First Air jacks up cargo rates due to Iqaluit runway repaving

Iqaluit businesses like DJ Specialties will soon get hit with higher costs, due to a temporary cargo rate increase that First Air abruptly announced this week, saying it was forced on them by a partial runway closure caused by repaving work at the Iqaluit airport. (PHOTO BY THOMAS ROHNER)

Air cargo landing in Iqaluit on First Air planes will soon get a hefty but temporary surcharge added to it, according to a June 17 news release from the airline.

That surcharge will cost some Iqaluit businesses thousands of dollars a week.

As of July 6, the airline will add a surcharge of 32 cents per kilogram on cargo landing in Iqaluit, the release said.

That’s when construction is scheduled to begin on repaving the runway at the Iqaluit airport.

The surcharge will stay in effect until the full length of Iqaluit’s runway opens, which airport officials predict will be Aug. 5, the release said

A vice president with the airline, Bert van der Stege, told Nunatsiaq News the runway construction project will result in a narrower runway.

And that means the Boeing 767 jet that First Air uses for freight cannot land or take off from it.

“As soon as we heard that the Boeing 767 wasn’t going to be able to land in Iqaluit, we’ve had to look for alternatives,” van der Stege said.

After three or four weeks, airline officials calculated that the smaller Boeing 757 would be the cheapest alternative, van der Stege said.

“The surcharge is purely based on extra cost. There’s a very simple rule in aviation: typically the larger the aircraft, the better the economics.”

With a Boeing 757 operating costs remain the same as with a Boeing 767, but less cargo can be carried on the smaller aircraft, van der Stege added.

The airline’s overall cargo capacity will be “slightly lower” while the surcharge is in place, the vice president said, but it’s not the size of the airplanes that has officials worried.

“The bigger worry in terms of capacity is flights not being able to land,” van der Stege said.

That’s because the narrower runway means a little bit of fog, or crosswinds, would make it unsafe to land an aircraft, he said.

“If we know in advance the weather forecast is going to be below operational limits, then we won’t even take off from Winnipeg or Ottawa for Iqaluit.”

Cargo flown from southern Canadian cities through Iqaluit to other Nunavut communities will also be affected, van der Stege said.

Marc Dubeau, owner of Baffin Island Canners Ltd. in Iqaluit, told Nunatsiaq News June 17 that he was surprised by the “big increase” in cargo cost.

“I guess we’ll have to absorb the costs,” Dubeau said, adding that at this point he does not intend to raise retail prices.

Dubeau said his main worry is that the one-month period airport officials have scheduled for the runway work will stretch beyond one month.

“We’ll see how it goes for the first month, and after that we’ll re-evaluate,” he said.

Mona Godin, manager of DJ Specialties in Iqaluit, said she’s willing to wait about two months before passing the extra cost onto her customers, mostly because the administrative cost of re-pricing everything in the store would add even more expenses, on top of the surcharge.

But Godin said she has many questions.

“I would have liked to have seen what happened before this surcharge. What did the airline do to prevent it?” she told Nunatsiaq News June 17.

And Godin also asked why businesses did not get more notice so that they could have brought in extra amounts of cargo ahead of time.

Businesses negotiate cargo rates with First Air on an individual basis, Godin said.

“Is there a loophole in there that says, oh, by the way, if we lose money we’re going to slam it on you?”

And another thing, Godin said: “Just how hard did the airline push the [Government of Nunavut] to cover the costs?”

Van der Stege said First Air approached both the GN and the federal government in the hope of minimizing the cost passed on to customers, but to no avail.

The airline worked closely with the GN to ensure the Boeing 757 can land in Iqaluit, avoiding other alternatives, such as surcharges that could have been three and four times greater than the current increase.

Another option they avoided was cancelling cargo service altogether during the runway repaving period, van der Stege said.

“Unfortunately, the best alternative [to Boeing 767s] has to come at a substantial extra cost, which we have to pass on to our customers.”