Cover

A Challenge in the Skies

Canada 3000 and its colourful boss lead a posse of carriers out to take business from Air Canada

John Nicol November 6 2000
Cover

A Challenge in the Skies

Canada 3000 and its colourful boss lead a posse of carriers out to take business from Air Canada

John Nicol November 6 2000

A Challenge in the Skies

Cover

Canada 3000 and its colourful boss lead a posse of carriers out to take business from Air Canada

John Nicol

The career in airlines of Angus Kinnear has seen him transport ballistic missiles, send Gurkhas from Kathmandu, Nepal, to Hong Kong, convert old passenger aircraft into freight planes and charter DC-3s to show schoolchildren the splendour of Niagara Falls. He soared with the success of Sir Freddie Lakers discount outfit, and came down to earth to start two airlines—including Canada 3000. That he has survived and flourished enables him to spit out comments on the industry with the no-nonsense demeanour of a commanding officer. In the 12 years since he founded Canada 3000, he declares, “Canadians have enjoyed the cheapest air travel, Air Canada and Canadian lost $3 billion in shareholder value and 14 airlines have gone out of business.” His airline showed a profit for 11 of those years, he says, in his spartan office near Toronto’s Pearson International Airport. The carrier, he adds, is “battle-hardened” and ready for the next war of attrition.

Analysts believe Canada 3000—the country’s second-largest airline after Air Canadas absorption of Canadian Airlines International—is best positioned to survive in the competition spurred by Canadian’s demise. By increasing the number of destinations and acquiring additional planes, Canada 3000, Royal Airlines, Westjet Airlines and Canjet Airlines (and soon-to-appear Roots Air) are lining up to capitalize on travellers’ dissatisfaction with the way Air Canada has handled the merger, and to start chipping away at the national carrier’s domination of the market. While Air Canada boss Robert Milton predicts that the smaller airlines will eat each other “and Air Canada will get blamed for it,” Kinnear believes the fate of smaller airlines is in their own hands. He has no patience for colleagues who run to the federal competition bureau to complain about Air Canadas predatory pricing. “Do you want a regulated industry or a market-driven industry?” asks Kinnear.

“We’re free-marketeers. Everybody has to recognize their own market niche. That’s what we’ve done successfully for 12 years—get down in our bunker, pull the lid over the top and get on with it.”

If there seems to be a surplus of war images in his vocabulary, Kinnear comes by it honestly. His lifetime in the travel industry began, literally, in a suitcase during the Second World War. In November, 1943, he was born in Arbroath, a town on Scotland’s east coast to which his pregnant mother had been evacuated. A week later, he went by train to meet his

Fare game

As most business travellers are ruefully aware, prices are normally highest for those who must fly at short notice. These are the costs for an unrestricted, full-fare return economy ticket, including fees and taxes, for a direct flight. (For Air Canada and CanJet, which have varying prices depending on availability, the range is shown.)

Toronto-Montreal

Air Canada

$716-$799

Calgary-Vancouver

Air Canada

$801-$893

Halifax-Ottawa

*only one unrestricted fare

father, travelling in an open suitcase that would become his protective bassinet in London air-raid shelters. “My father drilled holes in the top of the suitcase so that there was air,” says Kinnear, whose chiselled features betray some sentiment as he speaks. “I actually slept with the lid closed, because that was the only way, if the bomb collapsed the shelter, that I could have still survived.”

Kinnear emerged from his luggage cocoon into a lifelong affair with the travel industry. He was with the Cunard shipping line when it got into the airline business with Cunard Eagle Airways in the early 1960s. His Eagle experience had him arranging flights for British troops to military bases in the Far East, and carrying British missiles via islands in the Indian Ocean to Australia, just in case the Vietnam War spread. In 1967, he came to Canada for the first time to work for a B.C. airline, but returned to England in 1971 and later rose through the ranks at Laker Airways. In 1986, he started Air 2000 with a new plane based in Manchester, England, and a typewriter in the back of his car for an office. His goal was to fill the void left by Laker in the Europe-to-North America charter market by making efficiency and reliability his hallmarks. That meant abandoning the modus operandi of the charter business and using new planes.

When he tried to create a base in Toronto, Canadian regulators balked at the foreign ownership and the un-Canadian name. So, a Canadian family bought the British-owned shares, Kinnear replaced “Air” with “Canada” and raised 2000 to 3000. Now a Canadian citizen, he owns 10 per cent of the company, while another 20 per cent of the stock was floated this summer on the Toronto Stock Exchange.

The key to success, he says, was to learn from past mistakes. “Eve been with airlines before where we took old planes out of the desert, refurbished them and put freight doors on them, only to realize they weren’t economical in the marketplace. Someone else could carry more cargo farther than we could,

for less money.” That drives his current passion of getting as much out of a plane as possible—not only increasing the number of seats per plane (the airline is famous for being hard on the knees), but earmarking the right plane for the right route and keeping it in the air up to 16 hours a day, seven days a week. “Ifyou build a $ 145-million factory, why would you operate it only eight hours a day?” he asks, illustrating his theories with models of the Boeing 757 as well as Airbus A320s and A330s. “If you ask the manufacturers, nobody has higher utilization of their planes than we do.”

Using well-maintained aircraft day and night does not compromise safety, and Kinnear does not apologize for putting so many seats in the planes. If people want more leg room, he feels, they will pay for it. “But the first thing everyone asks when they go to a travel agent is: ‘Can you give me the cheapest flight?’ ” He reasons that most people would rather save money on the four hours it takes to fly to Cancún and spend those savings at the vacation spot.

Another tenet held by Kinnear is to keep on top of technology and market changes. His 15-plane fleet is already the newest set of jets in North America, and as 10 new planes arrive over the next three years, Kinnear says Canada 3000 will profit in fuel efficiency, safety and reliability. As for markets, three out of four flights at the former charter outfit are now regularly scheduled. He will add more frequent domestic flights and expand destinations to the Far East, where he feels the backpacking crowd has migrated. That’s why he opened a route to Brisbane, Australia, and is expanding next year to New Delhi with what he hopes will be a 14-hour flight from Toronto or Vancouver over the North Pole.

Kinnear has no plans to compete with Air Canada for the business traveller—“They produce a very good product with a high frequency of flights”—so he’ll leave that to Roots Air when it begins operating next year. Royal is nipping at Air Canadas heels on the busy Montreal-to-Toronto route, and is also competing with Halifax-based Canjet in the Maritimes. West jet, based in Calgary, is also growing fast, but is still mostly a western alternative to Air Canada. Julius Maldutis, global aviation analyst with CIBC World Markets in New York City, says Canada 3000 “will do quite well because it has positioned itself right in between the full-service carrier and the low-cost short-haul airlines.”

The way to expand, therefore, is aiming at the big guy, says Kinnear. “We don’t think Air Canada, no matter how good they are, can maintain its 80to 85-per-cent share of the Canadian market,” he says. In other words, the man who spent his infancy in air-raid shelters is ready to lead the raid on Canada’s national airline. Passengers can only benefit. Eu]