Next week (April 28-30) is the 38th Annual Northern Air Transport Association (NATA) Conference, AGM and Trade Show in Whitehorse, Yukon which brings together all the operators (38) and the associate members (OEM’s, airports, MRO’s, insurers and law offices, etc.). It comes as the big news in the region is the proposed Canadian North and First Air merger, with talks still on going between Makivik and NorTerra the two owners of the airlines.
My interest is always what is or is not happening in particular airlines, strategy, marketing, business development and sustainable business models, now there is generally little to get excited about in the North in those regards, status quo has been maintained, mostly small operators in remote regions with little in the way of competition and little change in business models, thinking and strategy.
But, 2013 was an interesting year as far as I am concerned for two companies, Air North and Summit Air. Now, Air North goes back to 1977 when it started with a Cessna 206, and worked its way through the large piston aircraft like DC-3 and DC-4 like some other northern company, but by the late 1990’s it moved into turbine equipment (B99, HS748’s) and today it operates 5 x B737’s (1 x 400, 2 x 200’s and 2 x 500’s) and 5 x HS748’s on scheduled services with the B737’s from Whitehorse to Edmonton, Calgary, Vancouver, Kelowna and Ottawa, and Dawson Creek, Old Crow and Inuvik with the HS748 turboprops. To go from DC-3’s to B737’s is major accomplishment, and the fact that the company continues to grow 12 years after its first B737 is a testament to its management, which is lead by Mr. Joe Sparling its President and majority owner.
Air North has had to face head on Air Canada and WestJet for many years now, and that is no easy task for any airline never mind one that is at a slight cost disadvantage being based in the North and having to face AC and WJ coming from the south, mainly during the peak summer months. The airline today is 51% owned by Mr. Joe Sparling and 49% by the Vuntut Development Corp. which is for profit Corp. for the citizens of the Vuntut First Nation (the community of Old Crow). In 2013, Air North launched its first route expansion since 2002 (11 years), as it opened a Whitehorse-Kelowna-Vancouver-Whitehorse service, initially seasonal now all year round, and then alter in November announced a new Whitehorse-Yellowknife-Ottawa service which started on Feb 12, 2014 twice a week. This is a very strategic move my Air North, breaks them out of the Vancouver, Calgary, Edmonton ‘box’ and opens up the east through a northern routing via Yellowknife, a hotly contested market of 4 major players, Air Canada, WestJet, Canadian North and First Air.
Stepping back and seeing how little changes in the North, these two new routes are a wonderful example of strategy, looking beyond your traditional market, looking out into the future and seeing a whole new future and market potential, which the other operators of the north do not see. It takes a real visionary business leader to accomplish what Mr. Joe Sparling has done with Air North, and he does fly the airplanes, but as an MBA graduate he is also very business minded. he has the business sense to grow the business, and run it well as he is facing more competition than any other northern based airline today. yes, 20 years ago, Air North was a DC-3/DC-4 operator like Buffalo Airways, one operator moved forward and never looked back the other is still running 70 year old airplanes. Yes, Air North has to change its HS748’s soon, they are 35+years old and I am sure the ATR-42 or DHC-8-300 is on the cards for the future, step by step is how you make changes.
I think Air North has a bright future, after 12 years of operating big B737 jets against the likes of WJ and AC, it is still here, growing and not afraid to try new routes and markets, that is a how you run an airline in the 21st century, build a proper business model and you have a future, count on your monopoly and just hope things will get better, and you will not last. There is a lesson here for all operators, and that is in today’s highly competitive aviation market, you need to run the business, you need to understand your competitive advantage, your value proposition and your strengths and weaknesses, so you know what you can and cannot do, no more seat of the pants management, unless you are one of those operators in a monopoly with no competition, but times are changing and when that competition does show up, those not used to competition will fail quickly.
There are many opportunities in the North, but it takes leadership, business sense and a vision of what can be done. It is why you want to have new people with new ideas in your companies, too many operators have the old thinking of “if it ain’t broke, why fix it ?” and the 1980’s management style of “hoping” things work out is not good enough anymore, HOPE IS NOT A STRATEGY !
The other company making waves today in the North is Yellowknife based Summit Air, now owned by Ledcor Group, which bought it in 2009 and later added Artic Sunwest, now both operating as Summit Air, along the way Trinity Helicopters was bought and in February 2014, CC Helicopters of Kamloops was acquired, and now both operations are under the Summit brand. I should point out that Ledcor Group is also partner in Aurora Jet Partners a fractional business jet operator and ownership/management company, so Ledcor Group is another one of those big well financed companies coming into the aviation industry and driving consolidation, more on that in another article.
Last summer, Ledcor Group brought in aviation veteran Mr. Robert Mauracher as President of Summit Air, and to thos eof us who really follow this industry, one knew big changes were coming, because Mr. Mauracher has years of experience from different segments of the industry, always a recipe for success instead of having someone who has done one and only one thing in aviation in their career. With senior positions at Viking Air, Air Creebec, Air Ontario, Austin Airways (all 3 part of the Deluce family holdings at one time), Bombardier, Air Jamaica and Hawaii Island Air, this man has the background to put into real change, and he has in short order. Last week, Summit Air launched Summit Air Baffin, little info yet, but its says Summit Air is going to Baffin Island, things will heat up there, as competition will increase there.
In March, Summit Air announced it will launch 90 seat BAe RJ85 operations with two aircraft starting this summer for Diavik Diamond Mines in partnership with Det’on Cho Logistics and First Air. The BA RJ 85 is a ‘better” BAe 146-200 which North Cariboo is using, a good aircraft for short gravel runways, high wing and 4 engines, it is a more economical choice than the 30-40 year old B737-200ADV’s being used by Canadian North, First Air, Air North and Air Inuit. It is good to see the come back of the BAe 146/RJ’s in Canada, especially for the North, they are a good workhorse and much younger than the B737-200ADV.
This move by Summit Air will open up new opportunities, not just in Canada but internationally as ACMI leasing is big right now just look at Voyageur Airways and R1 today. Another big move is the announcement that Summit Aviation Group will lease up to 4 of it Dornier 212-202’s to Indonesia’s West Java based Susi Air, which runs 40+ Cessna Caravans to open up scheduled routes with twin engine turboprops, I sold D0228’s for Dornier in Germany 20 years ago and its good to see that its special capabilities are still in demand and Summit Air can lease its DHC-8, DHC-5 as well overseas, should it choose to do so. These are the things people with vast international diverse experience can offer companies in Canada, a new way of looking at the aviation business, this lack of vision is caused by not having the experience, know how and vision within your ranks of managers. In my few years back to Canada, I have found a lack of a real vision or understanding of management principals and what can be done beyond your own market, especially in the North, where new ideas and ways of competing are rare, and consumers suffer from lack of competition, little improvement in quality of service and are captive to very high air fares.
With operations given by CAR’s, setting up an operation is relatively easy, its all given and straight forward, but it is the business side that differentiates one airline from another, it determines success or failure, and its all about leadership, the strategy, vision, the marketing, the branding, the ability and know how to finance the operation, all of this determines the success or failure in the long run. There is no magical formula and manual here, its about having experienced, educated and knowledgeable managers to carry out the 6 functions of management properly (1. Forecasting 2. Planning 3. Organizing 4.Commanding 5. Coordinating 6. Controlling).
Lastly, Summit Aviation group has formed a new entity called Summit Kitimaat Aviation Limited Partnership with the Haisla Nation and that will be paying off as well as that region’s economic activity starts to boom. Bringing in Mr. Rob Mauracher has transformed Summit Air, and if I were Air Tindi, I would be worried right now with the emergence of a tough new competitor, that just may get the local Northwest Territories Air Ambulance contract, which should be announced soon, either way, it is going to be interesting to watch how competition develops in Yellowknife and the surrounding communities.
My congratulations to the North’s visionaries, Air North and Summit Air, thanks to good leadership and business skills of people like Joe Sparling and Rob Mauracher, Northern operators are finding new markets to compete in and they will continue to grow, and that gives me hope that change will come to the North, those companies that are lean, well financed, visionary and business oriented are going to dominate the North.
Till next time, thank you.