Northwestern Air Lease Ltd. is pulling the chute on its operations at the Red Deer Airport.
Jim Heidema, chief operating officer of the Fort Smith, N.W.T.-based airline, confirmed on Thursday that scheduled passenger service between Red Deer and Kelowna will end on March 2. Northwestern will withdraw from the Red Deer Airport the same day.
Earlier this week, Northwestern announced that it would discontinue scheduled passenger service from Red Deer to Fort McMurray and Grande Prairie, effective Feb. 17. But it indicated at that time that it would continue to fly between Red Deer and Kelowna.
Heidema said the subsequent decision to leave Red Deer completely was motivated by a closer look at the books.
“We had intended to go longer in Kelowna,” he said, explaining that the route was performing better than those to Grande Prairie and Fort McMurray.
“We finally got a bunch of numbers in from our accountant and looked at what the trend was, and if the trend improved what effect that would have on the overall cost of operating out of Red Deer; and the numbers just were not there.”
Heidema said Northwestern has nine staff based out of Red Deer. All have been offered employment with the airline elsewhere, and about half have accepted.
RJ Steenstra, CEO of the Red Deer Airport, said Northwestern’s departure is disappointing. In addition to the local job losses, it will reduce the airport’s connectivity to other centres and mean a loss of landing and terminal fees.
“But we just have to make some adjustments and we can absorb that,” said Steenstra of the lost revenue.
He added that Air Canada, which offers three return flights daily between Red Deer and Calgary, accounted for most of the local passengers and will be able to accommodate those who previously flew with Northwestern,
Northwestern has flown out of the Red Deer Airport since April 2012, and prior to that from 2006 to 2010. It had been flying between Red Deer and Kelowna five days a week, and between Red Deer and Fort McMurray as frequently as four days a week. Four-day-a-week service between Red Deer and Grande Prairie was added on Dec. 1, 2014.
Heidema said the company’s operations have been hurt by the low Canadian dollar, since Northwestern buys its parts in U.S. dollars.
“It’s now costing us 25 to 30 cents more on the dollar to buy our parts.”
Low energy prices have slowed the volume of passengers flying north from Red Deer to Fort McMurray and Grande Prairie, he added, and the slowing Alberta economy has many people thinking twice about air travel.
Northwestern has also been hurt by the arrival of Air Canada at the Red Deer Airport in September 2013. Heidema said it’s been tough to compete with the international carrier, which he thinks is flying passengers from Red Deer at a loss so that it can get them into the Air Canada network.
“We were doing actually quite well until Air Canada arrived on the scene in Red Deer.”
Heidema praised the efforts of Steenstra in helping Northwestern and raising the profile of the airport, but said many Central Albertans continue to fly out of Calgary or Edmonton. For some, it’s habit; for others, it allows them to earn compensation from their employers for vehicle use; and for others, it’s a lack of awareness of the Red Deer Airport, he said.
Steenstra thinks Northwestern has also been hurt by a drop in demand for its charter services.
Despite this setback, he remains confident in the potential of the Red Deer Airport.
“We’re focused on attracting more services into Red Deer, and all of those conversations are going very well.”
He doesn’t think Northwestern’s departure will hurt his business case, pointing out that only 4.6 per cent on the region’s travellers currently use the Red Deer Airport, so there’s a huge untapped market.
“The reality is, the numbers are there.”