GN ready to ‘share’ risks, benefits of owning Canadian North: Community services minister
Contract gives government route to become part-owner of Bradley Air Services, which operates Nunavut’s largest airline
The Nunavut government has reached a travel agreement with Exchange Income Corp., owner of Canadian North, with a possibility of the GN becoming the airline’s minority owner. (File photo by Jeff Pelletier)
Updated July 22 at 2:50 p.m.
The Government of Nunavut could become part-owner of the territory’s biggest airline under a new 10-year agreement it has entered with the owner of Canadian North.
“Our airline is our only road system,” said David Akeeagok, the territory’s community services minister. “What better thing to have than an equity stake, because we rely solely on it.”
The agreement with Bradley Air Services — a subsidiary of Exchange Income Corp. — was announced July 16. Exchange Income Corp. owns Calm Air, Keewatin Air and Canadian North.
The parties started negotiating the contract in February after the $205-million acquisition of the airline by the Winnipeg-based company was announced.
The new agreement replaces existing separate agreements the territorial government had with Calm Air and Canadian North. It covers duty travel, medical travel and cargo services that the airlines provide to the government, Carmele Peter, president of Exchange Income Corp., said in a phone interview Thursday.
The agreement also tasks the corporation with reporting to the territorial government on the quality of service the airline provides with an aim to prompt “greater focus on time performance,” a reduction of “service interruption” and an improvement in the quality of Canadian North’s overall services for both for GN and non-GN travellers, Peter said.
“The travel agreement includes clear performance expectations for service delivery, reliability and freight,” said Casey Lessard, communications director for the Department of Executive and Intergovernmental Affairs.
“If service quality declines, the GN can escalate concerns directly to [Exchange Income Corp.] leadership. The GN also retains influence through the scale of our contracted travel.”
The agreement gives the Nunavut government the opportunity to buy equity in Bradley Air Services (operating as Canadian North) as well. If that were to happen, the GN would become the airline’s minority owner.
The GN has a year to decide this issue. If territorial leaders were to say yes, the move would require policy framework, legislation and a go-ahead from the legislative assembly, along with approval by Exchange Income Corp.’s financial management board, Akeeagok said.
The exact amount of equity is still in discussion.
A final decision on whether to buy into the airline would not happen in the life of the sixth legislative assembly, seeing as the territorial election will be held Oct. 27, Akeeagok said.
Neither Akeeagok nor Exchange Income Corp. said whether Canadian North is a profitable company. In 2023, Pita Aatami, president of Makivvik Corp., the previous owner of the airline, said it was “losing millions.”
The Nunavut government understands the air industry “hasn’t necessarily been a profitable place to be,” Akeeagok said.
“It’s something that as a government, I think if we have equity, then we can share those risks and ensure that our road system is intact,” he said.
Note: This story was updated to correct David Akeeagok’s role in cabinet
Anyone else remember how much money our government was forking over to Canadian North back around the pandemic? We were all wondering why it was that we didn’t get equity for all that cash at the time.
I believe the GN paid Canadian North $90 million dollars to continue running the routes it was already contracted to run. No equity. No loan. Just cash, courtesy of Ottawa as always.
Wasn’t there a big process for Canadian North and First Air during their merger? I thought there was rule put in place to protect Nunavut passengers? Was this even done with Calm Air and Canadian north???
Did you even bother to read the article? Calm Air is owned by the same company EIC, you should look into who and what they all own, Calm is but a small company in it’s huge portfolio.
You do understand that EIC owns Calm Air and that this isn’t a merger? It’s completely different, it’s like how Norterra owned Canadian North and NTCL?
Quebec’s regional air access program offers deeply discounted tickets to remote airports in some parts of the province. Anyone can buy up to 4 one-way tickets per year for $250 each. Mostly on PAL airlines… any seat, any time, the government subsidizes the rest. This is great for not only residents of the communities, but their visiting families and even tourists who want to spend their money on these communities, which can be a huge economic boost. Hopefully a similar program could eventually come into play in Nunavut.
Unless things have changed i think we are allowed 2 return flights per year and there are only so many of these beneficiary seats per flight, i could be wrong and its all changed now
The current one for canadian north doesn’t help non-beneficiaries and even if beneficiaries want to use it, it usually has to be booked well in advance.
If travel nunavut is serious about boosting tourism to nunavut, these kind of subsidies will help big time!
Ilak or Pivut is something done by NTI, they are the ones who decide how many seats per flight and how many per year is allowed, this should be common knowledge, Canadian North from my understanding of reading what was posted years ago just adheres to the rules set by NTI.
Another terrible brain fart from David Akeeagok. Now we will not just take a financial beating at the ticket counter but we’ll pay for the privilege through our taxes too.
What a clown!
Is the Government of Nunavut creating an airline monopoly to keep airline competition out of Nunavut over the next 10 years with this public-private partnership (PPP)?
Seems like it sets the GN to be in a position not to have the will to encourage competition or offer fair rates for travel and freight.
Pretty much everything will not be transparent by the GN because of commercial confidentiality.
The public won’t know what government hidden subsidies are flowing into their own air line monopoly to keep competition away from their routes. And if the private partnership side struggles, GN will be there as their pumping ATM.
You speak as if there is other airlines that want to go into competition. Let’s look at the Kitikmeot region for example, Buffalo cannot do passenger service as they lost their privilege to years ago (hence why they fly cargo only), Summit are just a charter company who specializes in mainly moving cargo/passengers for the mines (they are guaranteed big money doing that compared to flying to communities with no export). Tindi they are to small of an airline to service such a larger region, same goes for North Wright, Northwesternair and any other small time operations out and around the Yellowknife area.
Now let’s talk big competition West Jet/Air Canada, neither of those airlines would ever consider it because they would either need to contract (man the legal side of this would be just as costly as setting up full shop), both of those big airlines don’t have smaller aircraft to do those runs (remember Jazz is outsourced to another company), the initial cost of setting up in each community to service them would make any cost saving benefits worthless (ticket prices etc).
Air North I doubt have enough aircraft to service both Yukon and anywhere else (plus their aircraft rarely land on gravel strips). So that leaves what competition?
So is it better to have 2 or more airlines bleeding money to provide service and cut costs at every corner? I wouldn’t want to see this third party adhoc flights like in Europe where if something goes wrong you are royally screwed out of your money.
Of course. After 4 years of fiascos in Health, Housing, Education, Justice, etc… lets do an Airline. Yeah heck, what could go wrong?
Everyone keeps talking about more competition in air travel in Nunavut. Well, where is this new competition to come from for goodness sake?? The routes out to the communities are serious money losers and always have been. That’s why there has been no competition because any potential competitors out there realize that there is no money to be made in it. Frankly, it’s not even worth it for potential competitors to start up on the Iqaluit Ottawa routes. On small airline tried a little while back and then bailed out. People hate to hear it but Akeeagok is right that the whole thing just isn’t profitable, and the government will likely have to get more involved to ensure that this vital service is maintained.
Of course. After 4 years of fiascos in Health, Housing, Education, Justice, etc… Why not an airline? Sounds like a great idea to me. NOT!
There are just so many ways this could go very wrong.
Have we not learned through the Potatoe Companies that equity, even 100% equity, is not the same thing as control. It does not even guaranty access to complete information.
You may own part of an airline company.
It could “lose millions”.
But the aircraft maintenance company might be making huge profits.
Or the money might be ending up in the company you lease “your” airplanes from.
Or maybe to the company that actually owns the aircraft.
They could do a Microsoft, paying huge amounts for the right to use the logo.
Or they could copy what Air Canada did many years ago to get money free from airline regulations, they put the profit into the airline reservation business, which was not regulated.
What, exactly, does the GN think it will get from “investing” in this airline? What, exactly, will it have to give up?
The devil is in the details.
If everyone in Nunavut liked complaining about the costs and level of service when Makivvik owned the airline, I can’t wait to see how bad things can get with the GN as part owner… buckle up!
Ha! GN has fumbled just about everything they’ve touched and taken years to do it. The only way Canadian North could get worse is to allow the GN to be more involved in operations and decision-making.
Only saving grace is that the GN has 1 yr to make the decision … not a chance they meet that deadline
Well it is about time.
I have said for years that the GN needs to take an equity stake in the airline and have direct input to the decision making process.
From the GN perspective the best thing would be for the airline to operate as if it were a regulated utility, or a not for profit corporation.
This would not be possible with EIC as the owner, but having the GN take an equity state in a new Nunavut branded airline with EIC as the owner/operator would be a good step forward.
Anyone else remember the G1 that the GNWT used to run from Yellowknife to Rankin Inlet to Iqaluit?
Share responsibility for Lost Air Miles from both First Air and Canadian North Merger Honouring Flown and acquired Air Miles on Official and Personal Travels during Operations.
As it is today Canadian North cannot even reply to inquiries hoping it goes away quietly as require Consumer Clients to Purchase Seats than provide the Air Miles Honour System which was suppose to ensure Nunavut Beneficiaries who earned them have access to their supposed entitled Air Miles to Monopolies and Prfits o and/or they are not Professionally Equipped to Manage Customer Services.
Which is it? Both?
Why should Canadian North put priority on air miles tickets when that reward program is from Air Canada?
Aurora Rewards is Canadian North’s rewards program.
How about Ilak fares? Well that was something decided by NTI in conjunction with the airline, it’s NTI’s regulation to administer the fares and Canadian North follows those rules.
route for jet, ottawa iqaluit, resolute cambridge bay then yellowknife
My favorite part of the article is “If service quality declines, the GN can escalate concerns directly to [Exchange Income Corp.] leadership. The GN also retains influence through the scale of our contracted travel.”
Atleast now we know why Canadian North has been SO bad over the last year (not just the last year though i feel they got worse). It set this bar VERY LOW.
I wish our leadership at the GN would lobby the other airlines to start air travel to some of the regional centres at least, Air Canada, westjet, Porter, flair, another company.
Air Canada to Iqaluit-Ottawa was great when they had a scheduled service, we had three airlines flying in at one point, now we have no choice and a monopoly, Air Canada receives federal support, they should be mandated to fly in all of Canada, doesn’t have to be to every community but at least the regional centres. Where is our leadership in this?
Did you not read my comment earlier about competition? None of those airlines want to fly up in the north let alone have planes that could fly up in the north (with the exception of Iqaluit, Rankin, Yellowknife and Inuvik). They are not going to risk flying up north (high cost of insurance) to bleed money, they don’t have the resources for ground staff or equipment.
Then you screw all the other communities. The problem in Canada is that there are no subsidies for smaller communities contrary to many other countries, including our Southern neighbour. Very few routes make money and, in a way, customers on those routes “subsidize” the other routes. I’m surprised EIC let go the Kuujjuaq route.
EIC didn’t let that route go it was always done by Air Inuit (owned by Makkivik), who said southern routes are subsidized? You do understand that majority of the flights in the south are full both ways (ie making money by being full of passengers?).
Why not ask the better questions like why the hell isn’t the territorial government stepping in to upgrade runways? Pretty sure there is good new technology to make the runways into pavement or at least make them considered hard packed which reduces the aircrafts “cycles” compared to landing on gravel runway, also lengthing and widening the runways to accept bigger aircraft?
The Montreal – Kujuuaq route was not done by Air Inuit. It was a First Air (and now Canadian North) route. Air Inuit did fly out of Montreal to Kujuuaq as well. As part of the sale agreement, EIC gave up the route by Canadian North. Now it will only be Air Inuit serving Kujuuaq from Montreal.
Chee, one route should be specifically designated for medical travel holidays where I could bring my whole family. I will get on it, nevertheless. On the other hand, a flight designated for only GN duty travel where I will claim all the points. The public could pay the ridiculous fares, leave it to them. GN worry about the above two groups.
Remember Fly Sarvaq? there’d be a competition for a mere price of $499! only if y’all weren’t D riding Canadian North!
Air Canada. Did fly between Ottawa and Iqaluit in 2010 and pulled out because the federal gov and Nunavut gov would not support or give them medical travel. Iqaluit the party is over, reality check coming,
The potential equity stake is a diversion, a shiny MacGuffin. It may or may not happen, and if it does happen it probably won’t do much more than waste several millions of dollars.
The real story is 10-15 years of sole sourced medical/duty travel with no protection for the travelling public or the private sector in the context of a Nunavut aviation sector that is more concentrated than it has been in decades (possibly ever).
There is absolutely nothing stopping non-GN fares from skyrocketing on January 1. EIC doesn’t need to worry about competition for at least 10 years. They might want to fill the non-GN seats, but they’ll also try to anchor those fares at a high price point.
This could prove to be one of the worst decisions the GN has ever made.
Given Exchange Income “Stable” of companies,,I’m sure they would be open to looking at meeting any and all of your GN requirements/need’s.
Just make sure the requirements are clearly defined and what
the service level/expectations are,and,what penalties would apply if
they dont perform.
It’s a similar approach to doing a capacity agreement.
A Tender requesting “Bid’s” might flush out some other interested
parties also,??? (And speaks to transparency).
Historically,,Government ownership in Airlines has not gone well.
It’s not a “Core”” business of Govt,,nor are there the “subject matter”
experts inhouse.
The road to hell is paved with good intentions-!
Some places in the Arctic have passenger ships and boats to travel to other communities, Labrador, Greenland, maybe some of the communities can use this method of travel instead.
Chester, Rankin, Whale, Arviat.
Kinngait, Kimmirut, Iqaluit, Pang, Qik.
Grise, Arctic Bay, Pond.
Same in the Kitikmeot, our Marine infrastructure would have to be improved but this maybe an option, summer season.