Entrepreneurial thinking drives airport’s success – by Ian Ross (Northern Ontario Business – May 2013)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

Mining signals opportunity to Scott McFadden. The opening of Ontario’s Far North to resource extraction and development is something the president and CEO of Thunder Bay International Airports Authority is keenly keeping his eye on.

While the remote mineral exploration camps in the Ring of Fire are serviced by dirt and ice air strips, as progress moves forward, McFadden said building a significant airfield in the James Bay lowlands to eventually service working mines is a must.

“A properly built and maintained airfield is going to be vital to the development of the Ring of Fire.” McFadden points to Goldcorp’s Musselwhite Mine, 500 kilometres north of Thunder Bay, which regularly runs charters out of the airport, as a prime example of how the industry has evolved to attract and retain a transient workforce that prefers the long commute to work.

Instead of creating a remote mining town with all its infrastructure, McFadden said companies prefer work camps to allow miners to arrive and leave on a rotational basis.

“Years ago you established a mine and a town around it. These days people’s expectations are different. They want to stay home and I see an airport as probably the best way to develop a mine in a remote area.”

The authority has offered its expertise to Queen’s Park, the mining companies and the First Nation communities involved, but with many agendas at work, McFadden has yet to hear of a comprehensive plan on how that mineral-rich region is to be developed.

“I’m certain that (planning) is going on. I’m not certain that there’s a coordinated or strategic effort to make it happen. There are different mining companies, different priorities and objectives. It’s about getting everybody to play in the sandbox.”

McFadden makes the case that his organization may offer a solution to some of the challenges.

“We’re a not-for-profit organization. Our objectives are economic development.”

Just because it’s non-profit, doesn’t mean the Thunder Bay authority is not entrepreneurial.

The organization was formed in 1997 when Thunder Bay was the first of many small airports to be divested by Transport Canada into local hands. Without government subsidies, the airport had to generate its own business.

As an air service hub for northwestern Ontario, the authority has developed a penchant for turning a buck, producing surpluses every year while investing in major capital projects such as a new passenger terminal, a runway repaving project in 2005, and an extension in 2009.

“We’re a very successful airport because we do business as a business,” said McFadden.

The airport has attracted a slew of aviation tenants on the north side of its main runway which is home to Confederation College’s aviation campus, ORNGE provincial air ambulance service and Pilatus Centre Canada, a turboprop shop.

Millions of government dollars continue to flow in to support its industrial park with a street extension, an extended taxiway, and three large lots for future tenants in the aviation-related business. Airport land is also being set aside for a 75-room Hampton Inn which begins groundbreaking this spring.

On the south side, where space is more limited, a mineral assay lab has set up shop and some logistics companies.

The authority has established a community improvement zone, which McFadden calls a “world class aviation incentive,” to encourage companies to expand or relocate to the airport.

“The airport will underwrite some risk, if the company has other cash priorities. We would build a facility and lease it to the proponent.”

McFadden said several companies like Pilatus, Wasaya Airways and Wisk Air have taken advantage of that incentive.

To stay competitive, Thunder Bay is the only national airport in Canada without an airport improvement fee. Most of the revenues to pay for capital projects come from fuel sales and aircraft fees for landing, terminal, parking and passenger bridges.

Last year, Thunder Bay Airport reached a new record for passenger volumes in 2012 with 761,300, up 5.8 per cent from the previous year.

Those figures only stand to improve with the arrival of United Airlines and its daily Chicago-O’Hare Airport run in February, the fourth major carrier to go along with WestJet, Porter and Air Canada.

The authority also contracts out its administrative expertise to municipalities like the gold mining town of Red Lake where it runs the airport.

McFadden said that facility was financially struggling, but since taking over they’ve achieved 12 straight years of posting surpluses.

In the process, they built and opened a new terminal building in 2011 and are working to open more airside commercial space for development.

McFadden said they tapped into government infrastructure programs to upgrade the Red Lake facilities and took over its administrative duties leaving airport staff to focus solely on day-to-day operations. “That’s the business model we offer to other airports in northwestern Ontario and southern Ontario too.”

The airport authority also sells aviation software solutions to customers in North America and the Caribbean, and runs Sleeping Giant Enterprises, which specializes in airfield maintenance equipment like snowplows and runway sweepers.

In its future economic development plans the airport has, what McFadden coins, a “strategic positioning initiative” underway to position itself as a major support centre for turboprop aircraft.

McFadden said they’re working on that initiative with local aviation companies and a few companies outside Thunder Bay.

McFadden said with the Pilatus Canada Centre and Wasaya Airway Prop Shop, Thunder Bay has a surprising amount of local capability to do turbine engine and propeller overhauls, avionics, sheet metal work and airframe maintenance.

Most of that activity supports local fleets, but McFadden hopes that can be leveraged to attract other vendors and expertise.

 

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