Business travel heading north of 60
Mining and tourism helping drive northern commerce
By Monte Stewart - Business Edge
Published: 09/07/2007 - Vol. 7, No. 18
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Business travel is on the rise in Canada's North, say tourism and aviation operators above and below the 60th parallel.
Diamonds, energy, conventions, corporate retreats and even the famous Northern Lights are prompting airlines to offer more flights to Yellowknife and points farther north - while also giving hope to destination promoters who fight stereotypes about cold weather in the Yukon, Northwest Territories and Nunavut.
According to northern tourism associations, tourist traffic traditionally outpaces business travel by a wide margin north of 60.
This winter, Air Canada, through its Jazz subsidiary, will offer daily non-stop flights between Vancouver and Yellowknife using its 50-seat Bombardier CRJ aircraft.
Photo courtesy of Air North
Air North is marketing new vacation packages to the business leisure market as it works to builds its customer base.
"No. 1, there is business traffic between Vancouver and Yellowknife with the mining industry," says Air Canada spokeswoman Angela Mah. "Secondly, we do expect it to be popular with some of the leisure travellers, particularly from Asia - Japan in particular - for the Northern Lights."
Japanese couples, who have flocked to the North in recent years, believe conceiving children under the Aurora Borealis bodes well for a family's future. Air Canada has scheduled the Vancouver-Yellowknife flights to connect with planes arriving in Vancouver from Tokyo and Osaka.
When the winter season draws to a close, Air Canada will consider extending the Vancouver-Yellowknife service into the summer. The route addition comes after Canada's largest air carrier began offering direct daily flights between Calgary, Edmonton and Yellowknife last year.
Debra Ryan, a spokeswoman for Whitehorse-based Air North, says more corporate passengers will be a factor in the company's expected decision to acquire more aircraft within three years, although it caters primarily to Yukoners. The company has steadily increased its load factor in recent years.
Air North offers business-class service five flights per week to Whitehorse from Calgary and Edmonton, plus nine flights per week in summer and seven in winter to Vancouver. The company also provides connecting service to Whitehorse from Toronto and points farther east, carries passengers to Dawson City, Old Crow and Inuvik, and links with several smaller airlines that fly to destinations closer to the Arctic Circle.
Ryan says Air North's meal service, increased competition with Air Canada - which has resulted in a 30-per-cent reduction in fares since 2002 - and increased mining and oil and gas activity are drawing more corporate passengers, who often stay overnight in Whitehorse.
Air North is also marketing vacation packages to the so-called business leisure market - passengers who combine business with sightseeing - from Vancouver, Calgary and Edmonton.
In addition to Air Canada and Air North, Ottawa-based First Air - by far the region's largest airline operator - and Canadian North provide scheduled service to the Yukon, Northwest Territories and Nunavut. WestJet also provides many connecting flights.
Ryan says many people don't understand flight routes and schedules when trying to reach northern destinations. But some business passengers have become "quite savvy" at combining northern carriers' products with those of WestJet and Air Canada to get to outlying communities as quickly as possible.
She expects the world's increasing demand for hydrocarbons, the reopening of Yukon mines and the steady influx of major retail chains, including Superstore and Starbucks, to boost Air North's traffic in future.
In 2006, Air North generated $37.5 million, up 25 per cent from the previous year, while ridership increased seven per cent to about 107,000. Totals are expected to climb again this year. The airline also carted four million pounds of cargo, which has a strong link to business travel because many companies fly in heavy equipment as well as personnel.
First Air vice-president of marketing and sales Jim Ballingall predicts slow, steady growth of airline traffic in the North. The company will add a new year-round, six-day-a week route between Winnipeg, Thompson, Man., and Rankin Inlet this November.
Ballingall points to Yellowknife, a city of about 17,000 people, as an example of just how competitive northern aviation can be.
Three airlines - First Air, Air Canada and Canadian North - operate 10 flights per day between Yellowknife, Calgary and Edmonton.
"You wouldn't see that anywhere else in Canada, anywhere else in the world, I wouldn't think, going into a town that small," he says.
First Air offers flights to the North from four main southern bases - Ottawa, Winnipeg, Montreal and Edmonton - and connects to Vancouver with Air Canada. The firm, which has 1,000 employees system-wide, also operates many short-haul flights from three main northern centres - Iqaluit, Rankin Inlet and Yellowknife - while serving about 24 northern communities.
Ballingall says "a good percentage" of the firm's 225,000 passengers per year are business travellers.
"When you say business travellers, they're travelling to the mines," he says. "You've got consultants, you've got government officials, you've got health officials - it's a broad spectrum."
Different travel aviation industry insiders offer differing definitions of a northern business traveller.
Passengers include mining and energy company personnel headed to work at mines and exploration sites, often bringing equipment with them.
Ballingall describes cargo as "a mainstay" of the company's operations. Last year, First Air purchased its second Lockheed 382G Hercules plane to help cope with increased cargo volume. The Hercules, often used on military and international relief missions, costs upward of US$15 million and can carry about 20,000 kilograms per trip.
"We're the only operator of civilian-registered Hercs (in Canada)," says Ballingall. "They fly 365 days a year in the North on supply to the mines (and) on hauling fuel.
"You've gotta remember that north of 60, the only way in and out of the communities is via air. We are the road of the North."
First Air is considering the purchase of a "wide-bodied freighter," possibly a Boeing 767, that would operate primarily between Eastern Canada and the North.
Rick Erickson, a leading Calgary-based aviation industry analyst, does not expect a huge increase in corporate passenger and cargo traffic in the North in coming years, despite increasing industrial activity.
"Other than the diamond mining exploration cycle going on in Yellowknife right now, I think that the market is fairly mature," he says. "It's a steady-as-she-goes (market.)
"Costs are relatively high because of the high operating costs of specialized equipment in northern weather. So there are some challenges and problems with that."
He suggests airline traffic will remain strong, because aviation is "indispensable" to the North's social and economic wellbeing, and there are no alternatives when it comes to transporting everything from milk to generators to remote communities.
But most cargo loads are too small to generate big gains, he adds, and projects such as the long-proposed Mackenzie Valley gas pipeline will only produce temporary traffic spikes.
"(Travel operators) have not been overly successful in terms of tourism, trying to get southern Canadians - or anybody for that matter - to visit because of the cost and challenges," he adds.
But Jenn Houtby, managing director of the Yukon Convention Bureau, says business events are increasing in the Territories. Her group expects to generate approximately $7 million in direct spending this fiscal year.
"It's a bit skewed because we hosted the Canada (Winter) Games this year," says Houtby. "Traditionally, we would be somewhere around the $4-million mark. Next year, we're on track to do between $4.5-$5 million."
The Yukon hosts 5,000-6,000 convention delegates annually - the equivalent of one large conference in Vancouver. Houtby says the amount of convention-related spending by visitors has almost doubled to about $5 million from $2.5 million, and her bureau's membership has increased about 20 per cent in each of the past three years.
"Our bread-and-butter market at this time is the association market," she says.
But the bureau still faces lengthy delays when it comes to winning convention contracts - and fighting stereotypes about cold weather, lack of amenities and inaccessibility.
Instead of the usual three months to a year to secure a contract, it could take the Yukon a year or two.
Then, like convention-centre operators everywhere else, her bureau must wait three to five years for the actual event to be held.
But attitudes about latitudes are changing.
Northern business travellers also tend to stay longer - two or three weeks on average - than those who can visit southern destinations more frequently. And the Yukon stands to benefit as more Canadian companies require conventions to be held at home rather than in other countries following 9/11.
Corporate retreats are also on the rise, she says. Japan's Toshiba Corp. has booked a lodge for 35 employees in September.
"We're getting more and more requests for that type of business, which is new for us," she says.
(Monte Stewart can be reached at
[email protected])
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