Incentives attract, but don't keep airlines in Waterloo Region

American Airlines could not be persuaded to continue its flights from Waterloo Region to Chicago, according to regional councillor Tom Galloway.

Galloway spoke to CBC News on Thursday, after the region announced that the airline would suspend services from the Region of Waterloo International Airport beginning in October.

• American Airlines to end service to Region of Waterloo International Airport

"There really wasn't much opportunity after they announced it," he said. "They had already announced the new flight in the United States. So, they weren't really prepared to listened to any thoughts we had."

The announcement came as a surprise to Galloway, who recently asked an airline representative how things were going.

"Everything was going good," he said. "They never let on what their plans are, and that's for competitive reasons."

Canadian dollar to blame

Because of the low Canadian dollar, Galloway said the flight was not as profitable as it had once been.

"They're referring to it as a suspension of service," he said. "I think they're trying to suggest that they want to leave the door open to resume the service at some point in time, but we don't have any confidence that would be any time soon."

He said the dollar would have to "rebound significantly" before the airline would return to the regional airport.

In its first two years of local service, American Airlines was given $1.25 million in refunds from the regional government, according to airport manager Chris Wood.

"The business community also chipped in and put some funds towards a revenue guarantee," he said, adding that the airline would not have come to the region without that financial incentive.

'Terrible precedent'

"It really was to ensure that the airline made enough money to make the route profitable. It was basically an insurance policy for the first two years."

Rebates and discounts are a common way to attract airlines to a smaller airport, but Galloway said the region would never pay for an airline to stay.

"It's important for us to continue to promote the airport and promote the routes that we have, but at the end of the day it's the airlines who decide whether they're going to come, and whether or not they're going to stay."

He said further reducing airport fees or providing financial subsidies would set a "terrible precedent."