Cautious optimism guides B.C. aviation industry

British Columbia air operators and airports are cautiously optimistic about aviation’s eventual return to its healthy pre-pandemic state – but they’re realistic, too.

The fact is, COVID-19 dealt the provincial aviation industry a devastating blow, reducing business by more than 93 per cent in the span of a few short weeks.

“To sum it up in one word, the COVID experience was fast,” said Quentin Smith, president of Pacific Coastal Airlines (PCA) and a panellist on a June 9 webinar co-sponsored by the British Columbia Aviation Council (BCAC), the B.C Economic Development Association and the Tourism Industry Association of B.C.

“It was extremely fast. I remember looking at our traffic being down 10 per cent on a Thursday. On the Sunday afternoon, we drafted a potential schedule; but by Monday, we were down 50 per cent. By (the following) Thursday, traffic was down 80 to 85 per cent.”

With three brands under its umbrella – Pacific Coastal Airlines, WestJet Link and Wilderness Seaplanes – Smith said the provincial operator took swift action to conserve cash.

“Each group responded differently to the COVID-19 crisis. Wilderness has actually improved during the crisis because they drove down their operating costs. WestJet Link has continued to operate with low load factors, with the philosophy of maintaining service to every community. PCA has been impacted the most.”

Smith said the main airline ceased operations entirely on March 24, laid off more than 500 people and suspended all discretionary spending. While PCA has managed to regain some revenue through temporary government charter contracts, it is still grappling with an 82 per cent revenue drop year over year.

Now at the helm of a much small operation, Smith told 120 webinar participants that PCA is taking this chance to reinvent itself for the future.

“I know PCA needed a reset and I honestly believe the whole industry did. We were being inundated by government regulation and we were losing people as quickly as we could hire and train them. We hadn’t had a breath in years.”

While he’s the first to say this was a radical reset, Smith explained that PCA is taking this chance to introduce new processes, update technology and “right size our business model.”

PCA’s return to business will be cautious and geared toward the needs of the B.C. communities it serves, he added.

“Our loads are at about 10 per cent right now. We’re going to hold the line and see how we can add as much service as possible to drive revenue. But there are more questions than answers. A lot of our travellers were business commuters – what will happen to them? And to leisure travellers? We have to be agile and responsive right now. We won’t be aggressive in our growth pattern.”

Regaining consumer confidence

The International Air Transport Association has suggested the global industry bottomed out in April. The pain of hitting that bottom has been felt by not only air operators like PCA, but also by the airports that serve them.

At Victoria International Airport (CYYJ), passenger traffic is down 50 per cent year over year, representing a business decline upwards of 98 per cent. Brant Arnold-Smith, the airport’s director, security and terminal, told webinar participants that parts of the terminal building have been closed to save on operating costs.

“We’re estimating a total revenue drop of 60 per cent this year, or $17 million,” he said. “All aspects of revenue streams have been affected: parking, retail, airlines, etc. Victoria International had no debt so we were in a good position to enter the pandemic, but it’s still been very tough. We’re losing money every day.”

Arnold-Smith is proud that airports across Canada have continued providing vital air cargo services to maintain supply chains during the pandemic. But it’s time for governments to provide direct and indirect support to airports and air carriers, he said.

“The 21 airport authorities across Canada did get rent relief, but more needs to be done. As we open up our air borders and people start to travel, travellers will expect consistency throughout the network.”

Processes to bolster consumer confidence about air travel will need to be developed and then harmonized across the country, he added.

“We strive to have one of the cleanest airports in North America and we work to achieve that goal on a daily basis. We reviewed current passenger-facing operations from curbside to boarding. We researched white papers and regulatory changes to come up with best practice guidelines.”

Victoria International has introduced Plexiglas barriers, more regular cleaning, hand sanitizing stations, panel dividers for queuing lines, self-serve bag drops, kiosk upgrades and more automated procedures for customers. It has an electrostatic fogging machine on order and is looking at incorporating UV filtration into its heating and cooling system, as well as exploring vending machines that dispense personal protective equipment.

Arnold-Smith says the situation is changing by the day and co-operation across the sector is essential.

“We need to work collectively and collaboratively across our sector to generate sustainable demand. I think we’re doing all the right things to regain passenger confidence in the civil aviation system in Canada,” he concluded.

Over at Abbotsford International Airport (CYXX), the end of 2019 coincided with the one million passenger milestone. Things look a lot different today for the Fraser Valley facility, but general manager Parm Sidhu said the airport is a key economic enabler for the region and the “vibrant” airfield is making a comeback.

“Aerospace companies have continued to work within protocols. Flight schools had to shut down but are back operating now. Our national airshow had to be postponed to next year, but we still have 325 acres of raspberries on the airfield and that generates consistent revenue.”

While April numbers weren’t great, May was a bit better, noted Sidhu.

“We’re seeing some green shoots. We do see domestic demand coming back first. Our whole business model at Abbotsford is around making travel more affordable to Canadians. This is a chance for us to make tourism and travel year-round in Canada, get the whole ecosystem of hotels and tourism products together. I think we have a great country here, the brand is Canada, and we need to make sure aviation and aerospace continue to thrive.”

Sidhu is optimistic for domestic market potential in 2021 and believes Canadian travel will be back to 2019 levels within three years.

In the meantime, the airport is digitizing more processes to fast track travellers, with fewer touchpoints at the airport to keep it simple and efficient.

As for industry labour shortages, Sidhu agrees with PCA’s Smith that COVID-19 has prompted a reset.

“The industry had a shortfall, there was a shortage of pilots and airport operations staff … (but) I think in a year or two, you’ll see a vibrant market. Hang in there and it will bounce back.”

Meanwhile, liquidity continues to be a top concern for B.C. air operators and airports.

“If there is one thing I would ask for, it would be a grant or forgivable loan to get airlines back on their feet,” said Smith. “If we knew there was support, it would give us a lot more comfort. We haven’t seemed to get government attention as much as other areas have. To date, we’ve heard nothing original to aviation (support measures).”

Walt Judas, CEO of the Tourism Industry Association of B.C., said the one thing his organization has been hearing is that businesses cannot survive financially for an extended period of time.

“Cash flow is a big issue; a working capital grant is probably the biggest need of businesses,” he concluded. “Also, the lifting of travel restrictions within the province and then domestically and then internationally. We don’t want to breach any health protocols, but work within them to start welcoming people. Those are two of the most critical issues the entire industry is grappling with right now.”