that are being felt as a result of the pandemic, it does have an impact on things,” she said. “The industry has never felt this type of interruption.”

When Sarnia lost Air Canada service in 2020, the Chris Hadfield Airport started losing money.

City council, amid a consultant’s recommendation later that year to sell, opted to look instead into upgrade options to make the asset viable again, so a committee was struck to study the airport and make recommendations.

Federal Regional Air Transportation Initiative (RATI) grant money for terminal improvements and equipment purchases – and to buy the city more time – was awarded in August, 2021.

Part of that $1.9 million has been used in the place of city subsidy money since October, Provost said.

All of the initiative money has to be spent by March, she said, at which point Sarnia will need to start using the $400,000 approved for 2022 from its own coffers to cover monthly losses, which were $20,000 to $34,000 in the first nine months of 2021 .

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Up to when the RATI stop-gap was approved last October, $217,000 of the city’s 2021 allocation had been used.

The remainder went into a reserve account that can also be used on capital improvements, Provost said.

Currently, that reserve fund sits at $145,000, she said.

Any of the $400,000 left over at the end of 2022 would go into the same reserve, she said.

The extra $60.00 approved for airport subsidization in 2022 is predicated on extra insurance and utility expenses at startup if the city lands a commercial carrier, she said.

Building ridership and revenue will take time, she warned, “so we increased that number based on the fact that we anticipate costs to increase as we start to build a revenue increase with the connection of service.”

A master plan for the 1950s-built airport is also being developed using RATI funds, via consultants HM Aero Aviation and Idea Inc., and therefore must be done by the end of March.

Public input for the plan at speakupsarnia.ca was closing Friday. The plan would likely come to council in April, Provost said.

Council this week opted to extend a lease agreement with Scottsdale Aviation – the airport operator since before the city took control via federal divestiture in 1997 – until July 1.

The agreement had been set to expire at the end of March.

The lease agreement amendment includes the provision for the city to cover operational losses while Scottsdale keeps running the airport in the interim, something the city doesn’t currently have the expertise to do on its own, a report from Provost said.

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Scottsdale has a “head lease” agreement with the city until 2027, but the city only has rights to terminate under the agreement amendment currently in effect.

Hopes are the lease amendment extension buys the city time to weigh options in the master plan when it arrives, Sarnia Mayor Mike Bradley said.

The motion to extend passed 7-2, with councilors George Vandenberg and Nathan Colquhoun opposed.

Sarnia may be better off selling the asset, Vandenberg argued.

Sarnia also received millions of dollars from the federal government when the airport was divested 25 years ago.

That sum was virtually exhausted in recent years and currently sits at $31,240, city officials said.

Scottsdale’s lease agreement with the city is to run the airport for $1 per year.

The operator, up until the lease amendment, had been responsible for all operational losses and pocketed all profits, officials have said. The city covered capital costs.

Scottsdale and sister company Huron Aviation averaged $165,700 between 2016 and 2019, a recent report from the city’s Airport Action Working Group said.

Scottsdale meets regularly with the Airport Action Working Group, Provost said.

“They continue to be engaged and it’s been a positive relationship.”

Committee members have broadly outlined hopes to grow the airport to 30,000 commercial passengers per year within seven years and make the airport profitable.

Pre-COVID, about 10,000 passengers per year flew out of Sarnia, group officials have said.

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Different options are still being weighed for how to spend $730,000 in RATI money approved for a potential new shed at the airport, Provost said.

The project is complicated by the tight timeline and rising costs related to supply chain issues amid the pandemic.

“We’re still in discussions with the funder and the bidder, trying to figure out the best step forward with this,” Provost said. “We are anticipating that the project will still advance, just working through some technicalities with both of them right now.”

There’s also $420,000 in runway and terminal capital spending on Sarnia’s books for 2022, part of $3.7 million in capital spending at the airport planned over the next five years.

Projects planned include refurbishing the general aviation apron, ramp and tie-down area in 2023, refurbishing taxiway Charlie and the second runway in 2025, and repaving the parking lot and entrance road in 2027, a city report said.

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