Nunatsiaq News
NEWS: Nunavut October 04, 2018 - 8:22 am

Nunavut’s keeping a close eye on airline merger: transport minister

Competition bureau will review the new merger; GN plans to take part

SARAH ROGERS
A rendering of the new Canadian North’s look, displayed at a Makivik Corp. executive meeting in Montreal last week. The new airline will be Ottawa-based. (PHOTO COURTESY OF MAKIVIK)
A rendering of the new Canadian North’s look, displayed at a Makivik Corp. executive meeting in Montreal last week. The new airline will be Ottawa-based. (PHOTO COURTESY OF MAKIVIK)

The Government of Nunavut says it’s keeping an eye on plans to merge the territory’s two major air carriers.

Last week, First Air and Canadian North signed an agreement to make their merger official. The full merger is expected to take place sometime in 2019.

The venture by Makivik Corp. and the Inuvialuit Regional Corp. has yet to announce how the new airline will affect travel in Nunavut. The GN expects there will be some impact on the territory, though it’s too soon to say what that will be.

“It’s one we’re paying close attention to,” said Nunavut’s minister of economic development and transportation, David Akeeagok.

While the merger is a commercial one, Akeeagok said the GN could be affected through its government air travel contracts.

The GN just wrapped up a period of gathering stakeholder input on its new airline procurement policy. A study commissioned for the GN earlier this year recommended the government be more efficient by centralizing its booking and using its “market-size influence” to reassess routes.

As part of that process, Akeeagok said the GN reached out to other airlines to understand what could attract them to come and work in the territory.

Now the government is preparing to launch a request for proposals, with the goal of having those new contracts in place by 2019.

“We do have some contractual agreements with the airlines,” he said. “Our message to the company is that those will have to be honoured.”

The GN, along with the City of Iqaluit and a short-lived Nunavut airline called Go Sarvaq, all lodged official complaints with the Competition Bureau, starting in mid-2015, when codeshare arrangements between First Air, Canadian North and Calm Air were first announced.

That short-lived agreements, scrapped in May 2017, allowed the airlines to jointly market each other’s flights. Critics complained that cargo and passenger service suffered as a result, and alleged that the airlines engaged in predatory pricing on the Iqaluit-Ottawa route.

The Competition Bureau dropped the investigation last year when it found insufficient evidence to lay charges under Canada’s Competition Act.

But the bureau will be reviewing the new merger, the agency confirmed this week in an email.

Part of the federal Competition Act requires that parties notify the bureau of transactions that exceed certain thresholds, such as when an entity’s assets or revenues exceed $92 million.

As part of the review, the bureau would consult with industry stakeholders and experts to find out if the transactions could prevent or lessen competition in that market.

The bureau also noted that any merger involving national transportation may be subject to a public interest review by the minister of transport.

“We’ve expressed interest as a stakeholder in participating,” Akeeagok said. “We want to be heard on that.”

“When it comes to a monopoly, we want to make sure the rates are somewhat protected, and that there are ways to ensure those are closely [monitored].”

Makivik’s president, Charlie Watt, said that as the parties go through the federal regulatory process to finalize the merger, he hopes Ottawa will recognize the realities of air travel and operating a business in the North.

“There is room for only one airline in the North,” Watt said last week after signing the agreement.

“The regulators have to understand that maybe the North needs to be dealt with differently. It’s time for the regulatory bodies to realize that people in the North have a better understanding of our issues.”

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(8) Comments:

#1. Posted by Pat on October 04, 2018

Only thing I don’t like is they will use Canadian North name and keep the the first air scheme. Should be totally new scheme !!

#2. Posted by Think about it on October 04, 2018

“Critics complained that cargo and passenger service suffered as a result, and alleged that the airlines engaged in predatory pricing on the Iqaluit-Ottawa route.
The Competition Bureau dropped the investigation last year when it found insufficient evidence to lay charges under Canada’s Competition Act.”

This above statement drives me crazy,  right now you Canadian North charges over 2800 dollars to fly from Iqaluit to Ottawa return, (without any of the promotional codes).  This is a three hour flight!

From Ottawa you can fly to Rome for 890 dollars, Helsinki Finland for 1085, even Sydney Australia for 2100 all return. 

Where did the Competition Bureau look for there evidence?
Just asking….a 300 million dollar airport and only 1 airline allowed to use?

#3. Posted by don't let them make up the rules on October 04, 2018

@1: considering all the headaches this merger could cause, that’s a strange concern to have


I hope the GN holds them accountable. If this ends up costing us more than it used to, then we should give them hell. The point of a merger is efficiency, which will cut costs. If those savings don’t trickle down to the consumer, then something has to be done. This isn’t sustainable.

#4. Posted by Pat on October 04, 2018

People have to understand even though it hurts that the North is Expensive because we are not in great numbers, that is the reality.  We see all the time examples flying all around the world with the same price we pay flying to Ottawa or mtl.  Many many people fly all over the world are in great numbers unlike our numbers in the North.. I am sorry to break the news who still don’t understand why airline travel is expensive, and competition in the North is very hard, again we are not in great numbers. that is why it is hard for any company to have competition.
I hope people understands little bit more and starts to support inuit companies..

#5. Posted by Pat-2 on October 04, 2018

Another ex:  Iqaluit pop. and Ottawa population is no where near close.  sad reality…

#6. Posted by Walk about clue!?! Remote Communities on October 04, 2018

What Nunavut needs is another AIRLINE service business, basically with current airline services (first air and its partnership business) mark-up prices, and NO seats available in most days due to limited spaces.

Not sure if GN or Inuit organizations would wake-up!?! any clues!?!

#7. Posted by Dang on October 04, 2018

#4 maybe no one travels in great numbers because it’s too damn expensive. Everyone I know wants to travel but can’t afford an outrageous air fare. When there are seat sales everyone buys tickets.

These companies jack the prices up because they know the government will pay for medical flights, recruitment, relocation, meetings, construction, etc.

Thanks to these greedy people our food prices are crazy and cooperatives are just making money off the nutrition northplan. We’re all getting fucked by greedy people.

#8. Posted by Northern Guy on October 09, 2018

On the one hand, the merger of the airlines is a very real concern because it will definitely have a negative effect on both cargo and ticket prices. On the other hand it opens the door to real competition because now Air Canada, West Jet, or others can see this market as open for business (which makes the merger a very stupid business decision on the part of the First Air and Cdn. North as a national carrier will likely put the new airline out of business). In any event I am somewhat relieved that the GN will be entering the fray as their recently completed airline study will be excellent fodder for the Competition Bureau to consider.

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