National air cargo firm eyes Nunavut
We can ship food for 30 per cent less, Cargojet says
A national air freight carrier called Cargojet Canada Ltd. says it’s capable of reducing the cost of flying nutritious food to Nunavut by as much as 25 to 30 per cent, the House of Commons northern development committee heard earlier this week.
“What we’re talking about right now is talking to the northern carriers to get the product as quick as we can, as fresh as we can, from southern Ontario — that’s where most of it is purchased — into Iqaluit,” Jim Ballingall, vice-president of business development for Cargojet, told MPs on the committee at a hearing held Nov. 22.
Ballingall, who began his job with Cargojet in March 2009, worked for many years as vice-president of marketing at First Air, the Makivik-owned airline that has delivered food mail to most of the eastern Arctic for many years.
“I’ve been in every community in the North. I’ve seen 17 people in a one-bedroom house with the one bathroom. I know what’s needed there,” Ballingall told MPs.
He said his current employer, Cargojet, specializes in the rapid movement of air cargo across Canada, including temperature-controlled pharmaceutical products and perishable food.
Ballingall said his firm’s fleet of Boeing 727, 757 and 767 aircraft do this work using an overnight schedule.
But during the day, Cargojet’s fleet sits idle, which means the company’s aircraft are available for cargo flights to northern destinations.
“Our objective is to just point that [fleet] north to Iqaluit and we can do that at half the cost any other major carrier can in Canada, moving all that product into Iqaluit and or Rankin Inlet,” Ballingall said.
He said Cargojet can do this because its fixed costs are already covered by the revenue it generates from its national network of overnight flight routes.
“So if you can take that asset that’s already been paid for 100 per cent and turn it north, the opportunity to save a lot of money is there,” Ballingall said, saying he estimates his company could reduce transportation costs to Nunavut by 25 to 30 per cent.
Under Nutrition North Canada, which will replace the food mail program on April 1, 2011, retailers must negotiate their own deals with airlines to ship subsidized nutritious food to northern Canada.
Retailers, and others, would claim the subsidy by submitting waybills and invoices to Indian and Northern Affairs Canada after signing contribution agreements with the department.
INAC officials insist they plan to police the system to ensure northern retailers pass the subsidy onto consumers.
Under the outgoing food mail program, retailers were required to ship food from awkward designated entry points, such as Val d’Or, Que and were only able to use airlines chosen by Canada Post.
Under the new system, any airline in Canada could theoretically carry subsidized food cargo into Nunavut, Ballingall said.
But he said that because his company is based on southern Ontario, where the country’s big food wholesalers are located, a firm like his could deliver fresh food on a same-day basis.
“In this example I’m giving you right now [it] would be from southern Ontario, Hamilton, where the food originates. It’s in its freshest state, and we can get it up there the same day into Iqaluit,” Ballingall said.
About 60 to 70 per cent of food mail flown to the Baffin region is destined for Iqaluit only, Ballingall said, while only about 30 to 40 per cent moves on to smaller communities.
In 2005, Canadian North subcontracted Cargojet as part of a bid to win the Canada Post eastern Arctic food mail contract, but First Air managed to hang on to the contract.
Ballingall told MPs his airline is now “in discussions with some of the northern carriers,” but he didn’t say who.