WestJet will be offered flights from Saskatoon minneapolis In June after ensuring some support from the provincial government.
“We are committed to fostering a competitive business environment in our province, and that’s why the Government of Saskatchewan is pleased to support this flight with a minimum revenue guarantee of up to $2.2 million,” said Jeremy Harrison, Saskatchewan’s Minister of Trade and Exports ” Development.
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Harrison said the provincial government is prepared to ensure that the flight can continue.
“I would really characterize this as an insurance policy. It is going to ensure that WestJet is definitely going to be able to operate this route in an efficient way that there is going to be an economic return on that as well.
The thrice-weekly flights begin June 19 through a partnership with Delta Airlines.
Harrison noted that Minneapolis was an important hub, noting that it would increase connectivity between the United States and Saskatchewan.
They said no announcement had been made about Regina, but added they are working with the airport authority.
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Jason Childs, associate professor of economics with the University of Regina, agreed that this would create more connectivity, but pointed to some concerns with the minimum revenue guarantee.
He said that the minimum revenue guarantee is an agreement where if a business does not meet a specified minimum revenue, someone will come in and fill the rest to ensure that the specified revenue is met.
Childs said he wanted to see the contract between the government and WestJet, and needed more information.
“What’s really happening is the government is taking a risk down this route,” Childs said.
He said he is wary of these types of deals, noting that governments should not be taking risks for private businesses.
“I’m really not a big fan of these kinds of arrangements. I’m really not a fan of the government taking risks for private business, I think it’s a bad deal, and a bad model.
Childs noted that these deals can force businesses to do things they might otherwise hesitate to do.
He said these types of arrangements are becoming more common in Canada and around the world.
“One of the reasons the market is so efficient is that it disciplines firms. If you do something consumers don’t want, you lose money and you lose money to change what you’re actually doing.” Have real incentive.
Childs said that this agreement with the provincial government completely undermines market discipline.
“You’re potentially going to lose some of the efficiency that we add to the markets by diluting the market process.”
Childs compared the situation to WestJet selling tickets to the government of Saskatchewan, and the government trying to sell those tickets to consumers.
He said that taxpayers are trapped in this deal.
“The government of Saskatchewan is acting as an insurance provider for WestJet on this route, and again, I don’t think this government wants to set a precedent. I really don’t think it’s good policy,” Childs said.
Andrew Gibbons, vice president of government relations and regulatory affairs with WestJet, said they would increase capacity on other flights as well.
“We will increase connectivity between Saskatoon and Calgary,” Gibbons said.
“Calgary is the hub for WestJet, and WestJet is how the world will now connect to Saskatchewan.”
When asked about the increase in fares for WestJet’s flights from Saskatoon, he said there will be a diverse range of fares.
“I was looking on the app this morning, and the inaugural flight on June 19th, the lowest fare was $192 one way. I think the average domestic airfare in Saskatchewan, I’ll have to check it, has been pretty flat for a few decades.
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CJ Dusinski of Skyxe said that this route existed before the pandemic, adding that it was quite successful.
“It was a very important route for a lot of business connections,” Dushinsky said.
She said it is also important for hunting, fishing and tourism.
Saskatoon and the province began to see fewer options for flights earlier in the year following Air Canada’s announcement that it would cancel some flights from Regina and Saskatoon, saying it would focus on the main hubs of Vancouver, Toronto and Montreal. will focus.
Flair Airlines is set to start offering flights between Saskatoon and Calgary in May and is looking to fill the void left by Air Canada.
The Saskatoon Greater Chamber of Commerce asked Competition Bureau Canada to investigate the cancellation in mid-January, suggesting that there was a collaboration between WestJet and Air Canada to soften the competition between the two.
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