Penticton wants portion of room tax to market new flights

There is still much negotiating ahead before the full extent of an incentive agreement with WestJet is decided on

WestJet Encore president Ferio Pugliese with the model airplane he presented Saturday to Penticton's mayor.

WestJet Encore president Ferio Pugliese with the model airplane he presented Saturday to Penticton's mayor.

There is still much negotiating ahead before the full extent of an incentive agreement with WestJet is decided on, according to Penticton Mayor Garry Litke.

Items like landing fees at the Penticton airport, property taxes and whether other South Okanagan communities will be donating any portion of the $100,000 marketing fee already agreed on will all be worked on over the coming months, according to Litke. Waiving the $300 landing fee would add another $109,500 to the incentive package alone.

Passenger convenience improvements to the airport may add significantly to the price of the package as well.

“There are going to be a number of things to be talked about between now and October,” said Litke

The agreement only covers the first year of operation, which is the extent WestJet has committed to for the Calgary flights, though Litke points out that assigning an aircraft to Penticton airport is already a significant investment on WestJet’s part.

“The guarantee we have is one year. We are attempting to negotiate two years and beyond, but our financial commitment is only for one year,” said Litke. “We expect that after that, WestJet will be able to take that over for themselves. It’s a startup partnership agreement.”

The $100,000 will be spent to market the new direct-to-Calgary service outside the Okanagan to draw in new tourists, as well as in the South Okanagan to encourage travellers to use Penticton Airport and the WestJet service.

“It works both ways,” Litke said, adding that the city will work with WestJet and the Thompson Okanagan Tourism Association to develop the marketing plan, as well as any communities that decide to chip in. “The position I am taking is that whoever pays gets to play,” said Litke.

Should other communities not chip in, Penticton will foot the bill. Litke said the funds will come out of either the economic development or Tourism Penticton budgets.

That includes, he added, the possibility of using the two per cent additional hotel room tax funds the city is currently in a legal battle with the Penticton Hospitality Association over.

The hotel room tax funds are taxpayer money the city is responsible for, according to Litke, explaining that is why the city resorted to the legal process in order to get control of the money. Both sides are currently awaiting a decision by a B.C. Supreme Court judge.

“If we are correct, then we will get possession of that money and if we get possession of that money, this is an absolutely legitimate use of that money,” said Litke. “If this isn’t external marketing, then I don’t know what is.”

Though the PHA has been locked in a dispute with the city over the hotel room tax since last October, their director of operations Tim Hodgkinson agrees that supporting the Westjet deal would be worth looking at. If the judgement should fall in the PHA’s favour, he said they would still happily look at investing in the deal.

“Should that happen, the PHA would absolutely look at the supporting information whether this would be good return on investment for the community,” he said. ““If it is to promote that service, then yes, we all want it to work. It has the potential to be a game changer in the long term.”

According to Litke, Westjet turned down a straight incentive package, preferring the money be targeted for marketing.

“When we met with them before Christmas, we were open to anything that would make us look more attractive to them,” said Litke. “But they weren’t interested in having just an incentive put on the table they could take to the bank, because that doesn’t guarantee the planes will be full.

“They don’t need the cash, they need the bums in the seats. They are much more interested in forming a partnership to market the service and to provide a tourism marketing plan.”

Litke also said Penticton council needs to take another look at supporting a proposed Osoyoos to Kelowna shuttle proposed by the South Okanagan Chamber of Commerce.

“The landscape has changed a bit now. The things that concerned us about that shuttle service was the potential for making the Penticton Regional Airport become redundant,” said Litke. “Now that we have this flight to Calgary, the shuttle service from Osoyoos may actually feed into that. It could actually be more of a benefit than we originally anticipated.”

 

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