Indigenous and Northern Affairs Committee on Nov. 17th, 2009

[Stephen Mills]

The economy has been a bit down over the last year. We saw close to 100,000 passenger segments in 2007 drop to around 97,000 passenger segments in 2008. Our cargo is an integral part of our airline. We have two elements to our airline: one is the jet service; the other is turboprop service to the northern communities.

Our service to the north relies heavily on a combination of cargo and passengers. This allows us to fly larger aircraft, so that the rates that we charge into these northern communities are probably one-half of what you would get with turboprop service in other northern territories. It is probably the same turboprop rate as you would get with Air Canada Jazz or others in the south. We charge a significantly lower rate, but we rely on cargo. So if you have 30 people on the aircraft, you also have one-half of the aircraft full of cargo. On a weight-by-weight basis, it's about the same to fly people as to fly cargo—you just don't have to feed it.

From the south, we also rely on cargo. We do what we call, for our stats, our cargo-adjusted load factors. We may fly our aircraft with fewer people, but we provide all the air-bound cargo of all couriers and others into the Yukon. For the mining companies, we provide key cargo out of Dawson and other towns.

We also do quite a bit of charter work, including flying people out of Vancouver to the Queen Charlotte Islands. We fly people home from the oil sands, and we also fly people from the south into Churchill and other areas for polar bear viewing. We've tried hard to stay diversified and run an effective charter program. I would say charter is about 8% to 10% of our business.

Passenger service is the largest amount of our business, but cargo is a key part. That's what makes our planes profitable, even though we may be facing some fairly serious competition in getting people into the seats.

[Earl Dreeshen, Conservative, Red Deer, AB]

Do people know this? When we're looking at other parts, other airports and so on, do they know they could be using Air North in order to move that kind of cargo? What kind of barriers do you have? Are you having the same type of problem, with Air Canada and some of these other guys being in the way?

[Stephen Mills]

Air Canada isn't actually a competitor to us on the northern schedules. They fly these smaller aircraft that really have no cargo capacity. They've actually helped us secure the market for cargo.

Our Hawker Siddeley 748s are very effective turboprops, and we use those to provide cargo to Vancouver Island and many other areas. I think people are aware that we charter.

We're able to be competitive. All our aircraft are paid for, and that's a nice thing to have. We can park our aircraft if we need to, and we do park our aircraft. We usually have one jet and at least two Hawkers parked for the summer in Vancouver, strictly for charter work.

The other thing is that we are currently looking at purchasing a more modern jet that is more fuel efficient and has a slightly larger capacity to keep us competitive with the national and mainline carriers.

[The Chair, Conservative, Bruce Stanton]

You have about 20 seconds for a short question.

[Earl Dreeshen, Conservative, Red Deer, AB]

I want to mention something to Mr. Johnston. My father-in-law was a trapper, and he bought furs for the Edmonton fur auction and so on. When you talked about setting the points and all these types of things, I was wondering whether you had a relationship with people who have that type of history, or the aboriginal elders, as far as assisting with what you do with respect to the Yukon's museums.

[Marc Johnson]

Yes, is the short answer to that. We have ongoing programs with almost every museum that particularly involve first nations. Their cultural heritage and oral heritage is part of a whole other thing we haven't talked about yet. That aboriginal heritage is very different from the built heritage we like to talk about in the more traditional museum sector.

I'm thinking particularly of the Dawson City museum, which is a large museum for a small town. They've just come on board with the kind of display you're talking about. They have life-sized mannequins, if you will, of living people within the community, to demonstrate their own background and what they have brought to Dawson on an individual basis.

[The Chair, Conservative, Bruce Stanton]

Thank you very much.

Mr. Gaudet now has five minutes.

Mr. Gaudet.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Mr. Chair. I would like to know what the impact will be, as far as museums, tourism and Air North's operations go. The federal government is investing $33 billion in the territory on energy, mining and diamond research.

Will that benefit you? Will infrastructure be built? I do not know, that is why I am asking. What impact will the $33 billion being invested by the federal government have?

[Marc Johnson]

I'm not sure it's a downfall. We are always looking for funding. We look at the private sector as well. For instance, we sometimes bring on board the Silver Trail Tourism Association, which has an ongoing relationship with Alexco, the mining company operating within our jurisdiction.

If the federal government invests that kind of money, some of it will invariably filter down to the museum sector. I'm not thinking it would always fulfill our wildest dreams, but some of it will filter down to the museum sector. We're consistently looking for funding from the private sector, as well as government.

[Roger Gaudet, Bloc, Montcalm, QC]

Yes, Mr.....

[Stephen Mills]

Federal government investment, whether it is investment that improves museums or tourism, is all good for Air North.

With respect to investments in industry, in mining and oil and gas, our company does crew changes for some of the mining companies. The more we can get some of these developments, the more ability we have to increase the number of communities we can provide air service to. It also then multiplies in the ability for us to take crews out of remote areas through Whitehorse, and it increases our service to the south.

These types of programs, to me, are win-win situations for our airline. It's not always investment in the airline that increases our service or viability; an increase in the economy of the Yukon, without a doubt, improves our airline.

[Sandy Hachey]

I'd like to echo what Stephen is saying. The tourism industry has always said that we need to have both mining and tourism in the territory. We need to have a balanced approach.

Many of our operators benefit from mining companies operating here in the territory, and that's for everything from airlines to hoteliers, restauranteurs, retail outlets, etc.

So we're definitely not against that; we just are always advocating a balanced approach.

[Roger Gaudet, Bloc, Montcalm, QC]

Mr. Johnston, how many museums does the territory have?

[Marc Johnson]

That's a million-dollar question. I can't answer it with a finite number, because certainly we would like to represent all of them, but they aren't all members of our organization. Some of them are very tiny and private. Some of them are much larger, like the Dawson City Museum or the MacBride Museum here in Whitehorse. I'm taking an educated guess to say about 25.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you.

[The Chair, Conservative, Bruce Stanton]

Mr. Lévesque, do you have another question?

[Yvon Lévesque, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

In Quebec, specifically, assistance has been provided to air carriers so they can offer better prices on travel to remote regions. For instance, if you fly from Vancouver to France, I am sure that the ticket will cost less than a flight from Whitehorse to Vancouver. We have already had a program to help regional carriers bring down their prices and thereby encourage the public to travel by air instead of by car.

They are doing it elsewhere, as well. It is very common in Sweden. My friend, Mr. Bagnell, and I saw it when we went to Sweden. In the small Swedish town of Kiruna, with a population of barely 20,000, a 748 airplane is full for every departure, and the flight costs nothing. People prefer to go by plane than by car.

Would a similar measure have the same impact here, both with tourists as with the population and local businesses?

[Stephen Mills]

Funding of this type definitely would be of great use to our airline given that we provide both a turboprop service and the jet service to our communities.

I would say, though, that one way to lower fares is to better manage capacity. We have attempted to do that as much as possible. Any time you flood a market with excess seats, the price per seat will in the end have to go up in order for the companies to make money. We found that in a more stable environment, where it's properly managed, airfares can decrease.

On the northern schedules, it's a little different. The fact is that the smaller the aircraft, the more expensive it is to fly, so I'm thinking that in some communities, even in the Yukon, unless you improve the infrastructure, you can only use smaller aircraft. It is the same within the Northwest Territories, where the runways are even shorter.

So that's another way: to improve infrastructure and allow more affordable and more cost-effective aircraft into these communities. That's another way to improve the economics and reduce prices.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Lévesque and Mr. Gaudet.

Now, it's over to Mr. Duncan for five minutes.

[John Duncan, Conservative, Vancouver Island North, BC]

Thank you again.

I want to pursue two issues that you brought up, Stephen. You mentioned that you can't really upgrade your turboprop capacity because of the fact that you don't have paved strips, but there are so many gravel strips in the north. If you had three or four that were priorities, that would make a huge difference. Do you have such a list in your head as to what ones would be priorities?

[The Chair, Conservative, Bruce Stanton]

Excuse me, Mr. Duncan. It looks like we don't have translation.

Are we okay?

[Yvon Lévesque, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Yes. I was looking at Larry. He was showing signs, so I looked at him.

[The Chair, Conservative, Bruce Stanton]

Pardon me, I misunderstood.

You can proceed. I didn't even take your time away.

[John Duncan, Conservative, Vancouver Island North, BC]

I've asked my first question.

[Stephen Mills]

I'm sure that Mr. Bevington has priorities other than the NWT.

In the Yukon there are only two airstrips on our scheduled service that are gravel. We're talking about the upgrade of two airstrips, which would allow us to upgrade our fleet significantly.

We know that when it comes to crew changes and other things like that we would have to utilize some of our other aircraft. There are gravel strips across the north. That is true. There are aircraft capable of dealing with them, but they are aging aircraft and they are less fuel efficient. Paving these would allow for newer and probably more suitable aircraft for some of these strips. That's what I think we're facing across the north and in many other places.

A lot of our aircraft have been brought out of other areas of the world that have gone to paved strips. In the north we're still using aircraft that are very good for that, but they are not necessarily the best or the most cost-effective for passenger service to small markets.