Few federal workers using Air North’s Ottawa flight: Sparling

Air North isn't putting enough federal government suits in its seats, and according to President Joe Sparling it's preventing the company's Whitehorse-Ottawa route from making money.

Air North isn’t putting enough federal government suits in its seats, and according to President Joe Sparling it’s preventing the company’s Whitehorse-Ottawa route from making money.

The twice-weekly service, which stops in Yellowknife, was launched in Feb. 2014.

“I anticipated when we launched that we’d be flooded with federal government travelers because it’s a far less expensive and far more convenient route,” he said.

Sparling believes there are a number of reasons the company is coming up short.

He mentioned Aeroplan Miles as an issue, since a lot of government employees redeem them. Air North’s operating costs are significantly lower than its main competitor because it’s not part of that program, he added.

“It’s very expensive.”

Another concern has been the federal government’s travel booking mechanism.

Sparling said the new system doesn’t always show all the fares, or all the cheapest ones, and it’s driving high-yield tickets to Air North’s competitors instead.

“We’re coming up short and taxpayers are spending too much money – we have to find a way to fix that,” he said.

“A lot of federal agencies, like Aboriginal Affairs, are flying to and from the North under a mandate to somehow make the North more self-sufficient, and create more jobs. But invariably we find they buy more expensive tickets from our competitors and they’re putting the very jobs we’ve created at risk.

“To me, agencies like that should have purchasing policies that support their mandates.”

Sparling said he’s pitched the idea to both a Senate standing committee and the Canadian Transportation Act review for years.

Ultimately, the biggest impediment to growth is one of capacity, he said.

The pricing regime set by Air North requires a 75 per cent load factor – the percentage of occupied seats per flight – to be sustainable. But the Yukon market is flying with a load factor less than that, Sparling said.

The load factor for the Whitehorse-Ottawa route was only 55 per cent for the first quarter of 2015, and Sparling estimates it to be about 60 to 65 per cent in June.

There are two ways to improve load factors: either by growing traffic, or shrinking the number of seats in the market.

Sparling said numbers show the company has done well to grow traffic over the years.

In 2002, Air North transported under 25,000 passengers while its top competitor transported about 105,000.

In comparison, Air North transported over 160,000 passengers last year while its main competitor transported about 100,000.

“In essence we’ve created our own traffic, similar to what WestJet has done in new markets,” Sparling said.

“But we haven’t grown the market enough to provide the load factors that are necessary to support the price structure, and that’s our next challenge.”

Increased charter and ground handling activities, coupled with growing fuel sales, have contributed to Air North’s projected operating profit of $1.5 million for 2015.

That’s a significant turnaround from 2013, when the company lost an estimated $2.2 million.

Sparling said despite facing challenges two years ago – namely a “turf war” with its two main competitors – the company found ways to diversify its revenue streams in 2014 and that led to a strong start this year.

Last year, Air North launched a new charter program with Holland America, offering flights between Dawson City and Fairbanks, Sparling said.

The company also has an airplane based in Edmonton that flies crews to Alberta’s oilpatch.

Another plane is flown down to Vancouver, B.C. during the summer to offer sport fishing charters to the Queen Charlotte Islands.

Sparling said commercial fuel sales to all of the major carriers that fly into Whitehorse have also grown, as well as sales to the federal government, Yukon Wildland Fire Management and other corporate customers.

Another source of revenue has been additional ground handling activity for American Airlines, U.S. Airways and United Airlines in Vancouver and for KLM in Edmonton.

That entails both check-in services and below-wing baggage handling services, Sparling added.

“Basically those airlines have no employees, or very few, in Vancouver,” he said, “so we’ve taken over all of their handling.”

Contact Myles Dolphin at

myles@yukon-news.com

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