Stepping It Up

If you’re buzzing along Inglis Drive in Richmond, B.C., looking for number 4760, don’t be surprised if the first sign you spot on the building is “Flying Beaver Bar & Grill.” Fortunately, the Turbine Otter floatplanes docked there are a dead giveaway that this is the head office of Harbour Air. 

The restaurant is actually a partner of Richmond-based Harbour Air, with the airline’s head office located right above the famous airport eatery.
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Thirty-three years ago, Greg McDougall, now CEO of Harbour Air Group, was a corporate pilot for a land development company. When the recession of 1980 hit, he found himself out of a job. Undaunted, a year later he had teamed up with another unemployed pilot, leased an office and two Beaver floatplanes, and in 1982 launched Harbour Air. 
There’s been no looking back. Initially flying charters for the forest industry, McDougall’s Harbour Air Group has blossomed over the last three decades into an award-winning operation, billed as the largest all-seaplane airline in North America. A fleet of 35 floatplanes—three Twin Otters, 21 single Otters and eight Beavers in operation, plus three parked—and 72 pilots provide scheduled flight service connecting Vancouver, Victoria, Nanaimo, Richmond, Sechelt, Comox, Whistler and the Gulf Islands, along with a wide selection of scenic adventure tours and private charters. All told, its operations move 300,000 passengers a year with upwards of 250 departures a day in peak season.
Under McDougall’s leadership, the company’s success reads like a good business school case study. When his first partner left the firm after a year or so, he recruited a new one in 1986. He also acquired nine airplanes from B.C. business mogul Jimmy Pattison’s AirBC, at a time Pattison was rationalizing his company strategies. That was also the year of the highly successful Expo 86, which put Vancouver on the world travel destination map. McDougall spotted a golden opportunity: fly-in B.C. fishing lodges and tours. The business grew into 1989 and beyond; and before long, the second partner left the firm to open his own fishing lodge. McDougall then partnered with well-known pilot Kenn Borek, of Calgary’s Kenn Borek Air, which gave Harbour Air access to its first Twin Otters.
The company continued to expand through the 1990s, acquiring an operator in Prince Rupert that served the towns of Masset and Sandspit on the Queen Charlotte Islands (now named Haida Gwaii). By 1995, Harbour Air had grown into the largest charter operator in the province. But McDougall had further ambitions, like a scheduled service between Vancouver and Victoria, a route on which they were already operating charters. A year after Harbour was outbid by upstart Westcoast Air for AirBC’s float-equipped Twin Otters and the lucrative Vancouver-Victoria route, McDougall launched competing service in 1996: 20 flights a day at fares well below those of Westcoast. That was followed by a similar move against competitor Baxter Air on the Vancouver-Nanaimo route. Harbour’s operations grew apace; scheduled routes and sightseeing flight revenues soon outgrew the company’s charter income, which continues to this day. 
When Kenn Borek died in a car accident in 2002, McDougall had the opportunity under a survivor clause in the partnership agreement to acquire all of Borek’s shares—which he did. But growth didn’t slow down: in 2003, Harbour acquired a Victoria sightseeing operation named Cooper Air, which added considerably to its tourism-oriented business. The company could now offer adventures like whale-watching, kayaking and local aerial tours of the island.
In 2004, Harbour expanded its horizons overseas to the Mediterranean, entering partnerships in Malta for cruise passenger day trips and Twin Otter float operations in Greece, between the islands of Corfu and Paxos. Those recently wound down, “to focus on our operations here,” said Meredith Moll, vice president of sales and marketing for Harbour Air Group. 
The 2010 Winter Olympics again focused the world’s attention on Vancouver and the spectacular West Coast. Less than three months after the closing ceremonies, Harbour Air moved to acquire its closest competitor of the time, Westcoast Air—the very airline which outbid them back in 1995, from owner Rick Baxter. 
It was a good strategic buy. “They were our main competition for the Vancouver-Victoria route,” said Moll. “They used Twin Otters for that route; and they also did some smaller routes that we didn’t offer, such as Vancouver-Sechelt and Vancouver-Comox, offering those routes on the de Havilland Beavers.” 
The two companies were merged, but “we kept the Westcoast Air brand within the Harbour Air Group, and that gave us access to the Twin Otters and the new routes,” Moll explained. “It has a good reputation on the coast; a lot of people know it through its signature aircraft, the Twin Otter, so there was a lot of value in keeping that brand.”
Rounding out the list of strategic acquisitions is the 2012 purchase of Whistler Air. “That was fantastic,” said Moll. “They have the primary lease on Green Lake in Whistler for operating to and from the Whistler market.” Harbour Air was already doing charters there, but can now offer scheduled service from Vancouver and Victoria, as well as scenic tours of Whistler. It’s seasonal; usually May to mid-October, when the lake is ice-free. And, there are convenient add-ons. 
“We have a great partnership with the Whistler Mountaineer Train to do day trips,” said Moll, “and then we operate a lot of great charters from there, servicing the mountain bike community.”
Offsetting the Whistler Air purchase was the divestiture of Harbour Air’s Prince Rupert operation earlier this year. The name had been changed to North Pacific Seaplanes, and in mid-March 2013, its assets were picked up by competitor Inland Air, owned by Bruce MacDonald. 
Three Brands, One Balanced Portfolio
Harbour Air Group’s three branded airlines – Harbour Air Seaplanes, Westcoast Air, and Whistler Air – allow the company to provide service to all of its markets, including scheduled runs, sightseeing trips and seasonal flights.
The business split varies by season. “Our high season, which is May to October, is where we have a more extensive schedule, because we are able to operate with longer days,” said Moll. “High season is where we see a lot more tourists who are leisure passengers. We do about a 50-50 split between corporate travellers and tourists.” The longer days allow more flights because the airline flies strictly VFR (visual flight rules).
Scheduled runs operate between the major cities of southwestern coastal B.C.: Vancouver (out of the Coal Harbour dock downtown); Richmond (using the Fraser River); Victoria harbor; Sechelt; Nanaimo; and the Gulf Islands. For these destinations the airline has numerous regular flyers—many of whom commute almost daily. 
‘Flightseeing’ is especially popular with tourists. “The Vancouver Panorama is the 20-minute, lower price point,” said Moll. “It’s a great add-on; it’s not going to break people’s budgets and it works into their itinerary easily. Another one from Vancouver that’s popular is flying to Victoria and doing day trips. For the Victoria day trips we take you to a destination where you can add whale watching or tea at the Empress Hotel, or Butchart Gardens, before flying back to downtown Vancouver. Or, ultimately, if you fly to Whistler you can land on Green Lake. We have a shuttle service that takes you to the village, the peak-to-peak gondola, (you can) spend the day shopping or mountain biking, and then come back down.”
Twenty-one tours are offered in total. Some are unique, like the year-round Mail Run out of Vancouver. The passenger experience is different each run, depending on the day’s mail pickup stops. “It is exciting because it’s basically just hop to hop, seeing some of the different stops we make through the Gulf Islands,” explained Eric Scott, Harbour Air Group’s vice president of flight operations and safety. “It gives them a good idea of what it’s like out there, rather than picking a place on a map and then choosing a flight to have a look.” 
Competition for the Group, especially on the Vancouver-Victoria route, comes mainly from Vancouver’s HeliJet, which operates a fleet of Sikorsky S76 helicopters. “HeliJet charges more, but they also have the ability to fly IFR, which we don’t,” said Scott. So when the West Coast socks in, Harbour stays tied up at the docks. “Basically, we maintain a minimum of 300 feet and two miles visibility.”  
Despite weather complications, there are many regular and satisfied frequent customers. “There are a number of clients that do well over 100 flights a year with us,” said Scott. “I’m one of them. I commute from Sechelt every day.”
Customer satisfaction shows with Harbour’s accolades. “Four years running, we’ve been named one of Canada’s 50 best managed companies,” said Scott. And in 2012, Harbour Air was named one of Canada’s 10 Most Admired Corporate Cultures in the growth and small cap category, by Waterstone Human Capital. 
Safety Focus
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A large part of the company’s success and staff loyalty comes from its devotion to safety: last year, Harbour Air Seaplanes was awarded the Cumberbach Trophy from the Guild of Air Pilots and Air Navigators, for its safety record during a period that saw a considerable number of fatal floatplane accidents in British Columbia. “It’s a great culture,” summed up Scott. “The whole company takes a lot of pride in doing what we do. It’s certainly culture-based.” 
Vancouver’s Coal Harbour is bustling with floatplane and boat traffic, so of course safety awareness is the airline’s primary concern. Harbour activity may appear chaotic to the casual eye, but it is controlled. “The harbour has a control tower,” said Scott. “The pilots call up for clearance, get the transponder code, and then they get the traffic info. The tower works with the pilots to let them know of any swell or boat activity they might not see.” As well, there is a defined takeoff and landing area, which is quite large. The boats aren’t restricted from maneuvering in the takeoff and landing areas, “but we all work together.”
And, true to West Coasters’ reputation, Harbour Air works with the environment, too. Everyone who flies with the Harbour Air Group can enjoy a guilt-free trip. In 2007, Harbour Air became the first airline in North America to achieve complete carbon neutrality. 
“We were hearing from a lot of our staff that we should step up our environmental responsibilities,” remembered Moll. “So we took their suggestions and partnered with [University of BC professor] James Tansey, who started Offsetters carbon neutral society, to buy carbon offsets to offset the fuel we burn and our corporate emissions.” The process began with a third party assessment of their flight services and corporate carbon footprint, including fuel burn, mileage and average load factor, as well as office operations. Moll said the levy amounts to just 50 cents on a Vancouver-Victoria run and 40 cents on Vancouver-Nanaimo route. “It’s a very small amount on each ticket,” she said.
Now, the main environmental complaints they get seem to focus on noise issues. “When you’re doing 250-plus departures a day, it’s a lot of floatplanes flying,” said Scott. “When an airplane flies overhead, it’s a different sound to some people; it’s not the lawnmower, it’s not the cars going by; for some people it’s an annoyance.” 
Several complaints have been logged this year, because Nav Canada changed some of the company’s routing structure, which presented new scheduling challenges to maintain the needed capacity. 
“As demand increases, you have options of adding airplanes or frequency, but we have challenges at both Vancouver and Victoria as far as space is concerned. It’s just not that easy to add capacity, and so when you have changes in your airspace that make your flights a little longer, it has an impact. You have to look at changing your schedule, which reduces capacity, but you don’t have the space at the dock to add more fleet.” 
Having achieved a balanced business model, Moll said there are no immediate acquisition plans for the future. “We are only getting into our second season of operating the Whistler route and working it into our operations,” she said. “If Harbour Air continues to grow after that, we will see where it goes.”
Graham Chandler is a Calgary-based freelance writer with specialties in energy and aviation. His work appears regularly in several oil and gas publications as well as international magazines such as Saudi Aramco World and Air & Space/Smithsonian. Along with degrees in physics, business and archaeology, he is an engineering graduate of the US Naval Test Pilot School.

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