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Yukonomist: The Icelandair of Alaska

Northern Pacific Airways, a new airline in Anchorage, is launching a bid to become the trans-Pacific version of Icelandair. That island’s airline has successfully created a new business model by offering flights from North America to Europe with a stopover — a few hours or a few days — in Reykjavik without additional cost to the traveller.

Northern Pacific Airways, a new airline in Anchorage, is launching a bid to become the trans-Pacific version of Icelandair. That island’s airline has successfully created a new business model by offering flights from North America to Europe with a stopover — a few hours or a few days — in Reykjavik without additional cost to the traveller.

The scheme has been a huge boost to Icelandic airline and tourism jobs. I connected in Reykjavik a few years ago, and can attest to the crowds buying expensive sandwiches and high-quality sealskin mitts created by local artisans. And that was just at the airport.

Northern Pacific’s idea is that someone flying from Tokyo to Chicago might stop for a few days in Anchorage.

If it sounds improbable, find a rubber band and an old globe like the one that sat on your teacher’s desk in elementary school. Then stretch the rubber band between Chicago and Tokyo.

Contrary to what you might think if you only looked at flat Mercator maps on your computer screen, you’ll see the rubber band goes right over Anchorage.

Such routes pass over Whitehorse as well. As this column was written, a Boeing 777 headed to Tokyo from Chicago for All Nippon Airways was cruising at 34,000 feet somewhere between Teslin and Whitehorse. According to, the flight was about 4,000 kilometres into its 10,000 kilometre flight plan.

This is not exactly a new idea. Early jets had shorter ranges and many airlines landed in Anchorage to refuel.

Back when he was dictator of Venezuela, Hugo Chavez stopped in Whitehorse for a refueling stop on his return from a state visit to Asia. However, the trans-Pacific refueling market for dictators too worried about US sanctions to stop in Anchorage is small. The Airport Chalet has not become known for high-stakes summits between South American caudillos and Asian strongmen. Not like the Crow’s Nest restaurant at Anchorage’s Captain Cook Hotel, where Chinese President Xi and Alaska Governor Walker had dinner during the former’s stopover in 2017.

Today, modern jets can easily fly 10,000 kilometres on one tank of gas. They just fly right over Anchorage and Whitehorse. Ditto for other former refueling bases such as Gander, Newfoundland or Shannon, Ireland.

So, why attempt to revive the practice? According to interviews with Alaska Public Media, Northern Pacific executives think they have a few things in their favour.

First, the concept has already been proven by Icelandair. Most people still fly non-stop between Europe and North America, but enough like the Reykjavik gambit that Icelandair has over 45 aircraft and 1,200 employees.

Second, refueling mid-way means the jets have to carry less fuel. Which means they burn less fuel per mile, helping cut costs.

Third, Asian passengers will be able to clear customs in Anchorage. For anyone who has stood in massive queues at the airports in Los Angeles or New York, this is a big deal.

Fourth, they got a good deal on used aircraft thanks to the pandemic. The airline acquired Boeing 757s from mainline US airlines for its trans-Pacific routes.

The airline’s first domestic flight was July 14. It plans to launch its trans-Pacific routes in early 2024. Northern Pacific is owned by the same company that rescued regional airline Ravn Alaska from bankruptcy after the pandemic, restoring air service to multiple Alaska communities.

The bankruptcy of Ravn left many Alaska towns in the lurch during COVID-19. Eighteen communities in the Yukon-Kuskokwim Delta lost air service, for example. The local health authority had to charter planes to fly patients to Bethel for treatment.

It’s a reminder how fortunate we are that Air North survived the downturn, thanks both to decisive management action and government support.

The Northern Pacific plan raises the idea whether Whitehorse could get in on the trans-Pacific action. Icelandair is buying new fuel-efficient and extra-long-range Airbus A321XLRs. With an 8,700 kilometre range, these could fly from Whitehorse direct to Seoul, Tokyo or Shanghai. They could also reach Cuba, Mexico and most of Europe.

But let’s not get ahead of ourselves. Extensive runway renovations mean that our existing Condor flight to Frankfurt will be out of action until 2026 at least. Anchorage is advantaged since it is closer to the halfway point between big US population centres and East Asia. And Canadian fees and taxes for things such as fuel, security, navigation services and landing rights typically add up to a significantly higher amount per passenger than in Alaska.

We also have yet to see if Northern Pacific’s business plan will succeed. Traditionally, starting an airline is right up there with buying a professional sports team or winery in terms of ways a billionaire can become a millionaire.

Nonetheless, the Icelandair model reminds us of the economic value of having a local airline in terms of both airline and tourism jobs.

Air North has announced it is considering buying new planes. According to President Joe Sparling’s letter in the in-flight magazine, they are looking at three key factors: “more fuel-efficient aircraft, larger aircraft and operating flights with a higher load factor (more occupied seats).”

Air North’s analysis shows some major potential benefits. A Boeing 737-500 like Air North uses today on the Whitehorse-Vancouver run, with a load factor of 70 per cent, burns 77 litres of jet fuel per passenger. A “new aircraft” — Air North does not specify which model — with an 80 per cent load factor would burn 45 litres.

This is a whopping 42 per cent reduction in fuel costs and carbon emissions, on a per-passenger basis. Carbon emissions could be reduced even further if Sustainable Aviation Fuel becomes mainstream in Canada and is blended into the fuel.

Such savings would allow Air North to offer even cheaper fares to and from the Yukon, and better survive competition from big airlines.

Newer aircraft also have longer ranges, as Northern Pacific has noted, which raises other interesting possibilities for Air North. Flying from Miami to Beijing via Whitehorse is a fun idea for airline logistics nerds, but more realistic options are direct Whitehorse flights to major hubs such as Seattle or Toronto. Or vacation hotspots such as Hawaii or Mexico.

And Air North’s connector fare, which can apply for a stopover in Vancouver or Calgary for up to three days, is already a step into creative thinking about local access to longer journeys.

Air North’s cheap and friendly service to Vancouver, Edmonton and Calgary has already dramatically benefited Yukoners compared to the bad old days of being a monopoly route for a distant national airline. Expanding this further with new aircraft would make the Yukon an even more attractive place to live. It would also be great for our economy, from making it easier for tourists and conference attendees to get here to enabling remote-work lifestyles for people escaping big city real-estate prices.

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He won the 2022 Canadian Community Newspaper Award for Outstanding Columnist.