Features Operations
Strong Workforce Key To Success In 2006

The Canadian aviation industry could be in for some interesting times
over the next year. It looks as if many 705 operators have the
potential to post record numbers in 2006, depending on factors such as
fuel costs, labour relations and government regulations.

Air
Canada enjoyed record load factors in 2005. In 2006, its challenge will
be to deal with high employee attrition rate because of retirement. It
is also accepting delivery of new aircraft and will need to have an
infrastructure in place to deal with their arrival and with the
training of flight crews.

WestJet continues its expansion as it
replaces its ageing fleet of B737-200s with the 600 series. WestJet
also faces a few other unique challenges, the continuing lawsuit with
Air Canada, a volatile stock price and the loss of some key personnel.
CanJet has expanded westward, employing a conservative growth plan,
while Harmony is hoping to launch service into the orient this year;
this is a major expansion for the young airline and it will be its
biggest gamble to date.

Zoom and Skyservice continue with their
holiday service and although they have experienced growth, their market
remains somewhat limited and is dependent not only on the Canadian
economy but the stability of the tourist destinations.

It is
perhaps the 704 operators who will face the biggest challenges this
year. In addition to fuel increases, they will have to deal with the
loss of many of their senior pilots, and new systems such as SMS and
CATSA. Budgets will need to be addressed and reviewed with greater
care. Aircraft manufacturers and the industry also need to look at
implementing a new commuter aircraft, which is more in tune with new
passenger weights for range and fuel efficiency.

It is estimated
that 705 operators will collectively be hiring approximately 800 to
1,000 pilots over the next fiscal year; many will be coming from the
704 level. With the potential of this many pilots being taken out of
commuter sector, 704 operators will need to plan ahead and be ready.

I
believe that every operator will feel the pinch to some degree, some
more then others. It is conceivable that some operators will have
aircraft stuck on the ground because they have no crews for them, while
others will see management taking on additional flying duties. Many of
these operators have some very experienced and seasoned pilots who will
be moving on to the lure of large jet operations. For operators who
have tight margins this turnover in staff will be very straining on
their operations. Increased training costs, which may not have been
budgeted for, will probably result in fare rate increases, if
competition and the market allow it. The positive aspect to the
movement of senior pilots is a reduction in higher pay rates, although
some companies may need to raise their pay scale just to attract the
calibre of pilots that they want.

As the commuter sector
experiences the loss of senior pilots, the overall flight experience
level will decrease, likely resulting in higher insurance premiums.
Operators who have not budgeted for these increases will need to pass
them along in increased rates or operate on an even tighter profit
margin. The additional downside with the loss of this many seasoned
pilots is that we will see the possibility of more accidents and
incidents.

Those who have transborder operations will face
greater limitations flying into the US. New systems, new regulations
and tighter security in Canada and the US are consuming valuable time,
money and energy of management teams. Operators have to deal with these
changes, determine which ones apply to them and how. Then the training
for and implementation of these various changes will incur costs that
affect the bottom line of every operator.

Effective training
programs must be in place as well, so that operators are not taking
training captains off the line too much, thus taking away income
potential.

This year looks very promising for many; the industry
is looking stronger than it has been in years, especially compared to
the US. But 2006 will test many operators. They will need to pay closer
attention to the way they do business, prepare budgets and react to
changes if they hope to prosper.