First Air, Canadian North take another run at merging

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.”