Cargo rate hikes to hit small centres, small business
High Arctic residents will feel the worst effects of next week’s airline price increases.
MONTREAL — Starting next week, you can look forward to spending six cents on the dollar more to ship air cargo in the North.
On Nov. 1, First Air is hiking its cargo rates by 6 per cent, and Canadian North may follow suit.
This hike won’t hurt large retail chains, such as the Northwest Company, because they have contracts with air carriers that protect the prices they’re charged.
But smaller independent retailers, certain smaller communities, and ordinary residents will feel the pinch, especially in those regions where First Air enjoys a monopoly.
Consumers in Nunavut’s High Arctic communities and Nunavik will start paying more for chips, chocolate bars, soda pop and frozen fried chicken almost immediately.
Newviq’vi, Kuujjuaq’s bustling all-purpose store, will see its cargo rates rise for all food items that aren’t subsidized under Canada’s northern food mail program.
The store’s recently-arrived sealift order will help ward off price increases for many items, but Newviq’vi manager Eric Pearson said higher costs for First Air cargo will inevitably be passed on to consumers.
“I’m never impressed when anyone puts their rates up, but I understand what they’re saying. We’re going to have to accept it,” Pearson said.
Nunavik’s cooperative federation and Nunavut’s Arctic Cooperatives Ltd. won’t feel the full force of the increase right away.
The ACL has a service contract with Canadian North with a ceiling on cargo rate increases for cargo. This contract still has 18 months to go before it expires.
But the ACL’s contract won’t keep prices stable in Resolute Bay, Grise Fiord and Arctic Bay.
These communities are served solely by First Air cargo through flights to Resolute Bay. Items not eligible for the food mail program will cost more to ship there by air.
Peter Groenen, the ACL’s district merchandising manager, says co-op shoppers in the rest of Nunavut will experience a “delayed reaction” when the current contract with Canadian North expires.
Over the long run, Nunavik’s cooperative network of stores won’t escape higher cargo costs, either, for food items that don’t qualify for the food mail program.
The FCNQ has managed to keep air cargo rates lower by using Val d’Or as the staging point for all food mail and other freight.
Trucking food to Val d’Or and then flying it to La Grande and Kuujjuaq on Air Inuit or First Air is cheaper than using First Air flights from Montreal.
Ronald Lapierre, director of shipping for the Nunavik’s co-op federation, said that because of First Air’s monopoly on the Montreal-Kuujjuaq jet route, Nunavik retailers can’t benefit from competition.
“Ever since Canadian North got out of the market, First Air has continually upped its prices,” Lapierre said. “They have a hold on the market.”
Jim Ballingall, First Air’s vice-president of marketing and sales, said the 6 per cent increase won’t even cover the losses First Air has suffered since Sept. 11.
Ballingall said fewer passengers, higher Nav Can and terminal fees, a 300 per cent jump in insurance fees, and the “drying up” of First Air’s lucrative charter business leave the airline with difficult choices.
Ballingall didn’t rule out more rate hikes.
“I would never say never. At this point in time, we don’t have any plans,” Ballingall said.
Last week, both First Air and Canadian North announced a 6 per cent increase on their passenger ticket prices, effective Nov. 1.