Already clipping Canadian snowbirds’ wings, the nosediving loonie is taking down other ­bargains with it.

While a low Canadian dollar is helping Southwestern Ontario industries compete in the all-important American market, making their exports cheaper, the flip side is that goods and ­services costed in American dollars — which we pay for with our weaker buck — are bound to go up in price, or worse.

London saw that Wednesday, when giant American carrier United Airlines said it’s scrapping its new

direct service from London to the New York City area starting April 21.

Gone, in a New York minute, will be the twice-daily flights launched just four months ago to Liberty International Airport in Newark, N.J., just outside the Big Apple.

The culprit?

The swooning loonie — its dive accelerated by the recent plunge in oil prices — is mainly to blame, said Mike Seabrook, chief executive of the London International Airport.

“The decline in the Canadian dollar has killed the profitability,” he said.

“Most tickets are sold in Canadian dollars and their costs are in U.S. dollars,” Seabrook said.

Last month, United said it’s cutting daily service from Saskatoon and Regina to Denver.

While one aviation analyst said he hasn’t noticed any trend by American carriers to shut down Canadian routes, one big bank economist said we often overlook the drawbacks of a below-par Canadian dollar.

“The positives are touted,” said BMO economist Benjamin Reitzes, citing the obvious benefits Southwestern Ontario is seeing, with the loonie’s fall giving the region’s export manufacturing industries a lift.

But a low dollar also makes American goods and services — and Canadians buy many — more costly.

Little more than two years ago, an above-par loonie made American vacations and consumer goods a bargain.

Now, the Canadian dollar is fetching less than 80 cents US and Reitzes expects it could sink even lower, falling to the 77-cent range in the next few months because of low oil and commodity prices.

“The negatives are often overlooked and probably shouldn’t be,” he said of the low dollar.

“It hits a number of sectors in the economy.”

Reitzes said he was surprised United didn’t try to boost London-Newark fares before pulling the plug, but noted the low loonie would also tend to discourage New York business and leisure travel.

“After 9/11 and the last recession, it really hammered the (airline) industry,” he said. “They are as risk-averse at they can be.”

Aviation analyst Ambarish Chandra said just as gaining new service to a major city can be a “lifeline” to smaller airports, “taking that away can be very disruptive.”

The industry is nimble, he noted.

“Airlines are always experimenting with new routes and sometime they cut them soon after,” said Chandra, a business professor at the University of Toronto.

Serviced by 50-seat jets operated by Express-Jet, a United Express partner, Seabrook said the Newark flights are averaging 55% to 60% full — respectable for a new route, but below the 75% industry target.

He said United decided things were unlikely to get better soon.

“Airlines can’t take a lot of time to let a route build. Their projections for the Canadian dollar don’t look good,” he said.

Seabrook said the decline in aviation fuel costs doesn’t offset the loonie’s fall. and higher fares would only make London uncompetitive with Toronto and Detroit, from larger more cost-effective aircraft fly.

One London passenger Wednesday, Ishai Nir, was “disheartened” to learn the Big Apple run is doomed.

“We bought a company here in London — we’re from Edison, N.J. and it was tremendously convenient,” he said, adding “We’ll just have to drive from Toronto, I guess.”

Seabrook said United has assured him its daily London-Chicago flights are doing well and there are no plans to cut the service.

He said passengers booked to Newark beyond April 21 will be notified and receive a refund or alternative travel arrangements.

With file by Derek Ruttan, The London Free Press

hank.daniszewski@sunmedia.ca

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