Good afternoon.
My name is Yani Gagnon, and I am the co-owner of Pascan Aviation. During this presentation, we will share with you the challenges that are unique to regional air transportation. My business partner, Julian Roberts, who is here today, and I would then be happy to answer your questions.
Here is an overview of our company, Pascan Aviation. We are not promoters, but rather certified operators. Our business is fully Canadian-owned, and it is set up in Quebec. We have been operating it for 20 years. Our mission is to connect regions to one another and to large urban centres. We have more than 130 employees and currently offer flights across eastern Quebec and Labrador by serving 10 airports daily.
We have an aircraft fleet consisting of seven 19-seat BAe Jetstream 32s and four 34-seat Saab 340Bs. We will also have an opportunity to acquire another three to six Saab 340Bs in 2021.
We have a proven track record in terms of safety and compliance with Transport Canada. We have not had an accident since the beginning of our operations.
Before the pandemic, we were completing about 80 flight segments a day and transporting over 5,000 passengers a month. However, those figures have dropped by 35%.
We ensure the delivery of essential goods to the regions. We cover postal, medical and commercial needs. We have taken over for Air Canada in a number of regions, especially when it comes to medical needs. We also transport patients and medical staff to the Îles-de-la-Madeleine, Gaspé and Fermont hospitals.
The impact of COVID-19 on air transportation is a global disaster that has led to significant reductions in passenger volume and to dropped air connections, as well as to spiralling operating costs. The industry as a whole must reinvent itself. That will certainly require some time, but the status quo is no longer possible. Most specifically for us, small carriers, COVID-19 has magnified the vulnerabilities of regional air transportation, which existed before the pandemic.
The main purpose of regional air transportation is to serve small communities that are far from major centres. Most of those communities have a population of 25,000 or less, and an air link is a matter of economic survival for them. Therefore, regional air transportation is characterized by low passenger volumes.
Some stakeholders are saying that passenger volume reflects a direct correlation between ticket price and service offering. However, there are limits to that correlation. There are actually market pockets for which we could not generate more volume, even if we were to lower prices by 50% and add 50-seat aircraft. Some markets essentially reflect worker movements, especially in the mining sector.
Our operating cost structure is very high. All sorts of taxes and fees, for which the air carrier is only a collecting agent, account for between 35% and 40% of a ticket's cost. The constant increase in operating costs is also unfortunate. Last fall, for example, Nav Canada increased its fees by 30% unilaterally.
Many people are making the following comparison. They are saying that a plane ticket from Montreal to Sept-Îles costs more than a ticket from Montreal to Paris. Unfortunately, apples are being compared to oranges in this case. On international flights, large aircraft for 300 passengers and up have first class and business class seats that are sold at a high price. We are talking about $3,000 to $7,000 for a return ticket, which covers the total cost of the flight. The rest of the seats account for profit. The regional market is not large enough to support aircraft of that size. What is more, no one will buy a first-class ticket for a flight from Montreal to Sept-Îles.
For air carriers, the commercial risk is tremendous, as operating costs are almost predominantly imposed just before takeoff, regardless of the number of passengers on board. It is clear that various levels of government assuming some of the airport fees could lead to lower ticket prices.
Safety management and compliance with Transport Canada's regulations are critical in aviation. This is also very costly, especially for small airlines like Pascan Aviation. Safety management must be part of the carrier's DNA, and it is not something that is gained overnight. It requires years of experience and safety audits over the years.