Competition Bureau asks court to pry info from Nunavut airlines

The Competition Bureau is investigating two allegations against First Air and Canadian North: that they engaged in anti-competitive behaviour through their codeshare agreements and engaged in predatory pricing when they drove Go Sarvaq out of the market in April 2016. On Oct. 26, the Federal Court of Canada granted an application from the federal agency that requires the two airlines to turn over records, answer information requests and make their senior executives available to answer questions in person. (FILE PHOTO)

The Competition Bureau’s investigation into allegations of anti-competitive behavior by Nunavut’s two major airlines has made its way into the Federal Court of Canada.

Ottawa’s competition bureau, which investigates allegations of unfair marketplace practices, told Nunatsiaq News Nov. 3 that it has filed applications requesting that First Air and Canadian North produce records, deliver information and make their executive officers available to answer questions.

“If granted, the orders would require First Air and Canadian North to provide information to the bureau to assist with an ongoing investigation into alleged anti-competitive conduct of the two airlines,” an email from the bureau said.

The Competition Bureau filed its applications Oct. 20 with the Federal Court of Canada office in Ottawa and the court granted the bureau’s request Oct. 26, court records show.

“I can also confirm that the bureau received a complaint from Go Sarvaq regarding allegations of predatory pricing,” the bureau’s email said.

Predatory pricing means pricing services at such a low level that other suppliers cannot compete and are forced to leave the market, the bureau representative said.

The first complaint dates to 2015.

That’s when the City of Iqaluit and the Government of Nunavut first made complaints against the two airlines’ codeshare agreement.

Nunavummiut have said the codeshare agreement causes problems with medical travel, cargo transportation and decreased passenger service to a number of Nunavut communities.

Then, in April 2016, an Iqaluit-based start-up air carrier, GoSarvaq, folded before its first flight after the two major airlines struck back against Go Sarvaq’s low Iqaluit-Ottawa-Halifax fare by temporarily offering an even lower fare.

A roundtrip airfare between Iqaluit and Ottawa, with taxes and fees, now ranges from between about $2,500 and about $2,700, depending on where your travel originates. GoSarvaq was offering seats on the same route for about $800.

The two airlines’ sales tactics likely led to GoSarvaq’s complaint that Canadian North and First Air engaged in predatory pricing.

“Predatory pricing occurs when a company deliberately sets prices below cost for long enough to eliminate… entry by a competitor,” the competition bureau said.

“This involves an expectation that the company will be able to recoup its losses later, by raising prices again.”

Shortly after GoSarvaq folded, the two airlines returned their airfares to their normal rates, which were at least three times higher than the temporarily reduced rate.

But neither the anti-competitive behavior nor the predatory pricing allegations have been proven by the competition bureau.

Meanwhile, a one-day seat sale announced by First Air Nov. 2 crashed the airline’s website as hordes of Nunavut travellers flocked to the site for hugely reduced fares.

The airline was offering the Iqaluit to Ottawa fare, for example, for about $800—a third of its regular price.

The seat sale included travel between November and April, but blacked out the dates most people would use for Christmas travel for the Christmas holidays: Dec. 12 to Dec. 21 and Jan. 2 to Jan. 9 were blacked out from the seat sale.

Some Nunavummiut took to social media to express skepticism about First Air’s sales tactics, including former GoSarvaq employee Brian Tattuinee.

Gotta love how everyone is flocking to this seat sale. May I remind everyone that this was @GoSarvaq's regular fare.

— ᑯᐹᒃ ᐅᒃᑯᖅ ᑕᑦᑐᐃᓂ (@tattuinee) November 2, 2016

There needs to be a fundamental change to the way we do air transportation across the North, and it's going to take all the stakeholders.

— ᑯᐹᒃ ᐅᒃᑯᖅ ᑕᑦᑐᐃᓂ (@tattuinee) November 2, 2016

And on Nov. 2 in the territory’s Legislative Assembly in Iqaluit, MLAs complained about the high cost and low quality of air service in Nunavut.

Gjoa Haven MLA Tony Akoak asked Premier Peter Taptuna if the GN would respond to the service concerns raised by the Kitikmeot Inuit Association at their annual general meeting last month.

“Can the premier tell us today if he has any news regarding the competition bureau’s investigation into the codeshare agreement?” Akoak asked.

“I don’t have the actual facts of what the competition bureau is doing at this point… but once I do have that we’ll certainly share it with the members,” Taptuna said.

And Quttiktuq MLA Isaac Shooyook said there have been a lot of problems this fall with air service, especially for medical travellers and cargo.

“Fresh produce is spoiled by the time it reaches the people, and the people who ordered them have to throw them away and this costs a lot of money,” Shooyook said.

The competition bureau said it cannot provide an estimate of when the review into Canadian North and First Air will be completed.