Northern airline risks cutbacks without federal support
“This is dangerous for us”
Canadian North’s executive chairman, Johnny Adams, speaks to Makivik’s board of directors at the organization’s annual general meeting, live-streamed from Kuujjuaq July 16. (Screen shot)
Makivik Corp. president Charlie Watt says the federal government has left Canadian North in a vulnerable situation by not yet making good on a pledge to continue financing the northern airline.
Canadian North, co-owned by Nunavik’s Makivik Corp. and Inuvialuit Development Corp. in the Northwest Territories, has received financial support from the federal government since mid-March to offset its losses during the pandemic.
But those funds stopped flowing at the end of June.
Makivik officials says they’ve since met with federal Transport Minister Marc Garneau, Indigenous Services Minister Marc Miller and Northern Affairs Minister Dan Vandal, who have each promised Ottawa’s continued support—though only verbally.
Watt called the move “manipulative.”
“We really need to see this in writing,” Watt told Makivik’s annual general meeting July 16. “This is dangerous for us.
“Are we able to find ways to ensure that we don’t start spending our own money?”
Johnny Adams, executive chairman of Canadian North, told Makivik’s board of directors that the airline officials have met with federal ministers on three separate occasions in June and early July.
“They told us not to be concerned,” Adams said July 16. “They said they’ll continually support us financially, for communities that are isolated and without roads.
“But we’re still demanding a written letter,” he said. “We’re waiting.”
In Nunavik, where Canadian North’s only commercial flight—its Montreal-Kuujjuaq route—has yet to relaunch, Adams said the airline is benefiting from charter contracts with regional organizations.
The Government of Nunavut has also been an important source of funding for the airline, doling out $24 million to both Canadian North and Calm Air’s operations in the territory since March.
Canadian North hasn’t said how much it has received from Ottawa since then, other than saying the amount is in the “millions.”
In an email to Nunatsiaq News, the airline said it has seen “some very modest improvement in passenger volumes,” though they continue to be lower than before the onset of COVID-19.
Canadian North said it has “taken steps to reduce costs where possible until demand returns, but there is still a sizable gap between where we currently are and where we need to be to maintain sustainable operations.”
If the airline doesn’t get confirmation of continued support soon, Adams fears it will be at the expense of Inuit communities.
“If they continue to delay, we’ll have to look at cutting costs or scheduling,” he said. “We’ve waited a long time. I hope we don’t have to wait too much longer.”
“We would have lost millions”
Makivik Corp.’s other airline, Air Inuit, suggested that it’s faring a little better.
Air Inuit CEO Pita Aatami told Makivik’s annual general meeting that the regional airline has guaranteed financial support from the Quebec government until at least October 2020.
“We’ve been severely affected,” Aatami told meetings July 16. “But we’re not concerned about our financial state.”
“I’m grateful to the Quebec government. We would have lost millions.”
Air Inuit relaunched its intercommunity travel operations as of June 18 and continues to fly charters to and from the region. Aatami estimates the airline is operating at about half of its capacity.
The airline employs about 700 employees, 49 of whom were laid off when flights shut down in March. Aatami said the airline has been able to hire four of those employees back.
The airline has also had to temporarily cut its regular support to regional organizations.
“Our daily operations will hopefully come back, but we’re not rushing that,” he said. “We’ll always been concerned about COVID-19.”
—with files from Meagan Deuling
Wishfully thinking the airline will come to resorting to sell to a Nunavut-Inuit Owned company to keep Nunavut money in Nunavut.
One positive thing so far with the pandemic is the internet bandwidth was increased permanently a few weeks ago. Showing we have always been ripped off and the companies are able to continue with lower costs or more services offered to come closer to being comparable to Southern Canada.
Hmmm, I seem to recall the Canadian North used to be owned by IDC and Nunasi/Norterra, and that Norterra decided to give up on their 50% interest as Canadian North was losing money at the time and both organizations had to make further investments to keep the company going.
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And if my information is correct, Makivik had offered all 3 Nunavut RIAs equity stakes in First Air at a very favourable rate. While two of the RIAs at times had marketing deals with First Air none wanted to risk any equity.
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Also Nunavut needs to recognized that Canadian North serves the north, not just Nunavut.
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Now I’m sure that Canadian North would love to have the Nunavut RIAs invest in the company. It’s about time that they made a real investment which in turn would give them a seat at the decision making table.
Hey folks, its called a capital call from your beneficial owners. Any contribution from Canada, GN should be tied to an equity stake with voting rights. Time for the GN to have some skin in this game
in COVID-19, airlines are losing money. I suppose Watt thinks his company is above that because being Inuit-owned somehow means it must be funded by the government to survive. Maybe the company should fail and the government swoop in for discount planes. This is hostage taking language if I have ever seen it, and this guy should be ashamed by threatened normal people in Nunavut, most of them inuit, like this. I thought government had agreements in place to force them to fly but maybe not.
Maybe he could make a few runs with his float plane. That would get 2 birds stoned at once: give him something to do and cut down on Makivik’s expenses.
What’s wrong with spending your own money keeping your company afloat Mr. Watt? Stop standing there with your hand out and do you job and figure out how to keep your airline afloat. After all that’s why you get paid the big bucks.
To those that don’t think the government should subsidize Canadian North during the pandemic, why not?
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The government has said we do not want you to fly, and we don’t want people who would normally use your service to use it as it may spread Covid-19 to vulnerable communities.
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This is no different than the government subsidizing individuals who have been laid off, same with restaurants, bars, hair salons, etc.
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Airlines are capital intensive, huge costs for aircraft, parts, other equipment, daily maintenance, training (flight & cabin crews, engineers & mechanics), airport rents, staff salaries, etc.
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The government is paying the airlines not to fly their normal schedules but to maintain a minimum level of service (cargo, medical travel, essential workers). They are also paying the airlines to be ready to fly once it is safe to restart normal travel. This is money well spent.
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I don’t know of any service business that could afford to have 90%+ of their business disappear and still stay in business without assistance.
I do not have a problem with the GN or feds providing funds to keep Canadian north flying at this time. They are essential and planes have certain needs to keep them operational. However what i do think needs to go with it is proof that they would fold and that the money given goes to covering the bare minimum. As in at the end of the year Canadian North had better not have made a single dollar of profit. This year is all about not collapsing, not increasing profit for the share holders.
Precisely. They better not be paying any bonuses to execs this year if they’re in such a state! Profit is not a god given right. The feds should step in and manage airlines for the north. Connectedness is a vital services and the fact that Nunavummiut must pay a mint to keep grocered, housed, and connected is a shame on this federal government.
What percentage of those that travel are on Nunavut Beneficiary Medical Travel? What percent is GN Duty Travel, and those on leisure? Government Employees and Medical Travel patients should share and own a float plane for each region…lol Government and medical travel keeping you afloat there.
Our bonuses might be a lot smaller this year if we don’t get anymore funds to support our airline.
Lets save our money, pull the planes. Let the governments figure how to send food, medical supplies/ staff, essential material for public systems… let them deal with all that.
In case you didn’t notice, I was being sarcastic. We as shareholders should not be paying for essential life supporting services. We pay outrageous taxes already so lets see the support where it is needed in this time of crisis.
It will be terrible if all of the managers and directors of Canadian North have to go without all of the extra money that they are used to having down in Ottawa and Calgary. They have worked so hard to eliminate all of the hardworking people who have kept the airline going and now they will have to sell their second condos to pay for their Landrovers. I hope they will be ok,