Sask. government subsidy for WestJet direct route to U.S. draws criticism

Last week, the Saskatchewan government announced it would be subsidizing a direct WestJet flight between Saskatoon and Minneapolis, but critics say taxpayer dollars should not be used in this manner.

Minister of Trade and Export Jeremy Harrison made the announcement at the Saskatoon Airport on Friday. He said the province would provide a minimum revenue guarantee of up to $2.2 million to the Saskatoon Airport Authority over the next three years to support this flight.

Harrison said he expects uptake to be high.

"The connection will ensure that our province is a competitive place to do business and that Saskatchewan's economy continues to thrive and grow as well. This announcement will significantly benefit the province's outfitters, whose clients are primarily U.S. anglers and hunters."

The flights are in partnership with Delta Airlines and will begin in June, running three times a week.

Delta Airlines removed its direct flight from Saskatoon to Minneapolis in 2016 anddropped the rest of its service out of Saskatoon in mid-2020.

"As a provincial government we absolutely are prepared to backstop to make sure that this flight continues going forward," Harrison said.

"I would really characterize it as an insurance policy. This is going to ensure that WestJet is able to operate this route in an efficient way with certainty that there is going to be an economic return."

Harrison said Americans make up four per cent of overnight visits to the province, but contribute eight per cent of total overnight visitor spending.

"We've been engaged in these conversations with WestJet essentially since [2020], in hopes that they would be able to bring this flight back to us," said CJ Dushinski, vice-president of business development at the Saskatoon airport.

Economist says taxpayers taking on risk

Jason Childs, associate professor of economics at the University of Regina, said he is not a fan of the policy

"We're transferring risk from a multi-billion dollar corporation to the Saskatchewan government."

Childs said he would like to see the terms of the agreement and what the province would consider a success.

"They could be correct, but that would mean the provincial government has a better understanding of the demand for flights than WestJet does and I'm not sure what the foundation of that expertise would be."

Childs said the policy is more political than economic and that the province may feel pressure from Regina to make a similar arrangement.

"It's always political and the politics of it are inconsistent with good economic policy."

Taxpayers federation questions funding deal

The Canadian Taxpayers Federation (CTF) said it does not agree with the provincial government funding the direct route.

"I'm not happy about it. Whenever you give taxpayer dollars to a business, it always ends up with them usually coming back and asking for more. It's not a solution to any sort of airline-related problems," said Gage Haubrich, prairie director of the CTF.

Haubrich said if the business case was there, WestJet would not need the government's contribution.

He saidthe province does not need to provide revenue guarantees.

"Instead of giving money to private businesses, taxpayers' money, we should look to Ottawa to work on reducing airline regulations, feesand taxes to make it easier to operate an airline in this country."

Opposition critical of government economic record

Opposition NDP economy critic Aleana Young said Wednesday that the minimum revenue guarantees are a concern.

Young said that it was not a policy issue, but an economic issue.

"If everything was going swimmingly we wouldn't be asking taxpayers to backstop private companies in order to make these routes economical for them to fly."

Young said she will be looking for transparency from the government on terms of the deal with the airport authority and WestJet.

Regina direct U.S. route next?

Harrison hinted that Regina may be next up.

"What I can tell you is we have been working very, very closely with the Regina Airport Authority as well and they have been spearheading a lot of discussions involving this, as has the Regina business community, Regina leadership at the political level, the mayor as well. We have nothing to announce yet, but I can tell you that equivalent resources that are on the table," Harrison said Friday.

On Wednesday, Regina city council unanimously approved a tax break of more than $1 million for the Regina Airport Authority. The tax break was originally approved in 2019 and was set to expire this year.

Council placed a condition on the tax break saying the airport must secure a daily year-round service to a U.S. hub.