Air North continues to be the world’s No. 1 airline in a niche but, in my view, critical category: most economically interesting in-flight magazine.
CEO Joe Sparling’s letters to passengers have long been full of interesting facts about airline traffic, supply and demand, load factors and other items that make it impossible for an economist to get bored on the flight to Vancouver.
The latest edition gives us hard data on the scale of Air North’s direct impact on the Yukon jobs market.
Air North now employs over 500 people, of which around 250 live in the Yukon. Many of these are long-time Yukoners, with a quarter born in the territory and many more with a decade or more living here. Almost 100 employees at Air North’s Whitehorse hub have been with the company more than five years.
Human resources officials like these kind of statistics, since it suggests Air North has succeeded in building a team that is committed to the community and the business.
It’s also good for the economy. We don’t know the wage bill of Air North, but let’s make some estimates. The average income filed by a Yukon taxpayer in 2011 was $51,000. If we gross that up to $60,000 to cover benefit costs, and multiply by 250 Yukon workers, that gets to $15 million in local payroll.
That’s a big number in an economy the size of ours. And that doesn’t count contractors and local suppliers.
The average income tax paid by a Yukon taxpayer in 2011 was $8,000. For 25 employees, that works out to $2 million to be split between the feds and Yukon government. Then there is also the contribution Air North employees make to defraying the costs of the Yukon’s workers compensation system.
If Air North didn’t exist, most of that payroll would be in other airline hubs. That would leave a big hole in the Yukon economy.
That’s the direct effect. Sparling’s latest letter also gives us some suggestions of the indirect effect. It says that, back in 2001 before Air North’s jet service began, total passenger numbers at YXY were 150,000. In 2014 the figure was over 300,000 with Air North capturing a 58 per cent market share.
A big part of this increase is due, in my opinion, to Air North driving prices lower.
While things like steadily rising property taxes and electricity rates undermine the competitiveness of Yukon businesses, Air North is supporting the Yukon economy with cheaper travel. Travel is a key input for many businesses here. The effect is hard to measure, but is broad.
It’s easier to attract and retain staff since they can travel to and from the territory more cheaply. Knowledge workers can base themselves in the Yukon, and travel economically to their clients. People may not like fly-in workers, but mines depend on them. Air North helps Yukon mines lower their costs, critical in these days of falling mineral prices. Tourists find it cheaper to travel to the land of the midnight sun, home of the Klondike, or the guest room of the relative who moved annoyingly way up north.
The cheapness of travel to Vancouver may hurt some local businesses, since Yukoners may spend more of their disposable income on travel and shopping Outside than they used to in the days of CP Air. But the net effect of Air North has to be strongly positive.
The Vuntut Development Corporation as well as one Yukoner in 15 are shareholders of Air North, so lots of people benefit when Air North profits. The airline is also a generous contributor to Yukon community groups.
However, the airline business is notoriously tough. Air North faces large and tough competitors. The history books are full of failed regional airlines. The big U.S. carriers keep legions of bankruptcy lawyers in new SUVs. Air North’s peers in the N.W.T. and Nunavut are often in the newspapers, and not in a good way.
Sparling’s letter suggests that Air North is not complacent about its success. The new Ottawa route is turning out to be less profitable than the other routes, but achieved breakeven in 2014. Lower fuel prices will help. And Air North continues to work hard to earn Yukoners’ business.
Ultimately, the jobs and economic benefits created by Air North depend on Yukon individuals, businesses and governments choosing the airline for their travel over the competition.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. You can follow him on Channel 9’s Yukonomist show or Twitter @hallidaykeith