Title: Discovery Air spreads its wings

Sub-title: This air services player, known by defence sector experts for its Top Aces division, is diversifying into new markets.

 

When former CF-18 pilots Didier Toussaint, Dave Jennings and Paul Bouchard, formed Discovery Air’s Top Aces division ten years ago, they had no idea of how far they would go. However just one decade later the trio play key roles in a company which operates one of Canada’s largest air fleets and boasts 700 blue chip and government agency clients.

 

As if that weren’t enough, Discovery Air’s five divisions, which besides Top Aces, also includes Great Slave Helicopters, Air Tindi, Discovery Mining Services and Hicks & Lawrence, now have more than 500 employees based in 26 facilities across the country. Top Aces, which, through its fleet of 16 Alpha Jet and four Westwind “aggressor aircraft,” provides cost-effective military type airborne services, is the most familiar to defence sector players. However since the division’s August 2007 integration into Discovery Air and the subsequent nomination of Jennings as its CEO, the company has been spreading its wings, and looking to new areas.

 

“When we started Top Aces, we initially just wanted to use our technical and management skills to provide consulting services to large aerospace organizations such as DND and private sector players,” says Toussaint, Discovery Air’s Group President in charge of Government Services. “However Discovery’s five divisions are now positioned to offer additional services through the broadening of our Contracted Airborne Training Services (CATS) model, in Northern Canada and through our newly beefed up technical services capabilities.” Toussaint isn’t kidding. Discovery Air is now a public company, answerable to shareholders, so the pressure to grow quarterly sales numbers is far more intense.

 

Broadening the CATS offering

Top Aces’s CATS arrangement with DND, through which the company provides the Canadian Armed Forces with an “adversary force” made up of actual (though unarmed) jet fighters, which carry electronic countermeasures, flown by experienced pilots, is both unique and innovative. That’s because most air forces manage aggressor squadrons internally, as did Canada until 1999, when the Canadian government decided to contract out these services.

 

The process took place gradually, however today Top Aces, through operational bases located in Halifax, Bagotville, Cold Lake and Victoria, provides airborne combat training services to the Air Force, Army, Navy and the Special Forces. In addition to their “aggressor” role, the 16 Alpha Jets provide airborne combat and electronic warfare training services, while the four Westwind craft provide a platform for the training of radar electro-optical and infra-red guided systems operators. Over the near term Toussaint hope to broaden these services to encompass pilot night vision training.

 

However according to Toussaint, CATS and other public private partnership models is the wave of the future. “DND has an increasing amount of commitments on its plate, at a time of ever more strained resources,” says Toussaint. “The department has to make some big decisions as to where it wants to allocate its limited physical and human capital.”

 

Better management of human and capital resources

Toussaint cites Canada’s recent controversial commitment to acquire 65 Joint Strike Fighters from Lockheed Martin and its ambitions in its Northern region as programs that will tie up immense resources. “DND will have a substantial incentive to partner up with private sector players, if it wants to accomplish these and other key missions,” says Toussaint.

 

Another area in which Toussaint believes that the CF benefits from programs like CATS, is in its ability to leverage the abilities of its skilled pilots even after they retire from active duty. “The typical path that many follow is from the Air Force over to Air Canada,” says Toussaint. “However by having retired pilots join up with Top Aces in flying the aggressor fleets, the CF benefits from having a group of highly skilled, cool headed professionals, that can help to train the next generation of “Top Guns.””

 

“What we did at Top Aces, we want to replicate that with other divisions,” continues Toussaint. “We have the capabilities to partner up with DND and private sector players, to deliver turnkey, flight, transport, delivery, in-service support and many other services, to give clients what they need when they need it. It creates a win-win situation for everyone.”

 

 

 

 

 

 

 

 

 

A large footprint in the Arctic and Northern Canada

According to Garry Venman, Discovery Air’s Vice-President (Business Development) the Canadian government’s ambitious Northern Strategy also provides significant opportunities for the company. The melting polar ice caps and thawing of water bodies in Canada’s North lead many experts to believe that a Northwest naval passage may someday be possible. However many countries (including the United States) refuse to acknowledge Canada’s sovereignty in this area. As if that weren’t enough, boundary questions in the potentially mineral-rich Arctic region remain in hot dispute. Experts say that if Canada does not beef up its presence there, it could get left behind.

 

That’s where Discovery Air comes in. The company’s impressive Northern deployments, which include Great Slave Helicopters’ 55 rotary winged vehicles, Air Tindi’s 23 fixed wing scheduled and chartered air transportation fleet and Discovery Mining Services’ expertise in remote exploration facilities, provide an excellent base for partnerships in a variety of areas. “We have the infrastructure up North to provide air transportation solutions, to set up camps, provide patrolling, police services and search and rescue services,” says Venman. “In short, we believe that we can be a big part of the solution.”

 

Technical services

One of the areas in which Discovery Air is making its most aggressive moves is in its newly set-up technical services division, says Jean Genest, its president and CEO. The company recently took over a 60,000 square foot hangar at Quebec City’s Jean Legage Airport from Exceltech Aerospace after the latter came into hard times earlier this year. The facility hosts 35 employees as well as avionics, composites, sheet metal, welding and interiors workshops.

 

“Our core offerings to clients are cost competitiveness, quality and reliable turnaround time,” said Genest. “We recently achieved Aircraft Maintenance Organization (AMO) status, which enables us to do service work on Dash-8s out of the facility. We are also working to get AMO approval for ERJs, CRJs and Saab 340s.This will substantially increase the range of services that we can supply.”

 

How successful Discovery Air will be in increasing its footprint remains open to question. For example several things continue to be up in the air, notably where increased demand its services will be strongest (company executives currently project that future revenue growth will some roughly from a 50-50 split between the public and private sectors).

 

Also open to question is the future of the Top Aces contract with the Government of Canada, which is expected to expire in 2011. The company is currently in talks to move towards a longer-term contract. However as at press date, a request for proposal had not yet been issued.

 

All we know now for sure is that the impressive backgrounds of key company managers suggest that betting against them is unlikely to be a winning proposition.

 

Company snapshot

 

Name: Discovery Air

Subsidiaries: Top Aces, Great Slave Helicopters, Air Tindi, Discovery Mining Services, Hicks & Lawrence.

Key contacts: Garry Venman, vice-president (business development)

Phone: 613-839-3967

Web-site: http://www.topaces.ca/

Locations: 26 facilities across Canada

Services: Military type airborne services, air transportation, maintenance, logistics, engineering, specialty markets, technical services

Number of employees: 500

Sales: $123 million (12 months to January 31, 2010)

 

 

Peter Diekmeyer (peter@peterdiekmeyer.com) is a Montreal-based freelance business writer.

 

 

 

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