By Ben Lochridge The story of Alkan Air is one of success built on an unapologetic Yukon focus.
Over its 30-plus years the company has gone from dominance to near death and back. It may not look anything like the scheduled airline of the ’80s, but by delivering reliability, expertise in remote locations, experienced pilots and a high quality of service, Alkan is once again a leading player in Northern aviation.
Blue and red rotating beacons mix with white strobes and the yellow of a Yukon sunrise. Two flight-suited pilots wait at the open door of their turboprop. Looking lost, a twenty-something guy in a dirty baseball cap wanders around the parking lot, a box of parts for a crippled 200,000-pound bulldozer in his hand. He steps out of the way of a pair of ambulances as they roll through the gate onto the tarmac. There are no sirens, just the crunch of snow under tires and the 9-1-1 lightshow.
Next to Alkan Air’s older hangar sits the air ambulance, dawn colours scattering off its freshly polished chrome spinners. The Beechcraft King Air 300 is one of the few planes in the world that can fly into a short, gravel strip in the remote mountains of the Yukon and then fly two thousand kilometres, at 500 kilometres an hour, to Edmonton or Vancouver. Reclining leather armchairs for the paramedics, an autopilot setting marked ‘smooth ride’ and no need to stop for gas make the multi-million dollar King Air, and its sister ships at Alkan, popular machines in the critical-care business.
On the other side of the company pad, next to Alkan’s new, bigger hangar, another flight crew and another turboprop are waiting for the Caterpillar parts, dwarfed by the grey steel and shadows of a huge hangar built last year. This turboprop is a new Cessna Caravan, efficient and easy loading, but there are also older airplanes: a middle-aged Cessna 206, an old de Havilland Twin Otter, and an ancient de Havilland Otter. The Otter has a new turbine engine mounted where its greasy radial once growled, but even if you were too young to volunteer for the Korean War, this airplane is still older than you are.
Old and new, a glance around the compound reveals almost as many variations of Alkan corporate logos as airplanes. From bush outfit to scheduled airline to near extinction and back, this company has been around. Today, business is booming, and the company is adding airplanes and staff so fast you’re not sure if the guy in the dirty baseball cap is lost or if he works here, or maybe both.
In the middle of the old hangar, in an office with a décor combining ‘all-business Spartan’ with piles of random company hats, sits Hugh Kitchen. A thoughtful and low-key man with a brush moustache, he wears a neatly pressed checked shirt and dark Carhartt work pants – formal wear in the bush-flying business. The old hangar occupies prime real estate at the Whitehorse airport, and breathtaking views of Grey Mountain, Golden Horn and the Yukon River valley can be had from just about every window in the building. Just not from those in the office of the airline’s majority owner. In fact, there isn’t even a window. Kitchen chooses to sit right smack in the heart of the company, with no distractions at all from the business of the day.
In the 1970s, Hugh Kitchen left the dairy farm he grew up on in Ontario and found himself working a forklift and loading airplanes in Whitehorse. Seeing that the pilots did no more work than he did, but with a little more glamour, Hugh learned to fly and joined Alkan in 1982. By 1987 he was part owner of the airline and he became majority owner in 2008, with the retirement of Barry Watson.
Alkan took over the scheduled airline routes in the Yukon in 1985 and, in those heavily regulated days of aviation, was given exclusive rights for two years. Alkan still did bush charter work, but the bread and butter were three main routes: north through Old Crow to Inuvik; within the Yukon; and east to Yellowknife. After two years of monopoly operations, Air North came into the picture. Regulators allowed it to compete with Alkan’s King Air 200s on the Old Crow route, and Air North chose to do it with Douglas DC-3s. With lots of oil and gas work in Inuvik, and Air North allowed no further than Old Crow, the route was still profitable for Alkan. Air North’s choice of DC-3s came with a regrettable lack of engine reliability, and it didn’t take many engine failures to drive most passengers onto Alkan’s modern, turbine-engine equipped King Airs and Piper Cheyennes. The Yukon’s aviation industry was split: Air North had the superior cargo machines and Alkan the better passenger aircraft.
Pre-deregulation air service was a dream for Yukoners. Mayo, Faro, Ross River and Watson Lake all received regular flights. Regulation protected company bases from competition (one of Alkan’s smaller competitors, forbidden from operating within 25 miles of the Whitehorse Post Office, worked off the Takhini River until they lost their airplane through the ice) and routes were often exclusive. But expanding the fleet or the routes Ottawa gave you was almost impossible. Even adding a single airplane required letters of support from local and national politicians and business leaders. It was the buckets of red tape that led to all the convoluted corporate divisions and re-divisions, because starting a flying company from scratch was almost impossible.
In 1992, things changed. Deregulation was coming and Air North introduced what proved to be a game changer for the Yukon market: the Hawker Siddeley 748. Not a new airplane by any stretch, the Hawker was built in the ’60s, but its large cabin and good short-field performance were tough to beat. The Hawker was better at hauling cargo than the DC-3s had been, and better at hauling passengers than Alkan’s Piper Cheyennes and Chieftains. In the end, as Kitchen says, “hot meals were a crushing blow” to Alkan’s scheduled service. Unable to react with the fleet that they had, Alkan withdrew from its passenger routes in short order.
Alkan slowly wound down to a corporate low point, with one King Air 200, two twin-engine piston-powered Piper Chieftains, and a six-seat Cessna 206. During the 1995-96 flying season, Alkan employed as few as 10 pilots. There was no bush work to speak of, as there was little mining exploration on the go. The Faro mine, once the engine of the Yukon economy, had been on shaky ground since its first closure in 1984. By 1997 it was permanently closed, and all significant mining activity ceased in the Yukon. Scheduled air service declined to where it is today: Whitehorse, Dawson City, Old Crow and nothing else. Many operators died out, and some, like Summit Air, left the Yukon for Yellowknife, where mining and exploration were still a going concern.
Gradually, Air North and Alkan traded places as the leaders in bush cargo and scheduled passenger services. Left with a small fleet suited mainly to light work in the bush, one advantage Hugh Kitchen had was flexibility. The other was, after 1987, a fleet entirely equipped with wheels. “The Yukon is not float heaven,” says Kitchen. With many small strips throughout the territory, and the dry scrub forest making it easy to scrape out a thousand feet of dirt runway, “you can put a runway anywhere you can get in a Cat.” Some strips have been built after bulldozers were shipped in pieces by helicopter and built on site.
Unlike most of the North, which has low, rolling hills at best and lots of lakes, the Yukon is mountainous and many areas are dry. High, remote mining sites make water-based air service inconvenient, and old Cat tracks like the Canol Road and the Wind River Highway offer seasonal access for construction equipment if you want to build a strip. This means that bigger loads can be carried, since the airplanes don’t have to carry heavy floats on every trip. Compared to a float operator, Alkan could get more capacity out of every new airframe, making it easier to react to the changing market.
As the ’90s wore on, Kitchen had the changing market he needed. When mining picked up, he booked all the work his airplanes could handle and then some. Mining exploration went from a low of $6-million in 1996 to $190-million in 2008. This forced Alkan to buy or lease airplanes on the spot. “This is not an ideal situation,” says Kitchen. “You’d like to take advantage of the U.S. dollar and buy airplanes when they’re cheap, but this business forces you to meet demand after the fact. You have to buy what you have to buy … in order to satisfy the client.” Airplanes have a very high capital cost. A turbine powered de Havilland Otter goes for well over a million dollars, even if it was built in 1951. A Beechcraft King Air 350 can run anywhere from $2-million to $7-million depending on age and optional equipment, and Alkan picked one of those up this April.
It was also in April that Alkan beat out seven competitors to win a five-year, $25-million air ambulance contract. Kitchen and his management team sharpened their pencils to win it, beating out some bids by millions of dollars and others by just a few hundred thousand. But Kitchen says he likes competition, and has no interest in dominating the whole market or expanding outside the Yukon. According to him, “competition keeps everyone honest,” reducing the temptation to become complacent or take advantage of customers.
Contracts in the $25-million range attract outside competitors. With their bids on this tender, British Columbia and Alberta operators have shown an interest in expanding into the Yukon, threatening Alkan, but Kitchen has no interest in reciprocating. “I don’t want to live in B.C. or Alberta to manage an expansion base, and neither do my managers,” he says. “I’m happy being a Yukon-only operator. If I wanted to live in Kelowna, I’d live in Kelowna, but I want to live in Whitehorse.” The only local operator who can seriously threaten Alkan’s dominance of the bush work and medevac is Air North. With similar facilities and experience, Air North is choosing to concentrate on expanding its jet fleet and scheduled passenger service. Kitchen feels that Alkan and Air North “offer complementary services,” and the relationship between the two carriers is friendly.
Efficiency isn’t Alkan’s only secret. Standing out from the competition has been the other key to Alkan Air’s resurrection. Kitchen thinks service is the first and last principle of business. To him service is a fairly simple concept: “Do what the customer wants.” Unlike some Northern aviation companies, there’s no ego in how Kitchen handles his customers. He’s not here to fly bigger, faster airplanes or demonstrate his top-gun bush flying skills. He just provides the right combination of price and quality. You get the distinct impression from him that there’s nothing special about the aviation business, it just happens to be a business at which he’s been very successful. In fact, unlike many Northern operators, Kitchen hasn’t flown his own airplanes in years. “We provide quality aircraft and trained staff,” he says, with several pilots who are lifelong Yukoners and who have been with the company for decades. Over the years competitors have come and gone. They often undercut Alkan and, at least temporarily, take away business. But, says Kitchen, “there is some competition you like to have,” because nothing builds appreciation for your service like a shoddy competitor.
The medevac contract will help Alkan cover overhead costs and smooth out the reliance on the cyclical mining exploration business. Business in the Yukon means government, mining or tourism. Unfortunately, mining and tourism ebb and flow constantly, and this makes a steady business model difficult. Recently, mining has come under threat from the renewed interest in eco-tourism, specifically from the recommendations of the Peel Watershed Regional Land Use Plan. If the recommendations are carried out, vast areas of the Peel River drainage basin will be closed to exploration. Disappointed with the prospect, Kitchen feels the moratorium will be a mistake. He says tourism is just as cyclical as mining, but the two cycles are unrelated. If both industries can thrive, it would allow the Yukon to make it from one year to the next without so much boom and bust. On the other hand, he does agree that the mining industry could be more accommodating, they could “make it prettier.” Kitchen admits that some sites serviced by Alkan have been left an ugly mess by the rapid collapse of junior mining and exploration companies. They pay well to haul gear in, but little care is taken during the operation to haul drums and waste out of the sites. Once the company is bankrupt, there’s nobody to pay for the cleanup. But Kitchen says, “The same thing happens in tourism,” citing the unclear future for the facilities built by a luxury tour operator along the Yukon River for their wealthy German clientele.
Kitchen’s plan for Alkan is to make it the right size for the Yukon. Despite the recent boom and a good year to come in 2010, he remains wary since charter operations dropped by 40 per cent between 2008 and 2009, and active exploration sites in the Yukon went from 1,800 to 250.
The Alkan Air lesson is one of success built on an unapologetic Yukon focus. In Kitchen’s time at the company, Alkan has gone from dominance to near death, and the hard lessons of the past have helped the company experience a resurrection. It may not look anything like the scheduled airline of the ’80s, but Alkan is once again a leading player in Northern aviation, keeping their airplanes working hard in the Yukon bush.
