Originally published May 4, 2017 on Huddle Today.
Business people and entrepreneurs are told to go to where their potential investors and customers are. Often, they are in cities like Boston and New York.
Though hopping on a plane and flying right to these places seems easy enough, it’s not so simple when you live in New Brunswick.
Right now, none of the province’s three major airports offer any direct flights to the United States. If you want to fly south of the border, you need to have a layover in either Halifax, Toronto or Montreal, places often in the opposite direction of where you’re going.
“There’s just a lot head scratching,” says Yves Boudreau, CEO of Moncton-based Alongside. “Even going to Boston for something, there’s a bunch of times where it took longer to fly to Boston than it would have taken to drive based on the number of layovers and flight schedule options.”
But Boudreau says the long, sometimes multiple, layovers for New Brunswickers travelling to the U.S. are an inconvenience that can be dealt with. He says the real problem is when you need to fly important people in to see you. That’s why when Alongside helped organize the Amplify conference back in March, they decided to host it in Halifax instead of Moncton.
“We flew in speakers from San Francisco, New York … We had limited options with how we could make that accommodate all of the schedules and speakers because we were flying in seven different people,” says Boudreau. “So we just decided to do it in Halifax to reduce the risk of anything happening from layovers or storms and whatnot. It’s a lot easier to convince someone to fly directly to Halifax than it would have been from New York to Moncton.”
But the lack of U.S. flights doesn’t impact just business events. It can also impact whether or not a New Brunswick business gets investors or an exit offer.
“Where it really impacts you is you really don’t want to ask anyone to come see you and have to go through the process of getting to you and coming through our airports,” says former Radian6 CEO Marcel LeBrun. “The way I describe it is we live in a ‘one-hop’ world and we’re a ‘two-hop’ province.”
LeBrun says business heavyweights in cities like Boston and New York are busy people. They don’t want to take a whole day to travel to where their dealings are.
“There are a significant number of people both in the investment community and the business community who will not go somewhere that requires two flights,” he says. “Investors won’t go because they know they have to do a lot of work to support their investments and they have all these investments to support. It takes up so many hours in a month and they just don’t invest anywhere they have to take two planes.”
This was a challenge for Radian6, one of the New Brunswick’s biggest exits, when it was about to be acquired by SalesForce in 2011. LeBrun says what saved them was the fact SalesForce executives used private jets to fly in from San Francisco. He says had they flown commercially, it could have been a different outcome.
“Had they gone through the pain going to the last gate in Toronto, getting on a prop plane, landing in New Brunswick, waiting for a taxi while the drivers coordinate to make sure every passenger has a drive, then getting to an office, they’d basically say ‘what am I doing here?” he says.
“A prop plane says you’re in the wrong place. Landing in a one-gate airport … all these things say you’re in the wrong place and you really don’t want to be coming here that often … So the fact that we were able to do all this with private jets masks a bit of the issue of commercial travel to here.”
Though cases like Radian6 are still possible, LeBrun says, unfortunately, many companies’ prospects for an exit are impacted by their New Brunswick address.
“They’re outside the zone of where someone wants to travel to,’ he says. “So you have to be exceptionally strong as a market leader for the company to overcome that issue.”
Even if companies hop on a plane and go directly to the investors, their New Brunswick headquarters can be a deterrent.
“I see a lot of people thinking they’re going to go to the northeastern U.S. to get venture capital. They get on the plane and they go and they meet with all these venture capitalists and they all say no and they don’t understand why,” says LeBrun. “Part of it might be their business, the other part of it is their addresses and they just don’t realize they’re wasting their time because they’re not going to raise capital [there] unless they move their headquarters to that location.”
Why is it this way?
The lack of direct U.S. flights isn’t something that’s been lost on New Brunswick’s three major airports. It’s something they’ve tried to address over the years. At one point years back, both Fredericton and Moncton experimented with offering flights, but they were supported by either government travel banks or other incentives and as soon as those incentives ran out, there wasn’t enough traffic to sustain them and the airlines pulled out.
“At the moment, there is no U.S. air carrier that’s interested in [direct flights] … We don’t have the consistent passenger volume out of one airport to support it,” says Derrick Stanford, president and CEO of the Saint John Airport.
“First of all, they’re American-based airlines, so they operate in U.S. funds, so once you do the conversion into the Canadian dollar, it starts to push it out of the average person’s budget for a ticket as well.”
Volume has been one of the biggest issues New Brunswick’s three main airports face. They’re all competitive against each other and going after the same passengers. In 2016, the Fredericton Airport serviced 377,977 passengers, the Moncton Airport serviced 657,272 passengers and the Saint John Airport had 250,000 passengers. Meanwhile, the Halifax International Airport served 3,908,799 passengers in 2016.
Stanford says another reason getting direct flights is difficult is the business model of the Canadian airlines.
“For the Canadian carriers, we’ll use Air Canada as the obvious one, they have a have a ‘hub and spoke’ model. Their goal is to run everything back to Toronto or Montreal or Halifax,” he says. “Direct flights from markets like Fredericton, Moncton or Saint John are just so far outside their business model that they’re just not interested. They do everything they can to route everything into a hub, then from there the hub will pick up people to go to the U.S. destination.”
A one airport solution?
One of the biggest solutions tossed around over the years to fix the volume issue is for New Brunswick to have one central airport. Stanford says that’s a good idea, but it’s too late for that now.
“I think there was probably a time for that, but we missed that window. That [window] was when the airports were initially privatized in 1999,” he says. “There was talk of it at that time … That would have been the most practical time to have done that, but now we’re 18 years later almost.”
Airports, even smaller ones, are still economic drivers for cities. With the cities of Fredericton, Moncton and Saint John all still investing in their individual airports, Stanford says they won’t be willing to give that up.
“Having an airport in your community is a pretty big badge of honour and a sense of pride and it really is an enabler of commerce and tourism and I just don’t see [those cities] willing to give up their airport at this stage, nor do I see the community willing to give it up,” he says. “Even if I wanted to, I’m sure the people of Saint John wouldn’t want that.”
What can be done?
Yet, getting direct U.S. flights in New Brunswick is a cause Stanford is passionate about. He says the way it will happen is through air services development. He says both airports and airlines are constantly reevaluating their offerings and looking for ways to improve.
“There are a lot of air development conferences that go on, which is where airlines and airports meet together and it’s like speed dating for airports and airlines,” says Stanford. “So you go equipped with your data. For example, since I’m working so hard to try to get a U.S. flight, I got a lot of data around the viability of a Saint John to Boston flight.”
Though he admits he’s a little biased, Stanford says Saint John is the perfect location for such a flight, a big reason being the city’s business community. With larger companies like Moosehead, Irving, Crosby’s and Cooke Aquaculture all based in the region, he says it makes the city a strong case.
“When I get to present to an airline, they’re very curious about everything, from major capital projects to employment growth to the business community,” says Stanford. “It’s really expensive for them to make these kinds of decisions, so they don’t do it without doing a lot of investigative work. It’s a big deal and a lot of planning goes into it.”
Still, Stanford says he’s hopeful a flight can be secured eventually.
“I’m very optimistic,” he says. “I think it needs to be in the right market. It needs to be with the right carrier. It needs to be at the right times and it needs to be at the right place.”
Until then, businesses and entrepreneurs in New Brunswick must continue to work around the lack of access. For Marcel LeBrun, that means New Brunswick businesses will be missing out on major opportunities.
“What will happen is what’s already happening. I’d say many people are not aware of the impact it’s having now,” he says. “It’s not like a crisis, it’s a lack of opportunity. It’s not that something we’re doing is going to break. It’s that the places we want to go, we’re not going to be able to get to. That’s the problem.”