Airline expenses take off

JOHN THOMPSON

Passengers flying on northern airlines are paying more because of rising fuel prices around the country.

As of Sept. 1, both First Air and Canadian North increased their fuel surcharge for passengers from $40 to $50, each way.

By Sept. 15, the cost of shipping cargo with Canadian North also increased by six per cent, along with a cargo fuel surcharge that’s increased from 35 cents to 50 cents per kilo.

First Air hasn’t yet matched that with an increase in their cargo rates, but they’re giving current prices a “good hard look,” said Jim Ballingall, vice president of marketing and sales.

An increase in cargo rates will likely be passed along from northern retailers to their customers the next time they shop for fresh produce or other perishable goods, flown in from the South.

Fuel is one of the largest operating costs for northern airlines, second only to labour expenses. Fuel costs across North America skyrocketed after Hurricane Katrina swept through the Gulf of Mexico and crippled the United States’ ability to produce oil by smashing oil refineries and unmooring oil rigs.

Combine this with the recent announcement by the Government of Nunavut that everyone will be paying more at the pump, and large airlines were left no choice but to offload some costs to consumers, said executives from both companies.

“We’ve never experienced fuel prices like this,” Ballingall said. “We’ll do what we can, but at the end of the day, there’s only so much.

“We’re going to continue to absorb increases as much as we can.”

Fuel surcharges for passengers and cargo alike are tied to the price of fuel. If fuel costs decrease, so will the surcharges.

The only saving grace for airlines has been a steady increase in the number of passengers this season, said Canadian North President Tom Ruth, who estimates he’s seen a 15 per cent rise in traffic.

“That’s helped us,” he said.

Reactions to rising fuel prices were more subdued at small operations like Air Nunavut, which provides charter and medevac services across the North.

“As a small company, it’s still a good price for us,” said co-owner Judy Allen, who points out that the price of fuel in Nunavut is heavily subsidized by the government. If government ever stops propping up gas prices, “that’s when we’ll be crying.”

The costs of labour, maintenance and parts increase every year. Allen said it shouldn’t be a surprise that fuel prices do the same.

“It’s expected.”