Published in October 2015 issue

“We didn’t have a plan to grow the airline into what it is today… At the time, it was an act of necessity because I just needed a job.” — Greg McDougall

By Ken Donohue

Greg Mcdougall heads Vancouver-based Harbour Air Seaplanes, which, with 39 aircraft, is the world’s largest seaplane company. Like many other aviation pioneers, the Canadian’s roots in the airline industry weren’t formed in the corporate boardroom, but by eking out a living as a pilot.

In the late 1970s, McDougall was a pilot for a land development company in Vancouver, flying a de Havilland Canada DHC-2 Beaver. However, when recession hit in 1980, the company could no longer afford its planes. Out of work, McDougall and another pilot obtained two Beavers and leased a floating office in Vancouver Harbour. That was the beginning of Harbour Air.

It wasn’t all high flying for McDougall and his partner in the early days. There were some tough times getting the business off the ground—or off the water. Tourism in Vancouver wasn’t as developed as it is today, so the aviators were restricted to flying charters for resource companies, and, during the summers, they would fly people to remote fishing lodges along the British Columbia coast.

In 1986, Vancouver hosted the World Expo, attracting 22 million visitors. That six-month long event became the biggest single catalyst for change in Vancouver—actually, for the entire province. The Expo showed the world what Vancouver and British Columbia could offer to visitors. It turned Vancouver into a dynamic and cosmopolitan city, admired for its scenic locale and livability.

“That was the time when things really started to turn for us,” says McDougall. It was also the time during which a fortuitous opportunity presented itself. Car-dealer tycoon and investor Jim Pattison, an icon in the Canadian business world and one of the wealthiest people in Canada, had bought a number of smaller airlines, hoping to put together a regional carrier; this became Air BC, now part of Air Canada Jazz (QK). Pattison’s acquisitions included some small float companies, but he realized that the float aircraft weren’t a good fit with his turboprop operations.

Harbour Air bought the float division. Overnight, it had acquired nine new airplanes and a couple of bases: one in Vancouver’s Coal Harbour (next to the city’s downtown), Stanley Park, and another on the Fraser River, adjacent to Vancouver International Airport (YVR).

“That opportunity changed everything for us,” McDougall recalls. “Having a bigger fleet allowed us to operate more scheduled service.”

Harbour Air was still unable to operate on the lucrative route between Vancouver and Victoria harbors because the sale came with a non-competition agreement with Pattison’s Air BC, which retained its de Havilland Canada DHC-6 Twin Otter service between the province’s two largest cities.

That non-competition clause came to an end when Air BC sold its Twin Otter service to West Coast Air in the mid-1990s. Harbour Air could now expand its business considerably and become more of a mainstream carrier. However, in the public mind, there remained doubts over the safety of float planes.

“If we were to become part of the province’s transportation network, we needed to offer a more sophisticated service,” McDougall says. “It was a really a frontier mentality, and we needed to put more polish on our operations. This included a greater emphasis on the appearance of our aircraft, pilots and staff, more amenities for our passengers, and the evolution of a safety culture.”

If Harbour Air were to remain a successful business and grow into the airline it wanted to become, it needed to change the prevailing mentality in the industry, which was to challenge the weather and to fly overloaded airplanes despite the risks. The airline developed new safety and operating procedures and shifted the culture; instead of being rewarded for taking unnecessary risks, guilty pilots were disciplined.

“This changed it all,” McDougall notes. “The public became more comfortable with our product. They could put their children on our seaplanes, and trust that these could be a vital part of the transportation network. We’re proud of that.”

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British Columbia is perfectly suited for float planes. Small communities stretch along nearly 600 miles of a coastline dotted with islands and deep fjords where air service is often the only practical means of access. Remote mountain lakes and fishing lodges accessible only by air lure the intrepid traveler.

Then there are the province’s two largest cities— Victoria and Vancouver—just 70 miles (115 km) apart, yet separated by the Strait of Georgia, a waterway sprinkled with an archipelago of islands. Victoria, on the southern tip of Vancouver Island, is the provincial capital and generates a lot of government business traveling to and from Vancouver. It is also a city with a charm that attracts a lot of tourists, many arriving from Vancouver by ferry or air. There are few things more delightful than flying to Victoria on a float plane and alighting into the city’s historic harbor against the backdrop of the famed Empress Hotel and the august Parliament buildings.

The Vancouver–Victoria route is the busiest of Harbour Air’s nine scheduled destinations. In the peak summer months, Harbour Air offers 68 flights a day between the two cities on weekdays, with 12 of those coming and going from the airline’s base on the Fraser River next to Vancouver International Airport (YVR). On weekends, it’s 39 flights a day.

Although an excellent ferry system connects the mainland with Vancouver Island, it can take upwards of four hours to travel by car and ferry between the two cities. By air, it’s only 35 minutes. Such convenience comes at a cost. While Harbour Air does offer sales on select flights, the regular one-way fare between Vancouver (CXH) and Victoria (YWH) is $200 Canadian (US$158).

Helijet Airways (JB), flying 12-passenger Sikorsky S-76A helicopters on the same route, is Harbour Air’s primary competitor. There are also a few airlines that fly turboprop aircraft between YVR and Victoria International (YYJ) (Airways, June 2015), but they don’t have the same kind of convenience of the harbor-to-harbor float service.

West Coast Air (8O), operating de Havilland Canada DHC-2 Beaver and DHC-6 Twin Otter aircraft, used to directly compete with Harbour Air—until the large floatplane company bought it in 2010.

“We acquired West Coast Air when it got into financial trouble. We did too good a job competing with it,” McDougall says, with a good-natured laugh. “It had a valuable base in Victoria, and acquiring it was a strategic move. No question about that.”

As McDougall tells it, when opportunities like that come along, you have to act quickly or someone else will, and then the competition will be even tougher. Still, he says, it was great having a competitor, because it provided an incentive for the staff to be at its best every day. He concedes that the airline lost a bit of that edge after taking over West Coast Air.

Two years later, McDougall opened his wallet again, this time to purchase Whistler Air, which had been in service for 27 years and operated a float base on Whistler’s Green Lake that Harbour Air coveted.

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Harbour Air operates three de Havilland aircraft types: the Beaver, Twin Otter, and Single Otter. It’s the latter that has become the mainstay of the airline’s fleet, with 22 in operation. In the mid-1990s, de Havilland’s Single Otter underwent a game-changing modification with the introduction of a turbine engine, which replaced the original piston-driven engine. “I was skeptical at first,” says McDougall, “but the fact we could operate a single-engine aircraft and put 14 passengers in it sold me.”

According to McDougall, the unique design and certification of the turbine engine came from the aircraft’s military use, and the Single Otter remains one of the few single-engine aircraft that can carry that kind of payload. It’s more fuel efficient than a piston-engine aircraft, can carry 14 passengers, and only requires a single pilot.

Harbour Air also operates two 18-passenger de Havilland DHC-6 Twin Otters, which came with the West Coast Air acquisition and are largely dedicated to the Vancouver-Victoria service. “We put them on routes where the clientele prefer to fly them,” McDougall says. “They aren’t quite as efficient as the Single Otter, but they are more comfortable and a bit faster.” Because of the intricacies of operating licenses, it made sense for the airline to continue flying the Twin Otters under the West Coast Air brand, a name that still inspires customer loyalty, and in West Coast colors.

In its early years, Harbour Air bought the assets of a local airline that had operated out of Prince Rupert and had gone into receivership. Harbour Air now had a base on the north coast; from there, it flew to Haida Gwaii (formerly the Queen Charlotte Islands) and ran charters for resource-based companies in northern British Columbia and into Alaska. “They were very challenging flying conditions,” McDougall recalls. “It was much different than the briefcase-type of flying we do in the south.”

The mid-1990s saw a lot of resource activity along the north coast, particularly commercial fishing and forestry. It provided a lot of business for the airline—for a time.

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“We got impatient and couldn’t sustain our operations in Prince Rupert. It was hard having our headquarters 500 miles away in the south and trying to exercise our standards over the business,” says McDougall. With only enough business for one operator, Harbour Air ended up leasing its planes to the only other competitor in the region. This arrangement resulted in higher profits than it would have by operating the aircraft itself.

McDougall states that Harbour Air operates in the places it makes sense to and not in the ones it does not. In recent years, the airline has flirted with a few destinations outside its core, at airports not typically known for having scheduled air service. In 2007, it began amphibious operations with its Single Otter to Victoria Harbour from Langley Regional Airport (YNJ), located 35 miles (56km) east of Vancouver. Rapid population growth in Vancouver’s eastern suburbs provided new opportunities for airlines to offer service to residents and businesses who are a 60-minute drive, or more, from Vancouver’s harbor or international airport. However, after four years, the Langley route was cut because it made too little money. Although there was lots of one-way traffic to Victoria, the return flights were almost empty.

Last year, Harbour Air started a new service to Victoria (YWH) from Pitt Meadows (YPK). This service is pure float, with aircraft taking off from the Fraser River, right next to YPK.

“It’s a route that has promise, and we’re confident that this part of Metro Vancouver will be good for us,” McDougall says. “It wasn’t easy because we started this route in the winter, when there can be a lot of fog, and our reliability wasn’t as good as we’d have liked, but we’ll explore more opportunities like this.”

Capitalizing on opportunities is a theme that runs deep through Harbour Air’s history. To take advantage of its know-how and success in operating a seaplane company, for example, the airline has just started a consulting division.

“We have been receiving a lot of interest worldwide from people who want to copy our business model. We are approached weekly,” says McDougall. “People look at what we’ve done and ask why it wouldn’t work somewhere else. We’ve decided we’ll teach them how, but they will have to pay us.”

Besides the consulting business, the airline is exploring further opportunities with a group in Bali, Indonesia and another in the United Kingdom, and recently announced a major deal with the Zongshen Industrial Group to establish a float-plane business in China. This deal sees Zongshen’s Tianchen Aviation Company acquiring a 49% stake in Harbour Air, with 25% of the voting shares. A new airline, called Harbour Air China, will be the first general aviation company in China to provide float-plane service to major cities. With many large Chinese cities on waterways and lacking airport infrastructure, float planes could easily become the best way for people to travel by air. It’s anticipated that, a year from now, up to eight routes could be operating. Harbour Air will help train Chinese pilots, and may initially provide its own pilots to help the service take to the air.

Harbour Air has come a long way since McDougall and his partner were out-of-work pilots three decades ago. The airline carries more than 400,000 passengers annually and it has almost always been profitable, though McDougall cautions that there is a fine line in this business: “You don’t have to take your eye off the ball long to start losing money.”

It is, however, a business that perfectly marries a need and a place. “The seaplane is an iconic image for British Columbia, and it remains so to this day,” McDougall says, “Hopefully, we’ve been able to enhance that.”