Plan is to build its own crafts and expand around the world, founder says
A new hovercraft service proposed to connect Toronto and Niagara can be profitable with less than 30 per cent of its seats filled, the company’s founder says.
Chris Morgan, chief executive of Hoverlink Ontario Inc., said the company also hopes to expand the service to other spots around the world and to be able to sell the proprietary crafts it is manufacturing.
The service plans to run up to 24 return trips daily, 365 days per year across Lake Ontario and could transport as many as three million people per year. The trip is supposed to take just 30 minutes each way for about a $60 round-trip.
The hope is to start running as early as summer 2023.
Morgan, a Niagara-on-the-Lake resident, said while the three million figure is the maximum capacity, the service has a “modest” expectation of about 30 per cent occupancy.
Bottom line, he said, the service needs 27 per cent capacity to be successful.
He’s been working on the project for 11 years and said profit expectations are based on market research.
“We looked at other startups and other transportation sectors and looked at how you fill that and what the demand was,” he said.
Specifically, he said, the company looked at the province’s Transportation Tomorrow surveys, GO Transit studies and research on paradigm shifts for transportation.
“I’ve got some of the best marketing guys in the world that crunch numbers,” Morgan said.
He noted the Region of Niagara’s official plan for 2041 includes “massive expansion” in Niagara, including Niagara-on-the-Lake, which is supposed to see its population almost double with development in the Glendale area.
He is confident in the service, despite what he calls a “debris trail” of failed businesses that have tried cross-lake endeavours.
For example, in the 1990s, a hydrofoil operated from the dock area in Niagara-on-the-Lake to Toronto. But it didn’t last long.
But Morgan says his business model isn’t the same — his company is offering round-trips and more trips daily, making it more practical for people to travel.
That combined with an increasingly clogged highway commute, high gas prices, high parking costs in both Toronto and Niagara Falls and new tech like Uber for riders once they reach Niagara, could be what makes Hoverlink a success in an industry that hasn’t succeeded before.
He pointed out a lot of different people might use the service, including work commuters, tourists or students attending university (the service will have special rates for students, he said).
He also said that going to Toronto has been an option that’s been missing for many visitors to Niagara-on-the-Lake.
He’s been in talks with hoteliers in NOTL who say tourists would love to take a day trip to see Toronto, but the minimum three-hour return trip in a vehicle makes it less appealing.
If those tourists could purchase an excursion and be in Toronto in half an hour, it could be a lot more appealing.
“You’re talking about two of the largest tourism regions in Ontario, probably two of the top three in Canada. And the service that we’re doing is about moving people — we’re not moving cargo or trucks or cars.”
But the uses of the hovercraft don’t end with transit.
Another part of the whole business plan is to sell the technology and expand routes elsewhere.
Morgan said the company is manufacturing the hovercrafts and has reinvented the machine to be better and more efficient — technology he won’t talk too much about because it’s proprietary.
But long story short, if the proof of concept for the new hovercrafts goes well, they could open up similar routes in places around the world that need water transit — or sell the hovercrafts, which he said cost “about as much” as a big jet plane.
Asked how much of the tech is proprietary, he sort of grinned and said, “A lot.”
“We’ll make them and manufacture them, not just for here, but for military application, cargo application,” Morgan said.
The crafts are being built in North America, he said.
“And sooner or later, we’ll build them right here.”
He said he has a “memorandum of understanding” with Heddle Shipyards, which is also planning for major growth in Niagara.
He foresees the whole manufacturing operation producing about 800 to 1,000 jobs.
Eventually the crafts will also be used for cargo, he hopes.
“Did you know that 90 per cent of the Ohio Valley trucking that comes through Queenston-Lewiston Bridge is destined for Ottawa and Montreal, but guess where it goes? Around the Golden Horseshoe.”
“They will not do the toll roads in the United States. So we need to find a way to help that as well. And that’s on our agenda,” Morgan said.
“But right now it’s passengers — A to B and B to A — let’s prove the model out. Let’s test it, get it comfortable.”
The hovercraft is being designed and engineered by Hoverlink to cross Lake Ontario all year and he’s confident it can run all year.
He said his company is carrying enough inventory in parts that the vehicle can be serviced regularly.
Morgan has an extensive background in motor sports in IndyCar and Formula One, which he said helps him understand what the machine will need.
Still, he said things can happen “on race day” but “I can’t tell customers who rely on this to go back and forth, ‘Don’t worry, it’s under warranty. It’ll be up and running in a couple of days when the parts come in.’ That’s not gonna happen.”
Designing something that can cross the lake all year, was “a very tall order,” Morgan said, adding that regular hovercraft services would not have received the same classification.
“(Lake Ontario) shouldn’t be called a lake. She should be more like an ocean or the Mediterranean, because she can get really nasty. So again, having a craft that meets those pitches, that took a while.”
“If you gave me five shoe boxes and then each shoe box was a decade, you put a car, a phone, a plane and a hovercraft in each box for every decade, the only thing that didn’t change for the last four to five decades would be a hovercraft.”
The hovercraft has to go through one month of water testing, but he might do two months and offer free transit for that time, to get people to try to experience.
The vehicle is 33 metres long and 15 metres wide and he said the ride will be “comfortable” — he’s been in talks with Cisco to even see about getting wifi onboard, but isn’t sure yet where the blackout areas in the lake are.
Because it’s a hovercraft, he said the entire pressurized footprint of the boat is equivalent to 1/16 a human footprint.
“She’s used in the Aleutian Islands to do studies, testing in marshes,” he said.
“In fact, one of the tests that we did in the U.K., a dog ran out, got under the fence or ran out in front of the craft when we were going out testing — the craft went right over and he’s still stood there after shaking his hair because it won’t affect you.”
“I can clear six or seven feet of ice sticking out of the water. So we have sonar and radar and a bunch of other components I can’t talk about that helped us navigate.”
True to his past marketing experience with motor sports and even Disney, Morgan said he wants “to make this transportation almost like the Disney of travel, where you need to be fun again.”
And with a planned round-trip price tag of about $50 to $60, it is cheaper than most parking in Toronto, Morgan notes.
Even at the 27 per cent capacity required to run the business, that’s 810,000 passengers per year, an average of 2,219 riders per day. At 24 trips per day, that’s about 92 riders per trip.
When it comes to parking for those transit riders, he said the plan is to build about 400 parking spaces in Niagara for riders — about 150 spaces near the terminal in Port Weller and about 250 more near Lock 3, from where riders will be able to shuttle to the terminal.
Asked if the service might ever stop in Hamilton or other cities, he said, “There’s going to be another reveal. We’re not just these two destinations.”
The craft is also fairly eco-friendly. He said its fuel injection system “burns off just over 90 per cent of all harmful emissions.”
“So we’re 90 per cent less (greenhouse gases) than anything on the highway,” he said.
“That’s equivalent to 33 kilometres of cars parked bumper to bumper you’re basically taking off the highway.”
As for implementing a similar service in places like Vancouver, he said, “We’re already out there working on it.”
“For us, it’s about moving the needle on the first route and proving all the models, learning from them.”
He said there will be licensing opportunities and that it could even be used in Far North communities by the Canadian military to defend the country’s borders.
In the end, he said, people want to get to Toronto and back faster.
“You’re getting two, three hours of your life back. Whether you’re married, single or other, you’ve got three hours to do other things in life that are more important than sitting in traffic.”