Air North president issues public plea for Northerners to buy local to support Yukon jobs
Company can survive without government subsidies if Air Canada were to drop Vancouver-Whitehorse route
The president of Air North has issued a passionate plea to people travelling to the Yukon to fly with his airline and save northern jobs.
Joeseph Sparling made the plea in column posted Friday. He laid out his vision for the future in stark terms.
“It is becoming increasingly apparent that the industry will need to become accustomed to operating on a much smaller scale for much longer than initially anticipated,” wrote Sparling. “It is also apparent that not every airline will survive the effects of COVID-19. Air North, Yukon’s Airline will survive and we are absolutely prepared to operate on a smaller scale, but how much we have to shrink to survive will have a direct impact on our Yukon employees.”
When the pandemic hit, Air North followed other airlines by drastically cutting service. It suspended flights to Calgary, Edmonton, Kelowna, and Victoria and cut service to Vancouver to just three days a week. It also cancelled or scaled back service to a number of communities it the North.
“We soon found out that our reduced schedule was not providing the flight frequency required for the efficient movement of medical-related passengers and cargo,” said Sparling.
Making money on fewer flights
Following requests from the local hospital and government, Air North increased its frequency to the South. It now flies 18 flights a week; 13 to Vancouver, and five times a week linking Whitehorse with Dawson City, Old Crow, and Inuvik.
There has been a drastic reduction in the number of people flying because of the pandemic. Despite that, Sparling argues Air North can survive.
“At this point we are confident that if we can generate enough traffic to support our current flight schedule we will be able to generate a sufficient operating margin to meet our reduced overhead costs without further subsidies and without major fare increases,” wrote Sparling.
The basic argument is this: 18 flights a week allows Air North to cover fuel, salaries, office expenses, insurance, leases, spare parts, and all those other expenses that make up an airline’s overhead. All it takes is 75 passengers a day each way between Vancouver and Whitehorse – a 31% load factor. Anything more than that is gravy.
But here’s the challenge: Air Canada also flies the route, with 78-seat CRJs.
Now take those same 75 passengers and divide them between the 78 Air Canada seats and the 240 Air North seats. Suddenly you’re at less than 24% load factor – uneconomical by any measure.
Air Canada on his mind
Sparling said COVID-19 has cost his airline more than $17 million. Over the summer, Air North made ends meet thanks to $5.5 million in subsidies. Wage subsidies also helped save jobs – Air North kept 228 people on the payroll in August, but estimates its true size to be in the range of 196 jobs. The government said Wednesday the subsidies will be extended into next summer. But they can’t go on forever.
“Post-September traffic has declined by around 10% but there are still three daily flights in the market, two from us and one from our mainline competitor,” wrote Sparling. “If the market is only able to support two daily flights this winter, there will be more than 100 Yukon jobs on the line if we are forced to split the traffic.”
While Sparling didn’t mention Air Canada by name, it’s clear the country’s dominant carrier is on his mind. He has said in the past the pandemic provides the perfect opportunity for airlines to establish partnerships and work together.
Sparling laid out his vision in an interview Western Aviation News in July. “We’ve been doing the dance with them for almost 20 years,” he said of Air Canada. “But not getting anywhere with them yet.”
Ending government subsidies
Sparling sets himself apart from other airline executives. He’s one of the few not arguing for a government bailout of the industry.
That could mean going down to nine flights a week – enough to keep the airline alive.
“This is a critical time for us, and while we can still operate sustainably with half of our current flights and less than half of our current employees, this would be a worst-case scenario and one which is completely avoidable if we can encourage just a few more passengers to purchase their travel locally every day,” he wrote.
“The Yukon market is currently producing and will likely continue to produce sufficient traffic for us to operate sustainably, without major layoffs, without major airfare increases and without subsidy,” wrote Sparling. “To do this, we need to increase our share of the traffic with the help and support of our employees, our customers, our shareholders, and all of our other key stakeholders.”
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