Business in Vancouver column: Osaka air link cancellation will sever vital economic tie for B.C.

Osaka air link cancellation will sever vital economic tie for B.C.

Derek Moscato: Podium

Business in Vancouver July 29-August 4, 2008; issue 979

At first blush, this past spring’s announcement from Air Canada that it would be cancelling its direct flight between Vancouver and Osaka’s Kansai International Airport might have seemed like a minor setback for a handful of frequent flyers and would-be tourists on both sides of the Pacific.

High fuel costs have ushered in a tough new era for airlines globally. Volatile economic times mean that cutbacks at airlines across North America are the new norm.

As for Air Canada’s service between Vancouver International Airport and Osaka, while it’s true that the route did a brisk business, it didn’t exactly garner a reputation for attracting the kind of premium business that would fatten a carrier’s bottom line. Besides, Osaka has always played second-fiddle to Tokyo, Japan’s largest city.

So, given Air Canada’s financial troubles, its demise as a destination from YVR was perhaps inevitable.

No surprise, then, that industry observers in the Lower Mainland have been rather ho-hum about this development.

But they shouldn’t be.

The longer-term impacts of the cancellation to the Lower Mainland and Western Canada economies are both symbolic and real – and shouldn’t be glossed over as the cancellation of this service comes into effect this fall.

For starters, it will leave Vancouver without a direct connection to one of the world’s largest industrialized metropolises.

Richard Florida, the University of Toronto business professor and prominent urbanist, points to the Osaka-Nagoya mega-region as the fifth most important in the world based on economic activity.

Japan’s Kansai region, of which Osaka is the focal point, is home to 22 million people. It’s also responsible for 3% of the world’s gross national product.

The global companies that are based there are equally impressive. Think Sanyo, Panasonic, Sharp and Nintendo. Given the Air Canada news, it’s hard to envision a scenario in which the executives of these companies would want to invest further in Vancouver – especially with Los Angeles and San Francisco vying for the same kind of pan-Pacific business opportunities.

But the bad news doesn’t end there.

The end of this service will also have a negative impact on local tourism and education linkages between Metro Vancouver and the Kansai region.

In case you haven’t noticed, many downtown restaurants, shops and language schools – not to mention landlords – count on Japanese students as part of their customer base. But keeping Vancouver front and centre as a prime study-abroad destination will be difficult to justify, especially if getting here means connecting through one or two other cities on the way.

The tourist trade will also take a hit. Tourism Vancouver, which recognizes the importance of the Greater Osaka market, has already expressed its concerns.
Inconvenienced Japanese tourists, among the top-spending travellers in the world, might gravitate toward easier-to-reach destinations – such as California. That state’s Travel and Tourism Commission recently announced a $5.1 million marketing campaign featuring Governor Arnold Schwarzenegger on Japan’s major media outlets.

The timing, at least for California, couldn’t be better.

Back in B.C., there’s more to this story than short-term pain for the tourism or education sectors.

Premier Gordon Campbell has made B.C.’s role in the “Pacific Century” key to his economic vision for the province. His goal is for B.C. to become North America’s gateway to the Pacific by tapping into this province’s strategic location and cultural diversity.

Transportation is critical to Campbell’s vision. Unfortunately, the cancellation of the YVR-Osaka route flies in the face of his goal.

A further irony is that last year, then-minister of international trade and minister for the Pacific Gateway David Emerson announced the conclusion of air services negotiations between Canada and Japan, resulting in expanded air services rights for flights operating between the two countries.

As Emerson noted at the time of the agreement, “Japan is one of our key trading partners. … Air transportation is an important component of the Asia-Pacific Gateway and Corridor Initiative, and this agreement means more goods, services and people will be going through the West Coast and the gateway.” In retrospect, his words look more wishful than prophetic.

British Columbia deserves better than this outcome.

In response to American Airlines’ recent flight cutbacks at New York City’s La Guardia Airport, New York State Governor David Paterson implored American and other carriers to take into account more than profit when evaluating routes. His words may not go over well with the accountants at North America’s largest airlines, but they raise an important point: any short-term balance sheet gains for the airlines are more than offset by the long-term economic impacts to regional economies. And Vancouver is no exception.

For the sake of this province’s Asia-Pacific economic aspirations, and the well-being of the local businesses large and small who benefit from a direct linkage to Osaka and Kansai, let’s hope Air Canada will reconsider its decision. And that Ottawa is finally taking notice of this troubling news. •

Derek Moscato (dmoscato@yahoo.com) is a Vancouver-based journalist with a focus on urban affairs and economics.

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One comment

  1. This has been quite unfortunate.

    While Vancouver, Canada is my home town, I reside in Osaka, Japan.

    Many of people I have talked to in the Kansai region now seem more likely to visit other countries like Australia (which has a lot of active tourism marketing in this region) than Canada.

    While large numbers of people living in Japan would love to visit Vancouver, rising costs and the large amount of inconvenience this causes will continue to force people to look for other destination alternatives.

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