Northern airlines frustrated by scope of Competition Bureau review
“We urge Transport Canada to take a much broader and more complete view”
First Air is calling on the federal Transport Ministry to widen the scope of a review of its proposed airline merger with Canadian North.
When the two airlines announced plans to merge last year, it triggered public interest reviews by both Transport Canada and the Competition Bureau.
The latter released its report this week, which called the proposed transaction “a merger-to-monopoly.” The bureau raised concerns over its potential to raise prices and reduce flight schedules across the North.
But as its mandate suggests, the Competition Bureau only considered the competition aspect of the merger, said Christ Avery, president and CEO of First Air.
“The frustration is two-fold; one, the Competition Bureau really stopped short in their work, in our view, and they didn’t evaluate the efficiencies that would be created by the merger of the two airlines,” Avery said.
“The other part of the frustration is that there are two privately-held, Inuit-owned organizations that are striking a commercial deal to try and provide the best possible service for the North, and also try to protect the investment of their Inuit shareholders.”
Neither airline receives any government subsidies for providing an essential service, Avery noted.
“So we urge Transport Canada to take a much broader and more complete view of the merger,” he said, adding it should consider the economic and social factors of northern air travel.
“Which we believe they will.”
The bureau’s report, now submitted to Transport Canada, warned that the merger could translate into less capacity for both passengers and cargo, fewer flights and an increase in air fares.
The chance of seeing other competing airlines enter the market is low, the report said—even on a high-volume route like the Ottawa-Iqaluit flight, currently serviced by both First Air and Canadian North.
Avery tried to quell concerns about the monopoly the new airline would create, saying the airlines’ Inuit ownership means it has its shareholders’ best interests at heart.
“The organizations are committed to providing the best service to the North and particularly their own friends, families and their communities,” he said.
“It’s a closed system. These aren’t profits that are generated for some faceless fund or entity in the south.”
First Air, owned by Nunavik Inuit (Makivik Corp.), and Canadian North, owned by the Northwest Territories’ Inuvialuit, are still in discussions with Inuit organizations in Nunavut to have them sign on as shareholders to the new merged airline.
In the meantime, the airlines now await Transport Canada’s own review, which will be passed along to the federal cabinet to make a final decision.
The airlines initially envisioned that the new airline would be up and running in early 2019, though the federal government has no deadline for when it must issue its decision.
“Time is of the essence,” Avery said. “The sooner that we can merge the airlines, the sooner that we can gain these efficiencies.
“But we feel confident that the merger will ultimately be approved.”
you know who else is frustrated, the very people who live here. I wish Mr Avery or Mr Adams would just once have to buy a plane ticket to travel like we do.
Imagine one of our residents of Resolute Bay was an Edmonton Oilers fan and decided to fly to Edmonton to catch a hockey game. for them to fly from Resolute Bay to Edmonton return would cost a whopping, $11,557.61 on a Flex Fare.
If their Cousin in Ulukhaktok, NT wanted to watch the same hockey game, it would cost them $4,760.96 to fly to Edmonton on a return airfare.
I hope their Children don’t want to watch a hockey game either cause that cost of the flights above are for ONE PERSON only.
maybe their Parent can make them a pretty sign to wave at their kids on tv……
At those prices who could afford a hockey game….should ask First Air for the corporate seats or corporate box they have in Ottawa.
“The sooner we merge, the sooner we can gouge our customers more and provide even worse service.” would have been a more appropriate quote.
Let’s hope Transport Canada stands with the people who will be left broke by the two mismanaged airlines.
A simple suggestion: tell us what the flight costs will be after the merger (the real prices, not seat sales)
If you can’t do that, it’s because:
A) you don’t know because you haven’t calculated what these “efficiencies” will actually be, or
B) you don’t want us to know because it’ll be the same or more expensive.
Tell us how much it’ll cost and if we like it then we’ll all gladly support your shady merger. Until then: screw First Air and screw Canadian North. I hope you fail.
So let me get this right because First Air and Canadian North are Inuit owned that means they will have our best interests in mind… what happened when code share happened… did everything get better and cheaper… NO. That was there chance to prove they care more for us then profit and they blew it.
Just because Inuit are involved does not mean the individuals at the top really care about us customers of theirs. we are just their next bonus.
I do wish that everyone complaining would do a bit of research. First look at a map, then look at the GN & GNWT websites for population data, next cost out the aircraft, cargo mods, spares, etc, figure out that no one in any community wants to work earlier than 8 am or later than 4 pm, Monday to Friday. Figure out that the most you are ever going to get (with 2 airlines) is 60% of the market because the government is going to slant all contracts to “promote” competition – or more accurately stretch their budget dollar. Now tell me if you can possibly make a profit!
The federal air policy is the real culprit here. The markets in the north are too small to support two airlines. In fact the federal government should limit most routes to only one carrier, and that carrier should be subsidized directly for providing service. The U.S. Has an EssentialAir Service policy for remote and small communities. It’s time for the Feds, the GN, and the GNWT to step up and acknowledge that aviation is an essential service in the north.
The Ilaujuq Program in Nunavik is a good example of how an Inuit owned airline can use its services to better serve the beneficiaries. The Ilak Program is a similar program that allows a limited amount of trips to travel on board the Inuit-owned airlines at a very reasonable cost (max $800). The cost to operate an airline in the north, with the infrastructure (costs 3-5 times + more to build and operate than the south), human resources, vital equipment and mechanical services as well as high fuel costs is a big challenge. I doubt any other airline would provide those specific program fairs for beneficiaries and would keep the profits for their shareholders (private resorts, 2nd, 3rd houses, etc)
The profits are funneled back to the parent corporations, to provide needed services that the government does not provide, in turn, producing extra funds to support the region that would not be realized with government support. The government would not provide those extra funds for community purposes, we need to think about this. Like Chris has said, you got to look at the big picture. The region is vast, with a smaller population than what the major airlines serve. The profits are funneled back to the regions and the communities, creating badly needed programs that would not be realized with government support.
Who are planned to be the owner’s? Nunavut has been invited, which shows the interest to share. If all Inuit regions own the airline (Canadian North), then it would truly be an airline of the North, owned and operated by norther’s. Would you rather Air Canada or West Jet come in and take over? We need to think of the big picture here.
Honest question who do you work for, first air or Canadian?
Thanks for sharing your side of the story in any case
Wonderingly, I work for the beneficiaries.
That…that doesn’t answer the question.
Bemused, if you want to think otherwise, that is your choice, I can’t change what you suspect or think… looking at the big picture here.
You still haven’t answered the simple question: do you work for First Air or Canadian?
Bemused, what if I was not, and what if I was only an Inuk beneficiary, looking out for the best interests of my fellow Inuit beneficiaries, and for other Inuit in the Canadian North, do you have an issue with that? I believe that a jointly owned airline, owned and operated by the very Inuit they serve is a win-win-win for everyone, especially the Inuit beneficiaries, do you have an issue with this? Enjoy your day.
Tommy I think you are right in most of your assessment, the problem i have is that neither First Air or Canadian North have shown any indication in the past 10 years that they will not just keep raising the costs and decreasing the serves.
For the parent companies giving money back to the communities… First air is Nunavik owned and they only have 1 stop in Nunavik (Kuujjuaq), the rest in NU and NWT. and Canadian North is Inuvialuit in NWT owned and they have 1 stop in their area (Inuvik). so since they can not even provide direct service to very community in their own region how can we trust them with ours?
Consistency, from what I understand, invitations to Nunavut have been sent on several occasions, to have them as partners. With all the northern regions as partners (Nunavik, Nunavut & Inuuvialuit), it would allow for the sharing of control of the company. A fully Inuit-owned company, serving its population and giving back to the regions is what is at work. Would other major airlines do this? They only think of their shareholders and nothing more. If another Inuit-owned company is created, this would create inefficiencies and limited returns to the regions. Fully Inuit-owned and Inuit controlled, across the Canadian Arctic, does not seem wrong, it seems right.
Did people forget the GoSarvaq episode in 2016? In case some people don’t remember, GoSarvaq was suppose to start a low/lower cost flight service. A Ottawa-Iqaluit ticket was 500$. A few days before the start of the service, First Air and Canadian North lowered their ticket price to 400$. GoSarvaq could not match the price so they folded before their first flight.
Our “good northern” airlines never offered this low price again. So the question that comes to my mind, can they really be trusted to offer the best possible service at the best possible price? If so, where are 400$ ticket gone too?
You’re right but what did the people of iqaluit do..? They ooked paid the discounted flight of 400 dollars I stead of supporting the new airline..the greed of lower prices got the best of you and you swept the opportunity under the rug yet again..now look where you are at for that measly 100 bucks
Exactly my point! Just think for a second, the GN pays a lot a money for flight service (medical travel, duty travel, etc.) to 2 companies sharing the market. Image if it was just one company? Talk about setting yourself up for failure! Why charge 1$ when you can charge 10$
Can’t wait for Lufthansa to join the dance
First Air employers should try book a flight from Iqaluit to Resolute without discount same as everyone else.
It’s always reassuring to hear these companies who have been gouging Nunavimiut for years say that if they are allowed to become a monopoly, they will stop gouging Nunavimiut because they are owned by Inuit. Well, these two companies are owned by Inuit TODAY so why are Nunavimiut already being gouged? Right now, we are being gouged by two Inuit companies, after they merge, we will be gouged by one, bigger Inuit company.
If we can get the same treatment as getting 75% off and hockey game tickets for Montreal, I’m up for it, get my drift
They are always saying the prices are so high because of doing business in the north.
It costs less than $300.00 to fly from Vancouver to Whitehorse
So this excuse does not fly !!!