Airline gains on First Air with contracts for Kitikmeot, Kivalliq

Canadian North now controls the lion's share of medical travel flights in two of Nunavut's three regions, positioning itself to further eat into the profits of its main rival, First Air.

The new medical travel contract, awarded by the Government of Nunavut April 1 for the next three years, gives Canadian North the bulk of the GN's medical travel work in the Kitikmeot and Kivalliq.

First Air still enjoys slightly more than half of medical flights in the Baffin. But it can't count on the dominance it used to enjoy now that, as of April, Canadian North offers local service to many Baffin communities.

The medical travel contract is, in the world of Nunavut's airlines, one of two big anchor contracts that guarantee a steady supply of business – the other is food mail.

It's impossible to know exactly how much the medical travel contract is worth, as it depends on how many Nunavut residents will become sick enough in the next three years to require outside medical care.

But it's safe to say the contract is worth tens of millions of dollars. Nunavut's health department spends about $59 million each year on travel, and the bulk of that is believed to be spent on medical travel.

The new contract was, predictably, greeted with cheers by Canadian North, and silence by First Air.

Tracy Medve, president of Canadian North, said she's thankful the Nunavut government has "taken a huge leap of faith in us." She also said her company's recent expansion in the Baffin was required under the terms of the contract.

The turf war between airlines is good news for airline passengers, she said. When Canadian North expanded into the Kitikmeot in 2006, fares lowered. The same thing happened when Canadian North expanded into the Baffin in April.

However, prices on all flights across Nunavut have increased by about five per cent in recent weeks, Medve said, due to the rising cost of fuel.

The contract is also good news for Wayne McLeod, president and CEO of Kivalliq Air, which received more than one third of medical contracts in the Kivalliq. As a result, the airline introduced new flights in April to Arviat, Baker Lake and Sanikiluaq.

"It's a major deal for us," McLeod said.

The remaining share of Kivalliq flights in the region went to Canadian North, which has partnered with Calm Air to provide service in the region.

Jim Ballingall, First Air's vice-president of marketing, did not return several phone calls by the Nunatsiaq News deadline this week.