Let consumers decide

If you are one of Iqaluit’s many long-suffering consumers, Air Canada Jazz could not have picked a better time to launch a new north-south jet service between Iqaluit, Ottawa and Montreal.

Consumers, especially those who have to buy their airline tickets with their own money, are sure to greet this news with pleasure.

Starting March 28, 2010, Air Canada will sell one-way seats between Iqaluit and Ottawa for fares ranging as low as $599. Since Canadian North already charges about $659 per seat on that route, this can hardly be called predatory pricing. First Air offers fares starting at around $895 for the same product.

Who’s best? That’s a question, for once, that consumers ought to decide, because in Nunavut, it’s the kind of question they don’t get to decide often enough.

Northern consumers are sick and tired of being held hostage by a lazy, monopolistic private sector that offers high prices for low quality goods and services, usually offered alongside Nunavut’s traditional screw-the-customer service ethic.

Air Canada’s move into Nunavut won’t improve the territory’s crappy retail stores, hotels and telecommunication providers, but it ought to send a loud message to the two dominant regional airlines.

To service the route, Air Canada will use a new Bombardier CRJ 705 jet. This aircraft, designed for sale to regional airlines, is much cheaper to operate than the ancient Boeing jets that First Air and Canadian North still fly, mostly because its engines are far more fuel efficient. Bombardier says this aircraft can lower operating costs by 14 to 25 per cent per seat.

First Air, on the other hand, still uses jets that haven’t been new since the Nixon administration. And their latest acquisition, a massive, fuel-guzzling Boeing 767 super-freighter, rolled off the assembly line in 1983.

Last year, their sister company, Air Inuit, made a big deal out of its first jet, a pre-owned, carbon-spewing 737. Their first client, the Liberal Party of Canada, suffered no end of embarrassment after ex-leader Stephane Dion, he of the carbon tax, leased it for his disastrous election campaign. So much for innovation and creativity.

All the same, the political bosses who control First Air and Canadian North will, of course, complain as loudly as they can about Air Canada’s intrusion onto their turf. Don’t listen to them. No matter what they may try to claim, they are not entitled to a protected market. For better or worse, airline deregulation is now a fact of life.

And if Air Canada wishes to use its economic freedom to offer a service to Iqaluit, then it’s consumers, not politicians or bureaucrats, who should decide which carriers will live and which will die.

In the meantime, Inuit birthright corporations may want to take a long, hard look at the contradictions they created for themselves when they decided to put their beneficiaries’ money into airline businesses in the first place.

That’s because airlines, especially in North America, have always been poor investments, and many never do make enough money to pay their bills. Since 1980, more than 40 airlines in North America have sought bankruptcy protection, including Air Canada, which emerged from that state in 2004 and now makes only modest profits.

So if their goal was to make a lot of money for beneficiaries, birthright corporations like Makivik and Nunasi likely made very poor decisions when they decided years ago to buy their way into the airline business.

They forget that the Inuit beneficiaries who “own” these airline investments also form their biggest group of retail customers.

And these customers have suffered badly, as, over the years, First Air and Canadian North responded to rising costs by jacking up their fares and cargo rates to ever-higher levels. As a consequence, many Inuit beneficiaries have grown to despise the airlines their land claim organizations still operate in their name.

The brainiacs who run the Makivik Corp. helped expose this contradiction just last year. After making little or no profit for many years, First Air reported good returns in 2008. Their board, including several elected Makivik bosses, then voted, in secret, to pay themselves $1.6 million in “bonuses.”

As well as exposing the ethical swamp within which First Air and Makivik do business, this also sent a clear message to the airline’s customers: your needs come last and if we choose to line our pockets with your money that’s our business, not yours.

To give credit where credit is due, Canadian North’s parent company at least understands their beneficiaries and their customers want competition, unlike First Air, which has always sought to create a pan-northern monopoly through some kind of merger of the two airlines.

And in fairness, First Air and Canadian North have tried to build customer loyalty through a variety of giveaways, handouts and other schemes, such as the Pivut promotion.

But much of this simply amounts to bribing of customers with the customers’ own money. Not that there’s anything wrong with that — public relations gimmicks are a normal part of any business.

But northern consumers, whether they are land claim beneficiaries or not, desire one thing above all others right now: lower prices.

In the absence of price regulation, competition is the only way to achieve that. This time, let consumers decide. JB