Article: Calm Air Weathers Economic Turbulence; Northern Communities Benefit

  • Image of Calm Air plane on tarmac

    Fall, 2014, Altitude
    An excerpt from the book, Northern Lights: Arnold and Gail Morberg and the Calm Air Story, written by Doug Whiteway with Barbara Huck and Frances Russell.

    The Calm Air story is one of strong vision and good luck. Running a fishing camp in northern Saskatchewan wilderness in the early 1960s, Arnold Morberg could see how crucial airplane service was to remote communities not served by road. He could see, too, how critical plane service was to opening up Canada’s vast North. In 1962, with his wife, Gail, he founded Calm Air – what would become Canada’s largest privately owned airline – with the purchase of a Cessna 180. Seven years later, Calm Air was a charter service with a dozen aircraft, and by 1974 it inaugurated the first regularly scheduled passenger flight service in northern Manitoba. In 1976, Calm Air took over the Transair passenger service in the Northwest Territories. But the 1980s were wild times in the airline business. Arnold and Gail Morberg had good luck. And they had bad.

    They say one man’s problem is another man’s opportunity. But if that man’s problem is his airline and that airline happens to serve Canada’s remote northern communities, then that man’s problem is very soon every man’s (and woman’s) problem.

    Such was the case in the early 1980s when the North’s storied carrier, Lambair, flew into troubled skies.

    It wasn’t alone.

    As the decade turned, the airline business, like a plane with an engine flamed out, took a plunge. Fuel costs soared as the Iranian Revolution and the Iran-Iraq War squeezed the flow of oil to the West. Interest rates spiraled upwards to twenty percent and higher, bringing hardship to many companies and individuals. In this brutal economy, in early 1981, Lambair, founded in The Pas in 1934 by pioneer bush pilot Tom Lamb and managed in later years by his six sons, filed for bankruptcy. As the North progressed through the middle decades of the twentieth century, opening up to mining, hydro development, forestry and settlement, Lambair established new bases and augmented its fleet with a variety of aircraft, serving numerous communities in northern Manitoba and the Keewatin district of the Northwest Territories, now known as Nunavut.

    Then, almost in the blink of an eye, Lambair vanished and suddenly many northern communities were stranded, their air transportation gone. The problem was serious. There was no competitor airline to turn to, as there was in southern Canada.

    But Lambair’s problem became Calm Air’s opportunity. Before it went into receivership, Lambair had proposed a partnership with Calm Air, but the banks were quicker on the draw and put Lambair’s assets up for bid in spring 1981. Two companies approached the bankruptcy trustees, but Calm Air’s offer, which included payments to Lambair employees, who had been without wages for nearly two months, found favour and air service was resumed in many isolated northern communities.

    Almost overnight, Calm Air became the sole air carrier in the region, taking over Lambair’s routes in Keewatin – to Eskimo Point (now Arviat), Rankin Inlet, Baker Lake, Repulse Bay and Coral Harbour among them – as well as Lambair’s routes south from Thompson to The Pas, Flin Flon, and Winnipeg, and its Medevac service to Winnipeg’s hospitals.

    Arnold and Gail Morberg had bought a hanger in Thompson, 300 kilometres southeast of Lynn Lake, in 1979, which was the maintenance base for the Twin Otters, enlarging it to accommodate the Hawker Siddeley 748 purchased from Transair in 1979 when that airline ceased operation. In 1982, in the wake of Lambair’s demise and Calm Air’s bourgeoning operation, they built a completely new hangar and cargo facility at Thompson airport, acquiring two more Hawker Siddeley 748s and consolidating their maintenance operation there by moving it from Churchill where it had been located in a large hangar originally built by the Americans at the height of the Cold War. (Calm Air’s old Thompson hangar became its business offices.)

    With the business consolidating in Thompson – and with Thompson itself the centre of the universe in northern transportation terms – it became inevitable that Arnold and Gail and their family would relocate, too.

    The Morbergs loved their years in Lynn Lake where they had raised their young family, formed strong bonds with the community, and were at the centre of a social and business whirl. Lynn Lake had been a burgeoning community in the 1950s and ’60s, its population peaking in 1975 at 3,000, but it began to run into problems as the mine that sustained its economy started to run out of ore in the late ’70s. Says Gail: “We could see the writing on the wall.”

    In 1985, they packed up and moved to a new house at the north end of Thompson. Because Arnold, when they sold the lodge at Black Lake, declared he had enough of cottage living, Gail presumed they were in the new Thompson house to stay. Not so. By 1987, Arnold had bought a cottage at Paint Lake Provincial Park, thirty kilometres south of Thompson and, typically, in the face of government restrictions on living year round in a provincial park, set about renovating and enlarging the space – up to and including digging a basement in the bedrock. Two homes – one in Thompson, one in Paint Lake – had its domestic challenges, until Gail dug in her heels and said to Arnold, “the ketchup is always in the wrong fridge.”

    In 1989, they moved permanently to Paint Lake.

    As it happened, relocating to Thompson coincided with a particularly tough test of Calm Air’s business savvy. Scheduled flights to northern communities remained the meat and potatoes of the business: Calm Air had regular contracts with such large organizations as Hudson’s Bay Stores, Co-op Stores, and Canada Post, to transport personnel and freight, notably gas and fuel oil, which was vital to small communities operating everything on generated electricity. But there was one large contract that was the gravy: conveying men and commodities to the gold mine at Cullaton Lake, about 200 kilometres west of Arviat.

    With the value of gold rising sharply in the troubled economy of the early 1980s, mining the yellow metal in the forbidding Arctic landscape took on a new feasibility. To service the mine, the Morbergs purchased two Douglas DC-4s for cargo transportation and had them specially fitted with fuel tanks to haul 2,300 gallons of diesel fuel per load for Cullaton mine’s heating and power generators.

    Recalls Ross Ellis, maintenance manager in those years: “We were instrumental in getting a professionally designed system of pumps, hoses and connections that enabled us to keep the aircraft engines running during the cold weather, while the engine’s hydraulic system enabled us to discharge a full load of fuel in a matter of minutes. We could haul fuel 24/7, as required.”

    But as often happens when humans are lured by gold, Cullaton Lake turned into a tale of woe. By the mid-1980s, the price of gold sagged and the price of fuel climbed. It began to cost more than the ore was worth to pull it out of the ground. The mine closed almost as the Morbergs were arriving at their new base in Thompson. That, plus a reduction in governments sending their employees to remote locations as a cost-cutting measure, meant an unexpected decline in revenues.

    “It was very difficult, as we had to downsize accordingly,” accounting manager Pat Ellis recalls. Some staff experienced temporary layoffs and one of the DC4s was taken off insurance
    and parked.

    “Never mind, we’ll make it, we’ll make it,” Arnold told Gail – and his more cautious colleagues, as he often did.

    Arnold had always boxed clever. Where others saw problems, he saw opportunities. And opportunities there were. There was no real stopping the opening up of the North and aviation was the key to accessing its wealth. Native communities were increasingly leaving their nomadic lifestyle and moving into settled communities. Where once access had been only by river in summer or ice trains in winter, now landing strips were under construction to bring in supplies year round. Even if passenger numbers ebbed and flowed, the cargo end of the business remained constant and strong.

    If anything, impediments to innovation and growth came not from the market but from regulators. From its earliest days, the airline business had been tightly regulated. It was the federal government that decreed which airlines could fly which routes and what prices they could charge. The notion was that in a land as vast and sparsely populated as Canada, only the government could ensure equal service across the country and guarantee the very airlines’ survival. With the regulators working in glass boxes in Ottawa, well away from the unique challenges of remote places in northern Canada, it could be a stifling environment for anyone possessed of ambition and imagination. And Arnold chafed under it. Gail can recall them petitioning the government to allow Calm Air to reduce the fare on a certain route, and the government refusing, explaining this would be unfair competition – failing to recognize that Calm Air was the single carrier in the region. There was no competition to be unfair to.

    Calm Air survived the tough times of the 1980s to grow into a complex corporate entity with more than five hundred employees. Carl Arnold Lawrence Morberg, whose initials provide Calm Air’s name, passed away in 2005 at age 69. Gail Morberg stepped in as chair, a position she held until 2009 when she decided to sell the company. Calm Air is now part of Exchange Income Corporation (EIC), a Winnipeg-based niche company which owns several regional airlines.

    This article originally appeared in the Fall, 2014 edition of Altitude.

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