Nunavut government seeks to stir up airline competition
Call for bids on government travel aims to “improve access to affordable scheduled airline services throughout Nunavut”
The Government of Nunavut is looking for more airlines to operate in the territory. (File photo)
The Government of Nunavut wants to use its next medical and duty travel contracts to find more airlines capable of offering more affordable scheduled air services in the territory.
A request for proposals issued by the Government of Nunavut on Jan. 11 calls on airlines to bid on government-arranged travel, such as medical travel for patients and duty travel for GN employees.
Contracts could also include air freight.
Until now, the GN has divided up its medical and duty travel business among three regions. But this time companies will have until a closing date of March 15 to bid on up to seven routes, or any combination of those seven routes.
The seven routes are the following:
- Serving the Qikiqtaaluk region
- Serving the Kitikmeot region
- Serving the Kivalliq region
- Iqaluit-Ottawa
- Iqaluit-Rankin Inlet-Yellowknife-Edmonton
- Rankin Inlet-Winnipeg
- Sanikiluaq-Winnipeg
The new seven-route scheme makes out-of-territory routes, such as Iqaluit-Ottawa and Rankin Inlet-Winnipeg, open to individual bids.
That means, for instance, that a company could bid only the route between Ottawa and Iqaluit, without having to offer flights elsewhere in Nunavut.
There are also new proposed routes between Rankin Inlet and Winnipeg, and between Iqaluit, Rankin Inlet, Yellowknife, and Edmonton.
GN stresses affordable sked service
“The Government of Nunavut wishes to improve access to affordable scheduled airline services throughout Nunavut and in particular, points between Nunavut communities,” the request for proposals states.
“Proponent should clearly indicate how its proposal would contribute to improving access to affordable scheduled airline services throughout Nunavut.”
As things stand, Nunavut is set to soon see less airline competition. First Air and Canadian North are expecting to finalize an airline merger as soon as this spring.
Medical travel contracts would require airlines to serve communities three trips a week, and a weekend flight for some routes. The territory spent more than $60 million on medical travel in 2017-2018.
The GN is the largest contractor for airline services in the territory, and also spends around $15 million on duty travel each year.
New contracts would be for three-year periods, with the option to renew those contracts twice, first for two years and then for one year.
The GN expects any new contracts to come into effect by January 2020.
The GN will hold a meeting Feb. 8 for interested contenders.
Contractors are expected to offer training and create work opportunities for Inuit.
Proposals will be ranked on a percentage scale of 40 per cent for pricing, 35 per cent for proposed customer service, 20 per cent for Inuit employment and five per cent for Inuit training programs.
“One of the priorities of the GN is to ensure that Inuit, local, and Nunavut businesses supply materials, equipment and services, and that Inuit, local and Nunavut labour are used to the fullest extent practical on any GN contract,” the request for proposals states.
The GN just does not learn! Every time it tries to use it’s contract leverage to promote competition in a market that is too small to support it it makes the market weaker. It has pitted Canadian North and First Air, and to a lesser extent Calm Air against each other for the last 20 years. This has almost bankrupted all of these airlines in the past.
Here is a news flash for the GN – you have the most difficult aviation market to serve in the country. You need to look at it as one integrated market, not 7 separate markets. You also need to work with the airlines, not try to pit them against each other in the mistaken impression that “competition” will lower prices.
I have said this in the past, the 3 regional organizations should take up an equity stake in the merged Canadian North/First Air, buy out Calm Air, and operate the airline as a quasi utility. The 3 RIOs plus the current two owners IDC/Makivik can be held responsible for ensuring that the airline operates fairly and efficiently.
And if anyone should be paying to subsidize air travel for the individual traveller it should be the GN. Instead we get them trying to stretch their budgets by pitting the airlines against each other and trying to force them into offering services at or below cost. Shame on the GN.
This is just bs. Everyone things the airlines are making a mint but they’re not. Medical and gov contracts are what bleed the airlines dry. What people don’t think of is that these contracts require the airline to operate flights whether they have passengers or not, but of course they only pay for the tickets purchased. So let’s just say flight is Iqaluit to Pond and back, no passengers… Well there goes $30 -$40K.
Secondly , these RFPs give an “expected” number of tickets per year. These are what companies factor cost/profits etc when determining they’re bid. These numbers are never met and your dreaming if you think the government will pay the difference at the end of the year.
So we have a contract requiring service levels above the demand (at the company’s expense) that never fully pays out anyway… These contacts require a huge investment from the company (planes, staff, support operations) which they never see back.
If the gov is serious about wanting “affordable” travel they should treat it like public transit! Contract airlines to operate on they’re behalf (just like a bus). The GN can control ticket prices, the airlines can be sustained and the people happy!
And if you think this is not feasible or would be too costly then ask yourself how is an airline supposed to do it?
I agree that the GN needs a stake in the airlines, they are the majority of the tickets purchased. But i also think the GN needs to tell the airlines what they will pay (just for and example $1000 for a return ticket for Duty and Medical but the airline can only charge $600 for regular priced tickets. then the Inuit Orgs can make a deal with the airline and bring that cost down even further if possible for Inuit).
As for your example of the Iqaluit- Pond flight going empty.. why are the airlines flying with ANY empty seats. If there were cheaper seats, even last minute stand-by deals they would atleast have a body on the plane and some more cash in their pocket.
Exactly I totally agree with you!
What happens if no one bids on on one of the routes?
Old Trapper is correct, what the GN has done will cripple the Northern airlines that have infrastructure and have provided service and community support for years if a southern carrier comes in and cherry picks the single lane Jet corridors in the East or West, if they lose the Jet portion they will raise prices for all the inter community travel to recover the losses from the Jet.. What is GN accomplishing then? Northern Carriers will once again bleed money into losses and look for federal bailouts or close up shop. Way to Go GN careful what you wish for ….
it might not be so bad if they contractors used their bid to conform with the policies GN sets. hiring local would mean more jobs. stop flying in staff.
IMHO competition is a necessary evil to facilitate air transportation. GN forcing airlines to segment the weakest market in the country is a bad decision indeed. Competition of all those seven markets at this point is moonshine BUT competition is the only solution to lower harsh fares in the long run, as the very basics of Economics tell us. At least competition of Ottawa route should be implemented. This is vital for Iqaluit and then for nearby northern communities to foster tourism and influx of people. Then the demand for air travel will grow. This is totally viable, considering recent population growth.