Air North enjoys considerable customer loyalty from Yukoners, but the airline has long struggled to match one service that its competition offers: luggage transfers to connecting flights.
With WestJet’s entry into the route between Vancouver and Whitehorse this summer, securing such an agreement becomes all the more important.
Air North president Joe Sparling has tried to secure such a deal for a long time, to no avail. This week Economic Development Minister Currie Dixon volunteered “to lend a supportive voice” by sitting in at meetings between Air North and national carriers to secure luggage transfers.
“We’re interested in seeing them survive this battle between Air Canada and WestJet. We don’t want them to be lost in the fray,” said Dixon.
On the face of things, it’s hard to see much benefit to Air Canada and WestJet to help out their local rival.
But Dixon’s pitch is that it’s a win for all. That’s because the Vancouver to Whitehorse route is “less than one quarter of one per cent” of the national market, he said.
National airlines want a piece of the route, not because it’s profitable in itself, but to help “feed bodies” on to other flights, said Dixon. “They make money between Vancouver and Toronto.”
But he doesn’t think him playing hardball with the national carriers would help.
He could always threaten to pull travelling government officials from unco-operative national carriers, but “Yukon government travel is so small,” said Dixon. “It’s less than five per cent of the total market.”
Sparling puts that figure closer to 10 per cent. And the territorial government is the single biggest purchaser of tickets from Air North, he said.
“It’s pretty significant,” he said.
In 2011, Air North received approximately 60 per cent of Yukon government air travel from Whitehorse. Those tickets cost $4.09 million.
Sparling suspects the territory could exert pressure on national carriers through its travel policy.
“I’d tend to think it would be a bit of a lever. It ought to get their attention,” said Sparling. “But I don’t know how the big guys look at these things. Whitehorse is such a small market.”
Air North once had a baggage agreement with Air Canada. But Air Canada dropped the deal, citing logistical and security concerns, said Sparling.
Until recently, WestJet hadn’t signed baggage deals with any airline. That’s now changing, with the company inking agreements with international carriers.
Both competitors recently indicated they’d be willing to consider striking baggage agreements with Air North, said Sparling.
While Air North uses Whitehorse as its operational hub, for the other airlines the Yukon’s capital is a faraway outpost from Vancouver, said Dixon.
That means a lot of jobs are on the line as the three airlines duke it out.
“Air North is a tremendous contributor to our local economy,” said Dixon. “You’re looking at 1.5 per cent of our gross domestic product. That’s between $25 million to $35 million per year, 168 direct jobs, 64 indirect jobs, and a number of part-time jobs.”
And there are spinoffs. Much of Air North’s spending circulates in the territory’s economy “whether it’s the coffee they buy from Midnight Sun or parts they buy at the local suppliers,” said Dixon. “It’s a significant contribution to the local economy.”
But the airline faces a David versus Goliath battle in terms of the size of its rivals. By revenue “WestJet is 40 times the size of Air North and Air Canada is roughly 200 times the size of Air North,” said Dixon.
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