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Expanding Airlines

Nov 1, 2018 | Transportation

A new Northern Air Cargo wide-body B767-300 arrives at the Miami International Airport.

Northern Aviation Services

By Tasha Anderson

The landscape of Alaska’s home-grown airlines has changed significantly in just the last few years.

Outside markets and operations bolster Alaska

One of the state’s major aviation success stories, Alaska Airlines, acquired Virgin America and, in January, received its single operating certificate from the FAA. Alaska Airlines continues to move forward, leveraging its new assets to provide a more comprehensive route map balanced with ever improving customer service.

In 2015, Ravn Alaska CEO Bob Hajdukovich secured financing to buy out his partners and recapitalize the airline. A majority share of Ravn was acquired by J.F. Lehman and Co., and the remaining shares were consolidated in the Hajdukovich family. President and CEO Dave Pflieger now helms a leadership team (completed in July) that combines Alaska know-how and Outside expertise and is building on the company’s long history of success. On October 5 the court overseeing PenAir’s bankruptcy proceedings approved J.F. Lehman and Co.’s bid for the airline’s assets—PenAir will now operate with a separate FAA certificate as a subsidiary of Ravn Air Group, creating further connectivity among Alaska’s air carriers.

And Northern Air Cargo (NAC), North America’s longest continuously operating, all-cargo airline, is taking significant steps to leverage its extensive history of providing aviation services in Alaska.

NAC SOC

According to Northern Aviation Services (of which NAC is a subsidiary) President and CEO David Karp, NAC has been providing cargo services to Alaskans since 1956. “Our roots are in Alaska and in rural Alaska in particular,” Karp says. “We have people that have been here working in this company for more than thirty-five years, and they’re really mission driven, making sure we do a good job of getting the products out to the Bush that our customers need.” In May NAC announced that it had “acquired and been granted operating authority for its first 767-300 wide-body aircraft. NAC flight crews and maintenance technicians will be operating and maintaining a total of three newly-converted 767-300 freighters by the end of Q1 2019,” in addition to the company’s current fleet of eight 737s.

A Northern Air Cargo flight crew in a B767-300 taxiing for take-off at Miami International Airport.

Northern Aviation Services

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This is just the newest development in NAC’s steady progress to diversify its markets and operations. In 2008, Northern Aviation Services (NAS) acquired the cargo division of Hawaii-based Aloha Airlines when it went bankrupt, creating Aloha Air Cargo. In 2016, the company purchased a Florida cargo handling company “that was buying lift from another airline” called Strat Air.

Karp explains that this eye on diversity has been driven by “the primary purpose of stabilizing our core business here in Alaska.”

Today NAC is headquartered in Anchorage with bases in Honolulu and Miami. The airline is currently in the process of transitioning to operate all three locations under a single operating certificate, a phase transition it anticipates will conclude in April 2019. Karp describes it as a “managed transition very closely coordinated with the FAA.”

Northern Air Maintenance Services ramp crew marshalling in an arriving Shared Services aircraft at the Ted Stevens Anchorage International Airport.

Northern Aviation Services

It’s a lengthy, complicated process, but the benefits are substantial. “It’s really about efficiency and about allowing us to have more flexibility with our assets, hopefully providing ultimately better service to our customers,” Karp says. With NAC and Aloha operating as separate airlines, there’s little flexibility in how the aircraft can be deployed. “[But] when you have a single airline, you have a lot more flexibility in terms of cycle utilization.In Hawaii we’re in a very high-cycle environment, we’re taking off and landing a lot more frequently; here in Alaska it’s longer, so we don’t burn quite as many cycles. But part of what you’re trying to do with airplanes is manage the cycles, and so if we can do it across a broader platform, we get overall better utilization.”

NAC Vice President of Administration and Contracting Ann Campbell adds, “Another part of the motivation, too, is diversification to strengthen the airline core so that, when we have down cycles in Alaska, we have other business other places so that the jobs are still here… It’s part of the long-term strategy.”

Outside Alaska

While he’s not a pilot himself (“I like to think I know my limitations; I fly a desk,” he laughs.), Karp grew up in Nome and has been around planes his entire life. Karp actually started his career in aviation working for a company called Hawaiian Vacations, which chartered passenger flights between Anchorage and Honolulu, and moved to the air cargo side of aviation in 2006.

His connection to Hawaii mimics that of many businesses, including NAC, which find Hawaii to be a natural place for expansion, often because of the many similarities the two states share.

In Hawaii, through Aloha Air Cargo, the company primarily runs “inter-island” flights from Honolulu to its four main markets: Maui, Kona, Hilo, and Kauai. In addition to moving cargo for FedEx, UPS, and USPS, these flights often carry agriculture-related cargo on a quick, next-day delivery schedule. “Hawaii has a year-round maritime surface transportation, so everything we move in Hawaii is pretty much time-sensitive,” Karp explains.

Aloha Air Cargo also operates a flight from Honolulu to Los Angeles six days a week with a wide-body 767 “to feed our network in Hawaii.” There are approximately 450 employees working in Hawaii, which is roughly equivalent to the company’s Alaska workforce.

Strat Air warehouse crew loads and unloads a variety of cargo moving to and from Miami, the Caribbean, and South America.

Northern Aviation Services

In Florida, the company’s newest market, there are a little more than 200 employees. The majority of cargo out of Miami is flown on the wide-body 767-300. For example, through Strat Air, NAC operates three or four flights a week to Lima, Peru, primarily carrying consumer goods on the flights to Peru and agricultural products back to Florida. Five or six days a week, flights run from Miami to San Juan, Puerto Rico.

The bulk of NAC flights that utilize the wide-body plane are in and out of Florida because “the demand for space is there because the population centers are so much bigger,” Karp says. “There really isn’t any demand for wide-body aircraft operating within the state of Alaska. We could [in theory] fill up a 767 for a place like Barrow or Nome once every ten days, but that doesn’t work: you have to have higher frequency [of flights] and most of the runways here wouldn’t accommodate the aircraft anyway.”

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New Planes, New Pilots

While NAC provides other aviation-related services in both Hawaii and Alaska, Miami is strictly a cargo operation.

However, South Florida is where NAC often conducts non-classroom training for pilots because the flight simulators necessary for training aren’t available in Alaska.

And the company is doing a lot of training. “We’ve hired at least thirty new pilots, and we’ll probably be hiring significantly more than that as we spool up,” Karp says.

NAC is training two different pools of pilots: those who are new to the company and those who plan to transition from flying the narrow-body aircraft to flying wide-body.

Regardless of their career history in aviation, newly-hired NAC pilots are required to receive standard, FAA-regulated training, which can take up to four months and includes ground school, flight simulation, and operating experience on the actual plane.

This training is plane-type-specific, which is why current NAC pilots are also scheduled for training if they plan to transition to fly the wide-body planes. “Once they move from the narrow-body to the wide-body, they can’t go back and forth. You’re in one or the other,” Karp says.

Pilots are offered positions and opportunities in order of seniority, so current NAC pilots who are interested in flying a 767, which is about four times the size of a 737, will get that opportunity before new hires. But “you have to hire [and train] the replacement pilots for the 737 long before you can get your candidates for the wide,” Karp explains.

Northern Air Maintenance Services ground crew loading oilfield workers’ checked baggage.

Northern Aviation Services

Not all of NAC’s pilots are opting to take the opportunity to fly the larger aircraft. “[Some pilots] that have been with the company for a long period of time [in Alaska and Hawaii] know the market, they’re committed to the market, and they’re far enough along in their careers that this is what they do and they have no interest in relocating… which is great because they’re familiar with the markets, the people, and the routes.”

Karp says that the majority of recruiting will take place in 2018, and decisions that follow in terms of building crews will then be market driven. “We tend to be a little bit more conservative, not making a lot of highly speculative moves, but rather going out and trying to build lanes and then putting our own metal on them. That’s part of what lends to the stability of the organization overall.”

More Than Cargo

The company also finds stability through diversification, and expanding into new markets and new equipment is just a part of NAC’s diversification picture. “We’re diversifying geographically, we’re diversifying aircraft type so that we can accomplish different missions based on the need, and then we’re also diversifying by discipline, which basically means we’re not just flying cargo now,” Karp says.

NAS has two Part 145 repair stations, which perform aircraft maintenance.

In Alaska, NAC’s subsidiary Northern Air Maintenance Services has about one hundred employees who work for Conoco­Phillips Shared Services Aviation, performing maintenance for the Shared Services fleet, which flies back and forth to the North Slope. “It’s a completely separate piece of business for us: we don’t pilot the airplanes, we don’t do anything with flight attendants. But we do all the maintenance, the baggage handling, catering, and security screening in Anchorage, Fairbanks, and the North Slope,” he says.

In Hawaii NAS operates Aloha Tech Ops, which performs all the “non-routine and periodic pre-departure check maintenance for Alaska Airlines, America Airlines, West Jet, and a lot of the domestic carriers that come from the West Coast.”

Aloha Air Cargo loading time-sensitive cargo for a flight from Honolulu to one of the outer islands.

Northern Aviation Services

Bringing It Back to Alaska

All of these parts and pieces have contributed to NAC’s balanced and steady growth. “Stability of the company is much greater now that we have some uniquely different operating environments,” Karp explains. That stability has been vital, as many companies that rely on a robust economy in Alaska have felt the squeeze for three or four years running. The bottom line is that NAC has strengthened its ability to operate reliably in Alaska, providing much needed services and jobs, through expanding into other markets. “It gives us the ability to weather the storm a little bit when it comes to downturns in the economy and provides more stability in terms of how we’re perceived as an employer, in that if the Alaska economy were the only thing that we were focused on, we probably would have laid off people in the last couple of years,” Karp explains. “Instead, we grew our employee base here because of the activities we had going on in other places.”

Since both NAS and NAC are headquartered in Alaska, many of the company’s office staff members are located in Anchorage, working to support nationwide activities. In fact, NAC is creating a new facility in Alaska to support its operations: “We’re just getting ready to open up our new systems operational control center [SOCC]. Our old dispatch function involved three to four people sitting in an office dispatching our small fleet of airplanes. The new SOCC is a fifteen-seat, dispatch-oriented systems operation control room where maintenance control, flight operations, and crew scheduling all come together to oversee the successful and safe execution of all of the flights within our system. Those jobs are in this community,” he says.

Northern Air Cargo warehouse team staging and loading supplies destined for rural Alaska.

Northern Aviation Services

According to Karp, as NAC has expanded, one of the company’s concerns is that its Alaska clients and communities may think the company’s focus is shifting outside of the Last Frontier. “In fact, it’s the contrary,” he says. “We’re fortifying our stability to make sure that we can continue to provide critical service to our core… there’s job growth here not just in the dispatch function, but we have more people in the accounting department, we have more people in the safety department, we have more people in the maintenance department, and IT has really exploded. Aircraft records are a really big deal, and that’s being managed from here.”

Northern Air Cargo warehouse team staging and loading supplies destined for rural Alaska.

Northern Aviation Services

According to Karp, as NAC has expanded, one of the company’s concerns is that its Alaska clients and communities may think the company’s focus is shifting outside of the Last Frontier. “In fact, it’s the contrary,” he says. “We’re fortifying our stability to make sure that we can continue to provide critical service to our core… there’s job growth here not just in the dispatch function, but we have more people in the accounting department, we have more people in the safety department, we have more people in the maintenance department, and IT has really exploded. Aircraft records are a really big deal, and that’s being managed from here.”

Karp continues, “The main emphasis for us, what drives us, is that stabilization and the ability to maintain the focus on Alaska. We do a lot of things in the local market: we like to get out to every one of the communities we serve and participate in the high school graduation with scholarships, but we also bring fresh flower leis from Hawaii now, so every senior graduating from high school in the markets that we serve every year gets a fresh flower lei from Hawaii. We try to be active participants in these communities… We have a lot of people who work here in Anchorage who grew up in the Bush, so they understand the significance of the services that we provide, and we really feel a strong sense of obligation to keep that going.”

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