Nunatsiaq News
NEWS: Nunavut July 10, 2018 - 8:30 am

First Air, Canadian North take another run at merging

Nunavut’s Inuit orgs being wooed as potential investors

JOHN THOMPSON
First Air and Canadian North announced on July 7 an agreement in principle to merge. A previous round of merger talks between the two airlines in 2014 eventually fell apart. (FILE PHOTO)
First Air and Canadian North announced on July 7 an agreement in principle to merge. A previous round of merger talks between the two airlines in 2014 eventually fell apart. (FILE PHOTO)

Makivik President Charlie Watt says that Canada’s eastern Arctic is too big and remote to support two regional airlines—conditions that have prompted another round of merger talks between his organization’s First Air and its rival, Canadian North, which is owned by the Inuvialuit Corporate Group.

And Watt says he hopes Nunavut’s land claim organizations end up buying a piece of the new airline. Such an investment may help make airfares more affordable, he said in an interview with Nunatsiaq News.

“If the companies are owned by everyone, I think that’s the only positive thing to do,” he said.

First Air and Canadian North announced on July 7 they had struck an agreement in principle to merge. Makivik started the talks under the new direction of Watt, following his election as president of the Nunavik land-claim organization earlier this year.

But Watt, who has a long history with Makivik, and served as one of its founding presidents before moving on to become Nunavik’s senator, says the idea of Canada’s Inuit organizations collaborating to operate an airline is an old one.

In 1990, “when we first purchased First Air, the whole idea was to become part of Nunavut,” said Watt. “So that idea, it’s not a new idea. It’s a very old idea.”

If the current merger proposal comes to fruition, the new airline would operate under Canadian North’s name, while using First Air’s livery—including the Inuksuk logo emblazoned on the tails of its planes. The new airline would be headquartered in Ottawa. Merger talks are hoped to be complete by the end of 2018.

In 2014, Makivik and the company that then owned Canadian North, Norterra, spent seven months negotiating a merger of the two airlines, but were ultimately unable to reach a deal.

Afterwards, in mid-2015, the two companies struck a code-sharing agreement, which allowed the airlines to share routes. After much public criticism over overbooked flights, poor schedules and waylaid cargo, First Air cancelled this agreement in late 2016.

The new merger plans still must be finalized and approved by regulators. One big question mark, for now, remains over whether Nunavut’s Inuit organizations will get on board, said Watt.

“We need to get a response soon from Qikiqtaaluk Corporation, and the rest of the development corporations on the Nunavut side connected to the land claims money,” said Watt. “I think we need to hear from them soon.”

Nunavut’s air travellers, meanwhile, may wonder if the proposed merger, and subsequent loss of competition, will result in less frequent flights and more pricey airfares.

Watt said it’s too early to discuss details, but he said there’s money to be saved if both airlines stopped competing on small, money-losing routes and instead pooled their resources.

“You’ll probably improve the regularity of flights into the community,” he said. “And we don’t have any intention to raise the airfare. What we’re trying to do is that, down the road, when it becomes more economical, we can reduce the airfare. Now, as you know, it’s very high. And we need to do something about that.

“I think it’s time now for the two airline companies to try to come up with a solution to help each other out, rather than fight each other.”

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(22) Comments:

#1. Posted by Oh the irony on July 10, 2018

We all should have seen this coming when CN made a board game called “Canadian Northopoly”.

#2. Posted by Aurora Rewards Member on July 10, 2018

I wonder what will happen to our Aurora points….

#3. Posted by George on July 10, 2018

Open up the territory. Make it easier to have a free flow of goods and people. This is not about profit bur rather the advancement of commerce, people and ideas. this restrictive practice is detrimental to the Territory. Dramatically lower fares and cargo rates. Government and organizations should move forward on this crucial issue.

#4. Posted by Why? on July 10, 2018

Why cant they make money on their own?

#5. Posted by Nunavut Pays on July 10, 2018

Once again, it’s Nunavummiut who will pay as prices go up due to lack of competition and service decreases. All their promises mean nothing.

#6. Posted by Oscare on July 10, 2018

Well if the merger goes through, I hope Canadian North gets rid of them small, slow and crappy Dash 8 aircraft’s and start using the new better, bigger and faster ATR-42 500 series planes.

We (Nunavut) must open the skies for more competition in order get better and more efficient services and hopefully cheaper airfares.

But we will see what happens folks

#7. Posted by boris pasternak on July 10, 2018

one super airline, one super price, yakks. we screwed. why would charlie watt care? he rides free and his free rides would expand through out nunavut. senior ppl at both airlines laughing all the way to the bank. remember the last bonus of p.a.? 600k smackuroos. wow, why can’t it be me???

#8. Posted by Deja vu on July 10, 2018

Take 3 but why would they succeed this time? Inuit politics will once again get in the way. And it should.
Hope QC won’t fall in this trap. 

After much public criticism over overbooked flights, poor schedules and waylaid cargo, First Air cancelled this agreement in late 2016.

Hello? Let me read that again…..

Watt said it’s too early to discuss details, but he said there’s money to be saved if both airlines stopped competing on small, money-losing routes and instead pooled their resources.

Well guess what, that’s exactly what “Canadian Northopoly” will be doing.

This is about maximizing profit for makivik and IDC

#9. Posted by Worrisome on July 10, 2018

Oh those calming politician talk words are frightening… “... owned by everyone”. 

What happened to being a competitive business and instead going socialist route. Worrisome.

“... probably improve the regularity of flights…”  The word “probably” isn’t reassuring.

“... don’t have any intention to raise the airfare.”  But gives no proof how airfares will be lowered.

“... down the road, when it becomes more economical, we can reduce the airfare.”

Is “more economical” the beautiful carrot held out in front on a string that never happens?

“...time now for two airlines… rather than fight each other.”

Why? For a monopoly over Nunavut air,  making it harder for a new company to start with better service, fares?  What happened to all the regional is more strong talk?  Competition is good for everyone?

Why has every Inuit Org said zilch on coming Carbon Tax?  What will raise airfares (even if fuel is exempt) and everything thus making even harder to buy air
ticket and food.

#10. Posted by Native on July 10, 2018

One airline will mean a monopoly George. They will cut the schedule, charge higher prices and service will suck. Do you all remember CODE SHARE all the promises they made and how horrible it was.

Besides First Air is destroying Canadian North as they have most of the contracts out there and there service is 100 times better.

If the government allows this to happen we need to get a new government.

#11. Posted by Re-Regulate on July 10, 2018

The feds need to roll back deregulation of the aviation sector in Nunavut. It’s their jurisdiction but it’s Nunavut that’s getting the raw deal. Just think about all the ways the status quo is terrible for the territory.

OK, merge the airlines, there are efficiencies there for sure. Tiny communities probably don’t need daily flights and only the regional centres need more than one flight daily. And now we can stop pretending that the airlines are competing in a meaningful way.

#12. Posted by The Old Trapper on July 10, 2018

A merger makes sense, let me provide an example of how this could be good for the airline and the customer.

For years both airlines ran transterritorial flights Monday, Wednesday, and Friday and were probably 30 - 60% full. A merged airline could run 5 flights Monday, Tuesday, Wednesday, Thursday, and Friday at 35 - 70% full, and save 1 complete flight. In case of weather delays having a flight scheduled every day would also be better for re overly options.

This is only one example, there are many more, such as only 1 set of ground equipment require at each location.

A merger does make sense, especially if the new company is owned by all the groups. It’s about time for Nunavut RIAs to step up and put their money where their mouth is.

#13. Posted by Yes Commarade on July 10, 2018

OK.

Step one, open your books.
Step two, open the books of all closely held “suppliers” and “partners”.

What, you are private businesses?

And you want monopoly access to both private and public money?

Enough of this colonial thinking.

#14. Posted by Toonik's Granfather on July 11, 2018

I don’t pray but here it is;  Lord, can you bring Westjet to Ottawa-Iqaluit route.  Thanks Dude, amen.

#15. Posted by Gobble Gobble on July 11, 2018

I’ll just leave this here:

“Nunavik airlines report ‘solid returns,’ give millions to Makivik”.  October 16, 2017

“The money comes, in part, from “solid returns” posted by two of Makivik’s subsidiary companies, First Air and Air Inuit.”

http://nunatsiaq.com/stories/article/65674makivik_airlines_report_solid_returns_return_5_million_dividends_to_nu/

#16. Posted by Chesley on July 11, 2018

https://en.wikipedia.org/wiki/Financial_crisis_of_2007–2008

A reflection on the 2007-08 global financial crisis clearly shows that capitalism in its present misconstrued form does and will not miraculously deliver a great product, comrade. It was the public welfare that rescued the system and capitalist Wall Street.

https://www.theglobeandmail.com/report-on-business/rob-commentary/to-truly-reduce-inequality-canada-must-question-neoliberal-policies/article30237672/

Where ownership mega-business is held by a few a practice of influencing us through ownership of large portions of the media and the buying favour of politicians and governments is a temptation too great to pass up.

#17. Posted by Flyer on July 11, 2018

Its already way too expensive for the common person to fly anywhere up here, you have to fly for work or medical to get anywhere.

I am worried it will only get more expensive now and the service will again go downhill.

#18. Posted by Arctic Phoenix on July 12, 2018

If a merger is inevitable for both these 2 airliners the common goal should reflect the basic needs of the north. Yes businesses they are but still has some good returns to give the population is something to work for…profit to grow but I wonder if it is expensive to reroute some destinations between villages such as some communities going through yellowknife and fly great distances. Also can these 2 airlines get licenses to go to the U.S.A. with 1 destination maybe New York, and 1 route going to Europe both from Ottawa…find some way to do something diferent and new to airline industry…my 2 cent worth.

#19. Posted by 59009 on July 12, 2018

companies are in business for one thing…to make money. Just take a look at what kinds of bonus’ they forked out the last several years, and now expect it to be higher next year after a full year since the merge.
Now that it has become a monopoly, expect to pay as much as they want. It’s either that or boat/skidoo south…or grow wings

#20. Posted by Flight Dreams on July 12, 2018

We need GoSarvaq back.

#21. Posted by Seems to me... on July 12, 2018

I think we hear this whenever it is time for the GN to re-negotiate the “medical travel contract” and the “GN employees Duty Travel contract”.

#22. Posted by Toonik Granfather on July 13, 2018

Here is an idea, Calm Air and Air Nunavut….....merge and put that new jet (CA) on Ottawa-Iqaluit route.

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