A New York state of mind
By Bob Mackin
Harmony Airways CEO Gary Collins talks with BIV reporter Bob Mackin about his company’s new connections to the Big Apple and the challenges of expanding a locally based airline business to other parts of the world
New York City: Harmony Airways CEO Gary Collins is sitting in Shula’s Steak House in New York’s Times Square district. The walls are festooned with souvenirs of the Miami Dolphins’ unbeaten 1972 season.Like legendary coach Don Shula, Collins knows that putting together a winning lineup is the path to perfection. Harmony’s latest additions are San Francisco and New York, hence the cable cars and taxi cabs advertising campaign devised by Publicis Vancouver.
BIV: Harmony is taking on bigger, more established Canadian and American air carriers with the new routes. What’s the strategy?
Gary Collins: New York [is] a market that’s been underserved and when it has been it’s been poorly serviced. The schedules from the other carriers are poor. If you want to fly at a decent time of day you have to fly through Toronto or Calgary or Seattle. Even Cathay, which offers a good level of service, their schedule is late afternoon, and you have to clear customs at JFK [Airport], which is not a pleasant experience if you’ve ever done it.
We took what we’ve done in Hawaii, which is pre-clear when we can, a good schedule that works for people. It’s going to be an extremely successful route for us, the way Hawaii has been.
I’m a firm believer in show-me-don’t-tell-me. With New York, it’s the world-class city. There’s half a dozen that rank in that category. San Francisco is a similar icon city. People know what it’s about, cable cars and Fisherman’s Wharf, the wine district … so much in San Francisco. It’s a great weekend destination.
BIV: You’ve applied to fly to Beijing and Shanghai and the service could launch early next year if you receive approvals. Why is it taking so long?
Collins: It’s really at the policy level in the [transport] ministry. We’re working with them to educate them on that, if I can put it that way. [Approved Destination Status] makes it more attractive, but we think there is sufficient market in China without that.
It’s a chicken and egg game we’ve been playing with them. They say you get the aircraft and we’ll look at the frequencies. It’s pretty hard to go out and spend hundreds of millions of dollars on aircraft, not knowing [if] you’re going to have some place to send them. We’re waiting to see where they go with that.
I think they’ve got to modernize their policies. The government’s got to realize that you can have your air policy branch making policy, but you’ve got an economic policy for the entire country that talks about opening up the China gateway.
If you’ve got one air carrier doing that in Canada, you’re not opening it up. We’re still talking with them and hopefully they’ll get their heads around it.
Other people in government know about it, but the people in the air policy branch are still in 1970s mode. [B.C.’s senior cabinet minister] David [Emerson] has been supportive, and as an economist he understands what they’re talking about.
BIV: Harmony is a privately held company. As such you don’t release financials. Where does the company want to go and how big do you want to grow?
Collins: It’s an extremely capital intensive business. Not many people using their own assets say, ‘let’s start an airline.’ David [Ho, Harmony’s owner] is one of them.
One of the challenges you see with the startup carrier – and WestJet is a perfect example – their attractiveness to shareholders is high growth rates, increasing in asset value, but in order to stay there you’ve got to really grow. You can’t do 30 to 35 per cent growth forever. WestJet has found themselves in that situation. They’re still trying to expand into a lot of places.
David doesn’t need 34 per cent growth. He’s much more comfortable with normal growth rates.
BIV: You have been making alliances with a number of small to medium-sized airlines. Hawaiian, China Eastern, China and Air North, which is the partnership passengers notice at YVR.
Collins: We were using a different company we were extremely disappointed in. The baggage delivery was very slow. The check-in was sometimes good, sometimes not great. When you’re selling customer service you’ve got to make sure it’s good.
In November last year, we did a round-the-world charter. A company out of Toronto does these around-the-world charters. The first stop was Whitehorse, so we started talking. Nice people, really focused on customer service, which is rare in this industry, and we clicked. They said we should do some joint marketing. We fly a lot of people to Vancouver. You fly people to Hawaii. People here like to go to Hawaii. It just got better and better.
BIV: How will Harmony benefit from the new open skies pact with the United States? Any more new destinations?
Collins: The economy is very strong in B.C. and in Alberta. The dollar being as strong as it is, it’s making it more attractive to a lot of the places we go. There’s nothing in the wings for a little while, maybe one or two things. We always try to have some ready so we’re prepared for whatever the market is … with the new rules we could step up and say we want that route. Those kinds of things always take a little while to evolve.
Florida is another market that’s poorly served or not served at all out of Vancouver. It also fits for our aircraft. We like routes that are four hours plus, because of the 757, it starts to get quite competitive at those distances. There’s a whole new range of 737s out there that are fuel efficient and competitive.
Last edited by phesto; Jul 11, 2006 at 10:41 PM.
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