Diverse Discovery

If one adjective aptly describes the businesses within the corporate framework of Discovery Air Inc., it is “diverse.” The Yellowknife, NWT-based aviation services company operates about 150 aircraft and employs approximately 850 people in Canada and abroad. Since its creation in 2004, Discovery Air (DA) has pursued opportunities in specialty aviation markets, resulting in millions of dollars in profit and very impressive growth.

“Originally, the overall objective was that Discovery Air was buying companies it believed to be leaders in their type of industry – Hicks and Lawrence, Great Slave Helicopters, Air Tindi, Top Aces,” explained Adam Bembridge, group president of Discovery Air Northern Services. “Once there was a change of senior management and CEO in 2008, and an independent board was put in place, the overarching objective changed somewhat in terms of growing both organically and by targeted acquisition and innovation.”

Bembridge added that in terms of targeted acquisitions, the marching orders come from Discovery Air president and CEO, Dave Jennings. “The primary objectives are to increase the utilization of our existing fleet through geographical diversification, as well as to enter new markets that obviously render a better return on the capital employed than some of the current markets we are in. We’re also looking at getting out of unproductive assets and/or markets,” he said.

Discovery Air is always on the lookout for investment opportunities in what it terms “disruptive technologies.” By definition, these are game-changing ideas or innovations that could potentially have a large impact on air transport. A good example is the heavy lift air vehicle (HLAV) airship currently being designed by Britain’s Hybrid Air Vehicles Ltd. (HAV). Discovery Air Innovations, the business development arm of DA, has signed on to be the first customer for HAV’s commercial heavy lift program. The smaller cousin of the HLAV is a surveillance version for the US military, currently in the final stages of assembly, with the first flight planned for 2012. The HLAV is scheduled to begin flight operations in 2014.

In its short eight-year history, DA has also enjoyed incredible organic growth. In his comments following the release of DA’s third quarter 2011 results, Jennings said, “The current quarter results reflect a continuation of the significant sustained growth that we’ve seen over the last two years at Discovery Air, which is a credit to our operation’s ability to remain focused on seizing new revenue opportunities, despite the economic distractions over the past year. We plan to keep this focus by ensuring we continue to be the leading service provider in our existing operations and by seeking and selecting new opportunities that complement our growth model.”

DA’s business model has been designed to provide multiple revenue streams, which allows the company to tap into industries such as mining, which famed American investor Jim Rogers said in November 2010 is “the place to be” this century, along with agriculture.

At the same time, Bembridge said that DA is constantly evaluating all levels of its operation with an eye on profitability. “I would say we’re reducing our exposure in certain fleets where we can’t realize the necessary margins. In fact, Great Slave Helicopters has sold its entire Hughes/MD 500 fleet, and recently obtained its IFR operating certificate. We see shifting additional capital into offshore oil and gas opportunities, air ambulance, etc.”

Air Tindi: Also based in Yellowknife, Air Tindi provides scheduled, charter and air ambulance services with a fleet of more than 20 aircraft. Its roster currently includes the de Havilland Canada DHC-7 Combi, Beechcraft 1900D, Bombardier Challenger 601, Bombardier Learjet 35A, Beechcraft King Air 350 and King Air 200, de Havilland Canada DHC-6 Twin Otter, Cessna Caravan, and Cessna 185. On a regular basis, it flies to half a dozen communities in the Northwest Territories (NWT). Charter flights are provided for organizations involved in the mining, tourism, and government sectors. Air Tindi is also the dedicated medevac provider for the entire NWT and Kitikmeot region of Nunavut.

In December 2011, Tli Cho Air, which is owned by the Tlicho Investment Corporation as well as Air Tindi as a minority shareholder, signed a five-year, $15-million contract to provide eight to nine Dash 7 cargo, passenger and combi flights per week for Diavik Diamond Mines. The mine is some 300 kilometres north of Yellowknife.

“With the Dash 7s we can carry up to 46 passengers or 10,000 pounds of freight, or several combinations of the two,” said Air Tindi president Chuck Parker. “Because of its STOL (short takeoff and landing) characteristics, it can still land on gravel or ice strips as short as 2,500 feet, which makes the Dash 7 the ideal platform for the North, and Diavik in particular.”

Discovery Air Innovations: DAI opened its doors in 2011 as the business development arm of Discovery Air. As previously mentioned, DAI’s mission is to identify and capture high-value aviation service market opportunities, including in regions where the geography poses significant challenges. DAI’s provisional agreement with HAV outlines an HLAV to be designed, built, certified and deployed for Canadian northern operations by 2014. HAV is a pioneer and world leader in the design, manufacture and support of lighter-than-air (LTA). The deal involves up to 45 helium-filled hybrid airships that can transport 50 tonnes (50,000 kilograms) of cargo to remote sites where there are no runways.

“The opportunity here,” Bembridge told Canadian Skies, “is that the U.S. military is developing the LEMV (long endurance multi-intelligence vehicle) as a surveillance or security vehicle for Afghanistan. That technology is, we believe, transferable to the commercial market. It is one of the few things that could be a major game changer to what we view as stranded resources all over the world, and it could change aerial survey and the mining of commodity-based resource deposits. This technology would mean you wouldn’t have to build a runway or a road to transport in fuel and infrastructure and remove concentrate or other things.”

Although he said DAI is not going to “bet the farm” on the HAV technology, Bembridge said the airship has tremendous potential for geophysical surveying, forest fire suppression, sling-loads and heavy lift transportation, similar to the services now provided by some fixed-wing aircraft. “But, the HAV will not require a runway. It fits well with our active pursuit of initiatives that involve specialty aviation in remote areas,” he concluded.

“Hybrid air vehicles will dramatically improve existing supply chains for large industrial projects in hard-to-reach places, and enable economic development where it was previously not viable,” added Paul Bouchard, president and CEO of Discovery Air Innovations. “We are extremely pleased to partner with a company like Hybrid Air Vehicles to deliver this revolutionary product to the market. HAV has re-examined the basic principles behind lighter-than-air science and applied modern technology and materials to this 100-year-old concept.” 

The HAV concept has been lauded in academic circles as well. “The North has been waiting a long time for a year round, heavy lift transport capability,” said Dr. Barry Prentice, professor of supply chain management at the Asper School of Business in Winnipeg. “DAI presents an opportunity for Alaska and the Canadian territories to take control of their economic destiny. The conditions are right for a new form of transport that is capable of heavy lift, but that is also low cost and environmentally sustainable. DAI has recognized the opportunity presented by hybrid aircraft for the North.”

Discovery Air International: DA International is the newest enterprise in the Discovery Air family. In December 2011, Paul Bouchard announced that “Discovery Air International will initiate service, with Challenger 601 and Learjet 35 aircraft, in the executive charter and medevac service markets originating from Western Canada. DAI’s primary base and main operations will be out of Calgary, Alta., to capitalize on opportunities that currently exist, including those within the Western Canadian oil and gas industry.”

“Discovery Air International will be a new operating entity within Discovery Air that will focus on providing service into new markets in support of our future growth objectives,” added Jennings. “The initiation of Challenger 601 and Lear 35 medevac service is a new achievement for Discovery Air, and should make us very competitive in these new markets.”

Discovery Air Technical Services: DATS is a Transport Canada (TC) approved maintenance organization (AMO), with a large facility at the Quebec City International Airport (CYQB ) and an engineering division in Toronto (Mississauga). The company received its AMO certificate in late August 2010 and by the end of that September had its first contract to assist with overhaul work for a European Embraer ERJ-145 operator.

“The introduction in recent years of new aircraft types in the regional airline market, along with service life extensions of existing models, are creating opportunities for MRO organizations which can deliver quality services on time and at competitive rates,” said Jean Genest, DATS president and CEO. “As an operator of over 150 aircraft in Canada and abroad, Discovery Air understands the needs of operators and is positioned to deliver a superior MRO experience to its customers, as well as a wide range of specialized engineering services such as aircraft modification, conversion and upgrades.”

In January 2011, TC awarded DATS its Boeing 737 AMO certificate, a key step prior to signing a contract to provide B737 line maintenance for a Canadian operator. “We are extremely pleased with the quick ramp-up of our 737 line maintenance business,” said Genest. “DATS’ experienced maintenance personnel and modern facilities are the logical choice for Boeing 737 operators serving the Quebec City market.”

The maintenance facility at CYQB provides a wide range of services including welding, avionics servicing, engineering, machining, heat treatment, composite work, and sheet metal repairs.

In the same month, DATS received its Saab 340 AMO certificate and signed maintenance agreements with two operators of the regional turboprop: Sky Bahamas, a Caribbean operator based in Nassau, and Transwest Air, which has its headquarters and main base in Prince Albert, Sask. David Hvizdos, director of maintenance for Sky Bahamas, commented: “The DATS technicians are outstanding. Their knowledge, motivation, and problem-solving skills have allowed us to maintain a challenging flight schedule.”

Not content to rest on its laurels, in February 2011 DATS announced its TC AMO certification for the Embraer ERJ-135/145 regional jet, and concurrently secured a contract to provide maintenance for eight such aircraft operated by a U.S. regional airline. Three months later, another certificate was granted for the Bombardier CRJ-100/200.

“We are pleased to add this new rating to our capabilities and look forward to signing new customers for our CRJ- 100/200 heavy line maintenance,” said Remy St-Martin, VP of commercial services.

In May 2011, DATS signed a Dash 8 fleet maintenance agreement with Air Creebec, which is based in Val-d’Or, Que. “We are pleased to return to Quebec City for the maintenance of our aircraft,” said Marty Boisvert, the airline’s director of maintenance. “The extensive experience of DATS technicians is second to none in the industry.”

Two weeks later, DATS received new orders for heavy maintenance of 22 ERJ-135/145’s and opened an office at Toronto’s Lester B. Pearson International Airport (CYYZ). By mid-summer, DATS had even more aerospace work because in July, Piedmont Airlines, a subsidiary of the US Airways Group, contracted the Canadian AMO to provide Dash 8 maintenance for its 44-airplane fleet. William Arndt, Piedmont’s VP of maintenance, explained: “Discovery Air Technical Services provided us with the most competitive proposal for our Dash 8 aircraft. So far, our independent audits show us that the quality standards of DATS and their ethics meet Piedmont’s high standards.”

Before the year was over, DATS had also obtained its ISO 9001:2008 Quality Management System certification, which is recognized worldwide. “This new QMS certification will not only directly benefit our current customers, but it will also enable us to attract more business from a customer base that demands high standards,” remarked St-Martin. “By embracing an environment where continuous improvement is part of the corporate culture, DATS can ensure that all of its clientele receive a product that exceeds their expectations at a competitive price time and time again.”

The icing on the cake of DATS’ very successful year came in mid-December, when the company announced the creation of a new subsidiary, Aero Vision Technologies International. AVT i’s mandate is to develop software solutions for the global military and civil aviation market. To accomplish this, AVTi entered a joint venture with Boston-based Visidyne, a leader in the field of airborne and space data collection and processing. AVT i also signed two technological agreements, one with DATAFACE of Houston, Texas, and the other with Wan IT from Brussels, Belgium. Both companies plan to integrate their technology into their offering of AVTi products.

Discovery Mining Services: DMS is primarily an exploration industry supply and expediting company that serves the needs of customers throughout the country. The company builds and manages custom-designed, all-weather exploration camps in remote locations and fills logistical needs.

“We believe that mining and exploration companies need a confidential, reliable expediting service,” said DMS president Andy Young. “We provide dedicated services to meet the special needs encountered in operating in Canada’s Arctic and remote provincial locations, and have built our business providing our clients with all possible savings across all aspects of their exploration expenditures.”

Great Slave Helicopters: GSH is one of the largest helicopter operators in Canada, operating 60 light, intermediate, and medium single- and twin-engine helicopters, including Bell 206, 205, 212, 407, 412 and 212 models, and all Eurocopter AS350 variants, both single- and twin-engine. GSH’s main operating bases are in Yellowknife and Calgary, with other branches located strategically throughout Canada and South America. Its primary customer base includes the mineral, oil and gas exploration and development sectors; aerial construction and precision external load applications; forest fire suppression; public utility and environmental survey sectors.

In May 2010, GSH initiated service in South America with a US $5.4 million contract supporting oil and gas seismic exploration in northeastern Peru, using five medium and intermediate Bell 212 and Eurocopter AS 350 helicopters. The company has continued to expand its presence in the continent and now enjoys operations in several countries spread across multiple industries.

“We are very pleased with this opportunity to diversify GSH’s revenue by tapping into the thriving Latin American oil and gas market, as we build on our experience providing safe, efficient airborne seismic services to the oil and gas industry,” said Jeff Denomme, GSH president. “While this initial agreement related specifically to Peru, our team has been focused on growing our reach further into other lucrative South American markets, where our proven expertise supporting mineral, oil and gas explorers in remote operating environments for more than a quarter century is very much in demand.”

“This was an important win for GSH in particular, as well as for Discovery Air,” added DA president and CEO, Dave Jennings. “It aligns very well with several main objectives in our strategic plan, including employing assets where they will generate the maximum benefit for shareholders, and continuing to diversify our business outside of traditional markets. We also believe this opportunity positions us well to explore additional opportunities for the Discovery Air group of companies in the region.”

On Feb. 2, 2012, GSH announced that it had purchased Servicios AeÅLreos Helicopters Ltda (Helicopter Air Services Ltd.) of Chile. “SAL” was founded in 2002 and provides helicopter services to clients in mining, power construction, and forestry. The company operates a fleet of up to 10 intermediate and medium helicopters and has two main operating bases. It also conducts operations in Argentina and Columbia and is ISO 9001, ISO 14001 and OHSAS 18001 certified.

“Opportunities for aviation services in Chile and the rest of South America are expanding rapidly, and joining the Discovery Air team will allow SAL to offer our clients an even greater portfolio of services. We are very happy to be joining a diverse and respected company like Discovery Air,” said SAL founder Carlos Lopez.

Hard on the heels of the Chilean acquisition, GSH announced on Feb. 21 that it had also acquired Northern Air Support (NAS), an almost-20-year-old helicopter charter company with bases in Kelowna, B.C., and Rocky Mountain House, Alta. NAS’ fleet includes the five-passenger Eurocopter AS 350B2 and the six-passenger Bell 407.

“We have been looking for a partner in the B.C. market for some time, and are very pleased to have come to an agreement with NAS,” said Denomme. The current management at NAS will remain and the company will operate independently under the name Northern Air Support.

Discovery Air Fire Services: Dryden, Ont.-based DAFS has been involved in aviation for more than half a century. The company has three operating divisions: fire, air charter and training. In early 2010, the fire division was awarded a new five-year contract with the Ontario Ministry of Natural Resources (OMNR) to provide 20 aircraft in support of the OMNR’s forest fire management and air transport requirements. The services contained in this contract include airspace and aircraft management (bird-dog), aerial fire surveillance (detection) and air transportation.

“We are extremely pleased with this contract award, which attests to our long-term track record in meeting the OMNR’s needs and to our continuing ability to provide our customers, including the OMNR, with safe and professional air services,” noted DAFS president Mark Hill.

DAFS has also been working on offering high-tech imaging to its clients. In July of 2011, the company announced the integration of Hawkeye Infrared Services assets into its suite of specialized fire management services. “We are very pleased to integrate the assets and contract of Hawkeye Infrared Services into our company,” said Hill. “They will enable DAFS to provide a suite of specialized infrared services, ranging from high level aerial platforms to low level aerial infrared services, which is Hawkeye’s area of expertise.”

The air charter division operates as Walsten Air and is based in Kenora, Ont. It provides air charter services to various government and corporate clients. Walsten employs some of the most experienced Beechcraft King Air pilots in the industry, and has been operating turbine aircraft throughout northwestern Ontario for over two decades.

The training division operates as Discovery Aviation Academy (DAA) and is based in Sudbury, Ont. The school was developed to fulfil key strategic objectives, including greater utilization of DAFS infrastructure and establishing a pipeline of qualified personnel. DAA is one of the first flight training centres in Canada to be part of a large aircraft operator.

Top Aces: Since 2005, Top Aces, which is based in Pointe Claire, Que., has delivered realistic and cost-effective training to the Canadian Forces under the Contracted Airborne Training Services (CATS) program. The company operates 16 Alpha Jet trainers (ex-German Luftwaffe aircraft that are used for simulated combat sorties), three IAI Westwind 1124s (providing other types of combat support training), and a Bombardier Challenger 601 (for longer duration training flights). In November 2011, Top Aces announced that the interim CATS contract had been extended until June 2012, with an option to extend to June 2013. The federal government has confirmed funding for the CATS program out to 2031.

Top Aces provides airborne services (close air support training, anti-shipping profile, airborne adversary support, aerial target towing, combat dart with real-time scoring feedback, sea-skimming targets, surface-to-air gunnery targets, and electronic warfare training) as well as aircraft engineering, maintenance and management, and aerospace consulting and project management.

In just eight years, Discovery Air has grown into one of the larger and more complex aviation enterprises in Canada. Future expansion at home and abroad seems very likely. This is certainly a company to watch.