Air North's president says his airline's route connecting Yellowknife to Ottawa could disappear for weeks at a time during off-peak periods.
"There will probably be some weeks where we won't operate at all," Joe Sparling told Cabin Radio on Tuesday, elaborating on earlier comments in which Sparling promised the route would not be dropped altogether but said details were still being hashed out.
Air North presently flies from Whitehorse to Ottawa and back, via Yellowknife, twice a week. Sparling says travel between Whitehorse and Ottawa is growing, but the Yellowknife leg is underperforming and high fuel costs are turning some trips into a loss for the airline.
Taking aim at Yellowknife Airport's 2017 introduction of higher landing fees and an airport improvement fee payable by passengers, Sparling said: "I think, in the North, air transportation is such a necessity that it's maybe not the right strategy to levy fees and taxes on air travellers.
"You don't see toll booths on our highways and I don't think we should have unreasonable fees to use our airports – we need them to get around."
Read Sparling's interview with Cabin Radio below for more information about the airline's plans.
This interview was recorded on November 6, 2018. It has been edited and condensed for clarity.
Ollie Williams: What's the current situation?
Joe Sparling: Still in the planning stages, Ollie. We are seeing adequate demand during the peak season and some of the non-peak periods producing inadequate demand. In response to that, we'll probably have to pull some capacity during the slowest parts of the year. The need for this is driven primarily by the rise in fuel costs. Unlike our other routes, the Yellowknife route has not produced an offsetting rise in traffic. In fact, traffic is actually down a little bit. When costs go up and revenue decreases, that creates a problem and we need to address it.
I'm sure people can understand that. When you say there may be a reduction in capacity, does that mean the route might go away completely for a few weeks or months at a time?
Well, we're only flying twice a week now and I don't see any point in reducing to once a week during the slow periods. There will probably be some weeks where we won't operate at all. That'll be a choice: cut it back to once a week or not operate at all for a few weeks. We haven't made a firm decision on that, but I'm not sure how useful people would find a once-a-week service.
You have mentioned you partly feel Yellowknife Airport is to blame here. Air North was critical of the airport introducing an airport improvement fee and increasing landing fees. How difference is it in Yellowknife to, say, how your relations are with Whitehorse's airport?
In Whitehorse, the landing and terminal fees are a fraction of what they are in Yellowknife. There is no airport improvement fee. We've had some success in demonstrating to our Yukon government that air travellers are very, very price-elastic – when the cost of travel goes up, people travel less. There are plenty of statistics to show that. While we have had success in demonstrating that to our Yukon government, we were not very successful in making that point to the GNWT. When we see our Whitehorse-Ottawa traffic growing and our Yellowknife-Ottawa traffic shrinking, you can't help but think that it's got something to do with the increased cost of travel resulting from not only the fees, but the increased fuel costs as well.
Another issue you've raised is a lack of support from the federal and territorial governments in terms of taking up seats on your flights. How does that work? Are there standing offer agreements, do you have to bid for the work?
We don't have any contracts in place at all. I'm not sure how it works in your territory but, in our territory, the government – when they want to travel – just look at what service is available. We have to compete for the work and again, I think the Yukon Government does a pretty good job of trying to spend the money locally. I'm not suggesting the GNWT doesn't do that, but I think the route would be more sustainable if we had more uptake from all levels of government. When we first started the route, we expected the lion's share of the traffic would be government travel back and forth – but really, the people buying our product are largely visiting friends and relatives. We are getting our business from a source we really didn't anticipate. That explains why the peak season flights are busier and self-sustaining, and the off-season flights are sometimes not paying their way. A remedy would be if we could attract more government and business travel.
My understanding is, in the NWT, the system operates at least partly on standing offer agreements, whereby an airline can provide services on an ongoing basis. Is that not something Air North has looked into?
I can't say whether we have looked into it or not, quite frankly, but I am pretty sure we are not party to a contract. I expect the GNWT is using us to some extent but we have experienced, over the years, some difficulty in getting the level of federal and territorial government support that we would like. Twice-a-week frequency is not always the best for them and sometimes the frequent flyer program influence probably costs us a few seats.
You sound significantly happier with the Yukon than the NWT. What would change that for you?
Anything we can do to lower our operating costs – lower airport fees would help. Lower fuel prices would help a lot, too. We are stuck in a high fuel-cost environment for the foreseeable future, and the governments have their challenges too. I think, in the North, air transportation is such a necessity that it's maybe not the right strategy to levy fees and taxes on air travellers. You don't see toll booths on our highways and I don't think we should have unreasonable fees to use our airports – we need them to get around.
When will we know, for sure, what the schedule is going to look like?
Within the next couple of weeks, we will be loading additional flights. People can count on the peak-period flights being there; it's just a question of how much capacity we think we need to pull during the slow periods, and identifying what the slowest periods are. We want to look at special events like spring break and sports exchanges between the three capitals – those have always been great sources of businesses for us, and we don't want to do anything that's going to curtail the ability for kids to travel between the three capitals in order to participate in sports and cultural events.