Northwestern Air’s service from Grande Prairie to Red Deer has become a casualty of Alberta’s current economic down turn.
The airline started the service just three months ago, but has already decided to scrap it.
Chief Operating Officer James Heidema says under different economic circumstances, the service could have been successful.
“We ventured into Red Deer knowing that we’d suffer a loss, but we weren’t prepared for the degree of loss. The trend was going down a slippery slope very, very quickly and our passenger loads were failing.”
There were three main factors that Heidema says contributed to their decision, the first of which has to do with the current price of the Canadian dollar, which has driven the price of airplane parts up 25 to 30 per cent.
“Expenses to run an aircraft are huge because there’s limits on things like how long a prop can be used, how long an engine can run. There’s a whole bunch of things that we have to comply with so that’s a huge cost to us.”
Secondly, while Heidema says he thinks there is a viable market in providing service to Red Deer from Grande Prairie and Fort McMurray, everyone is too unsettled by the economy right now.
“I think the economy is scaring a lot of people in Alberta and that translates to whether they get in their car or whether they get on a plane. In this case it looks like many more are getting in their cars rather than on a plane and it is have an impact on us.”
Thirdly, Heidema says to Northwestern Air as a company, expanding into Alberta at a time when the province is slashing budgets to compensate for falling oil revenues is quite unsettling.
However, he says the company will consider re-instating the service when the province returns to a more favourable economic climate.
Northwestern Air will end their operations in Red Deer on March 2.