Tripping: YVR Rides High as #1

Blitz Magazine

You need to fly somewhere. You want to get there quickly, efficiently and in a cost-effective fashion. Upon arrival at your destination, you grab your luggage and get a cab. Do you care which airport you fly into?

And airports are essential. All air passengers have to use them, like it or not. So do airports need to market themselves?

The answer to both questions is yes. It’s not something most of us think about, but airports do need to market themselves—vigorously—and the Vancouver International Airport Authority is particularly good at.

The Vancouver International Airport Authority (VIAA) is a 230-employee, not-for-profit, locally-controlled corporation to which, in 1992, Transport Canada passed the Vancouver airport’s management and operation. While the VIAA has taken flack for being secretive, it has done a tremendous job of managing, and selling, the Vancouver International Airport (YVR).

When it took over, the VIAA’s first order of business was to position YVR as a gateway airport—not necessarily a destination terminal. It doesn’t appear so on a flat map, but Vancouver is the closest North American city to Asia. Travelers can save an hour by flying into Vancouver from, say, Beijing, to which it’s 800 miles closer than is Los Angeles. So YVR positioned itself as offering one-stop access to North America from Asia. It wants Asian travelers flying to the US, the rest of Canada, Latin America and Europe, to fly into, and transfer from, Vancouver.

The other target was, and remains, the cruise industry. One million cruise ship passengers pass through Vancouver every summer. And they have a choice—they can fly into Seattle and drive up.

YVR had to meet the arrival and departure requirements of all these international travelers, in addition to the needs of notoriously picky Canadians. The task was to create a facility that was efficient, comfortable and accommodating to everyone.

In 1996, the International Terminal Building opened as the first terminal of its kind in North America. It was designed especially for international connecting passengers, with state-of-the-art technology for ticketing, baggage handling and customs/immigration inspection.

By 1996, $250 million had been spent on constructing the International Terminal, installing a third runway, renovating the Domestic Terminal, adding a new parkade and creating 109,000 square feet of retail space. Work continues. In 1999, $90 million was invested in infrastructure, renovation and expansion of facilities. Also that year, work began on the $40 million Airport Connector Project, which involves road improvements and a new three-lane bridge. The YVR South Terminal, which services domestic commuter, small regional and charter airline traffic, was also upgraded. (The cost of all of this has been helped along by the much-loathed Airport Improvement Fee: $5, $10 or $15, depending on destination, payable by all departing passengers.)

YVR’s location is, for an airport, incongruous. It’s only 20 minutes from downtown Vancouver but it’s on Sea Island, which is an environmentally-sensitive area. And it’s beside Richmond, a heavily-populated bedroom community. The VIAA pays rent ($64 m/yr) to the federal government, which owns the land, but it’s the caretaker of Sea Island and has to try to keep both environmentalists and Richmond residents happy.

YVR was one of the first airports to introduce a de-icing system which eliminates the pollutant urea from its ice control program. It maintains water, air quality and noise monitoring systems. It uses electric vehicles. It has a mobile, 20-unit environmental emergency response team. Its waste management program annually handles 470 tons of paper and 127 tons of compostable food waste. Construction projects are monitored for environmental compliance. It uses dogs to prevent bird strikes and negate the need for pyrotechnics—although YVR is located in the avian Pacific Flyway, its bird strike rate is less than half of that at other Canadian airports. From the PR perspective, all of this works—a 1999 survey found that 75% of locals had a favourable impression of this corporate citizen.

Most passengers don’t think about this sort of thing. They’re more likely to notice the airport’s amenities. Such as the 72 shops in the departure lounge. The concierge service, chapel, business centre, family rooms, nursery. The loads of inexpensive long-term parking and constant free connector shuttles. The art collection, natural light and mountain views. The dozens of multi-lingual volunteers. Cruise ship passengers have their own baggage belts and carousels. Fairmont Hotels attached a 392-room inn to the airport, which it bills as the world’s most luxurious airport accommodations. It offers day rooms, gym use, in-room airline check-in and satellite check-in. YVR’s positioning statement ‘Above & Beyond’ is something its management sticks to—and it’s true that a common reaction from arriving passengers is: “Whoa, nice airport.”

Then there’s cargo. YVR has positioned itself as the global distribution centre for cargo between the world’s major trading blocs, particularly Asia-Pacific and North America. It’s a 30-minute drive from the US border, and from the Port of Vancouver, which is served by most international shipping lines, four railways and 400 motor carriers. The central Cargo Village houses 130 transportation companies, forwarders, brokers and other related businesses. The VIAA’s positive relationship with Canada Customs, and a pre-arrival review system, allow for international shipments to be released within 45 minutes. YVR also offers pre-clearance of US-destined cargo through Free Trade Zones (Export Distribution Centres), a 25% discount on landing fees for international all-cargo flights, a fuel tax exemption on international air cargo and 24-hour operations, all of which makes for a vast reduction in air cargo costs. Obviously, cost reductions make an airport attractive.

The pay-off of this investment and overlook-nothing organization is that, in 1999, 290,000 tons of cargo passed through YVR. That’s a 14% increase over 1998, far in excess of both forecasts and growth at other west coast airports. The International Terminal Building was meant to accommodate 8 million passengers; in 1999, 16 million passengers used YVR, allowing it to surpass San Francisco as the second-largest airport on the North American west coast. In 1994, airport revenue was $128 million, concession revenue $28 million. In 1999, airport revenue was $245 million, concession revenue $61 million. Today, YVR is one of BC’s most important economic engines, generating $4 billion in annual revenues. It supports 400 off-shoot businesses and 26,000 employees—more than the province’s mining and fishing industries combined.

In the International Air Transport Association survey of leading airports, YVR was ranked #1 in North America; #4 internationally (behind Singapore, Copenhagen and Helsinki). Business Traveler Asia-Pacific magazine named YVR its airport of choice, Conde Nast Traveler placed it among the world’s top ten. It has become a management model for airports around the world.

The VIAA subsidiary, Vancouver Airport Services (VAS), markets its expertise, operating philosophies and leading-edge systems to governments all over the world, which are rapidly dumping airport operation and financing on the private sector. VAS may take over whole airports, or perform specific services. It recently took over management of four airports in the Dominican Republic, as well as airports in Uruguay and Chile. It completed, for example, the business plan at St. Maartens, the reconstruction of the runway and apron at Moncton, the new retail plan at Wellington.

It’s easy to see that an efficient, beautiful, fully-outfitted airport is going to be attractive to those who have to use it. But VIAA has to work as hard to sell YVR to everyone who needs an airport.

Janice Antonson, the VIAA Manager of Aviation Marketing, explains: “A lot of people don’t think of airport management as a competitive business, but it is. Airlines and passengers have a choice of which airports to use. Back when Open Skies lifted restrictions on who could fly into Canada, we had a lot of new carriers flying into Vancouver and we had to compete with other west coast airports—LA, San Francisco and, to some extent, Portland. And we had to fill this new terminal.

“We work with the carriers that fly into Vancouver and are the liaison between the tourism industry and the aviation industry. Once a route is brought into Vancouver, we help market that route. Our job is to ensure that all airlines that fly in, as well as travel agents and tour operators, are aware of the connections available through the airport, and the facilities and services we offer.

“Education is a big part of the job of this marketing department. For example, to help Philippine Airlines establish the Manila-Vancouver route, I would go to the Philippines and meet with their employees, most of whom probably haven’t been here and don’t know the airport. I give a PowerPoint presentation on the airport and its location. I explain about Vancouver’s Transit Without Visa program, which means that most travelers connecting to the US, depending on where they come from, don’t need a Canadian visa. You come in on a flight from Hong Kong, you go immediately to US Customs, so you aren’t technically in Canada at all.

“When you explain this, people realize that they and their customers can save an hour in the air, and another hour by by-passing Canada Customs. When you shave off that two hours, YVR becomes the logical choice. And for business travelers, time is everything. The new airport in Seoul, for example, is over a hour from the city—YVR is 20 minutes from downtown Vancouver. That makes a big difference. And what a great stop-over city. On an overnight stay, you can go skiing, shopping, golfing—whatever, and make a short trip back for your flight out. These things are very important to passengers and airline employees. And once they know all of this, they choose Vancouver.”

Antonson also works closely with the cruise ship companies, through the VIAA membership (along with Tourism Vancouver, Tourism BC and the Port Authority) in the Pacific Rim Cruise Association.

“We have to work with both the cruise ship companies, and with the airlines that feed the cruise business,” she explains. “Despite the cruise passenger traffic we already have, we actually suffer in the summer because we don’t have enough seats coming into Vancouver. Sometimes we lose up to 11 busloads a day to Seattle because all the flights coming into Vancouver are full. So we work very hard to encourage the airlines to put on a bigger aircraft and more flights.

“We have the capacity for the traffic, but the airlines don’t have the aircraft on this route in the summer—their aircraft could be heavily directed at Europe in the summer. And cruising is seasonal. So it’s a big challenge for us to keep the carriers bringing in their service year-round. The airlines have to make sure that the yield from the seat price is right, and that it’s good enough to pull a plane off another route. And they have to know that the plane bringing in those cruise passengers will leave full. It costs a fortune to leave a plane sitting on the tarmac—planes have to keep busy, so we have to present airlines with positive passenger flow numbers.”

Antonson has found that airline economics leaves little room for patience. “Once we get a flight coming into YVR, we need time to market that flight. For example, American Airlines was flying non-stop Vancouver-Miami, which was excellent, but that route was pulled after four months because the flights weren’t full. But four months isn’t enough time to fully market a route and make travel agents aware of it. It takes a lot of time and effort to make a flight successful. But the airlines have to put their aircraft where they’ll make money.”

Antonson, who would not state her marketing budget, makes sales calls to travel professionals and, for travel agents and tour operators, she produces numerous brochures, maps and booklets—everything they need to know about the airport, its facilities, its connections, and what happens to passengers upon their arrival. For others, annual reports, Skytalk Magazine and the annual Airport Business Report, are helpful. Then there’s the hard-core process of convincing the airlines to book their routes into Vancouver. All of that goes on in boardrooms during months of negotiations.

“Our Air Service Development people are in charge of negotiating with the airlines,” continues Antonson. “Some airlines approach us, we approach some. It’s an extremely complicated business and most people have no idea of what goes on behind the scenes. We can’t have carriers landing here unless they can feed into the rest of the network—they have to be able to pick up traffic elsewhere, they have to have the right aircraft and the capacity to service the route. During negotiations, they discuss everything from who the ground handlers will be, to slot times, to catering, to aircraft size, frequency of flights, destinations, where their airport offices will be.

“The airlines have to be sure that the route will be profitable, because anything relating to the operation of the aircraft is their responsibility and cost. They become YVR tenants. They have to pay landing fees, fuel taxes, airport taxes. They have their own employees, including mechanics, on the ground. It’s a significant dollar investment for them, so we show them the traffic numbers; they see how active we are at marketing the routes. It’s not something anyone takes lightly—every landing of an Air Canada 747 from Hong Kong, for example, generates 86% of a person-year of direct employment.”

Most airports don’t even have marketing departments—just communications offices. But as YVR was the first Canadian airport to privatize, the VIAA may have felt pressure to succeed, or saw it as an opportunity to do something very well. Either way, very little has not been done well.

“YVR is not just a pretty building in a pretty city,” says Antonson. “And our mandate is to market YVR as the Pacific Gateway of choice. We’re in a competitive business and have to work to get the airlines to come here and stay here. So we’re aggressive about it—we create and try new programs first, and now we’re the leader in airport marketing. YVR is a great success.”