Birch Hill’s Harbour Air acquires Pacific Coastal Airlines

Private equity investor Birch Hill Equity Partners is forming a regional airline group in British Columbia, announcing its Harbour Air holding is buying Pacific Coastal Airlines.

The airlines, which will retain their separate brands, will have a combined 59 planes and 900 employees serving 25 destinations on Vancouver Island, and B.C.’s coast and interior. The purchase price of the buyout, which is subject to regulatory approvals, was not disclosed.

Bert van der Stege, chief executive officer of Harbour Air, said the two airlines have networks with very little overlap, and fleets that are a natural fit – Harbour Air’s seaplanes, which can only fly during daylight, and Pacific Coastal’s wheeled aircraft.

Harbour Air’s average flight is just 32 minutes, flying point-to-point to mainly serve leisure travellers. Pacific Coastal, meanwhile, has longer routes that travel inland and feed connecting carriers, including WestJet Airlines, with which it has an interline agreement.

“The two airlines [Harbour Air and Pacific Coastal] really complement each other well,” Mr. van der Stege said by phone. “A wheels network and a seaplane network will make regional air services in British Columbia so much more reliable and stronger.”

He said he is optimistic the buyout will receive regulatory approvals. The airlines will operate separately, each retaining their own operator’s certificate.

“We have no plans to reduce jobs,” said Mr. van der Stege, who took the top job at Harbour Air four years ago after holding roles at WestJet’s Swoop, the Halifax International Airport Authority and First Air. “Obviously, we will look at some synergies and we will look at combining overhead functions.”

Family-owned Pacific Coastal was founded in 1987 by Daryl Smith, a logging truck driver who bought a seaplane to better access remote work camps. The airline, helmed by Mr. Smith’s son, Quentin Smith, flies twin-engine aircraft that hold 19 to 34 passengers out of Vancouver International Airport.

“We are joining an airline that has long served B.C. communities and with a shared culture of service,” Quentin Smith said in a statement. “Under new ownership, we will be able to invest in growth, maintain our brand and continue to build a stronger, better, airline for the communities that count on both of us.”

Birch Hill purchased Harbour Air in 2020. The airline, founded in 1982, is developing an electric version of its Beaver seaplanes. The company has flown more than 100 test flights and is awaiting a longer-lasting battery system and Transport Canada approval.

Birch Hill is a Toronto-based investor that raised $2.6-billion in its latest fund offering. Its stable of companies include First National Financial LP, Rexall Pharmacy Group and Park Lawn funeral services. Companies Birch Hill turned around and sold include sporting goods company CCM and Sleep Country Canada bedding.