Onex airline merger threatens our existence, First Air says

SEAN McKIBBON
Nunatsiaq News

IQALUIT— A proposed merger between Canada’s two national air carriers could put northern regional airline First Air out of business, and destroy the investment of Nunavik Inuit says First Air president Bob Davis.

“Left with no alliance with a national carrier, the viability and future of First Air will be at risk,” Davis said during a press conference last week. He said the merger threatens the jobs of 450 northerners and the $50 million that the Makivik Corporation spent when it bought First Air.

“It is evident there is no concern at this point about what impact this will have on the North,” he said. The concerns of northerners and other Canadians in places served by small regional airlines are being completely ignored, he said.

Davis says the merger would favor his company’s rival and leave First Air without a national, southern airline to connect its passengers to points First Air does not fly to.

Canadian North has the advantage in the deal, Davis said, because it has a partnership with Canadian International and a newly merged airline would not want to compete with itself.

Davis dodged the question of whether his company would consider merging with Canadian North.

“We have a commercial agreement with Air Canada. Our competitor Canadian North is partnered with Canadian (Airlines International). It would seem that the logical choice if there was to be a partnership, it would be with Canadian North,” he said.

“Right now the airline industry within Canada is built on a two airline model. Everything the government has done so far in this process or lack thereof, has been to facilitate a situation which may create a dominant single airline in the South,” he said.

The federal government has a fiduciary responsibility to protect the interests of Northern Quebec Inuit, Davis said.

Davis said officials from the federal Department of Transport and the federal competition bureau had approached First Air informally and indicated there would soon be a single dominant air line in the south.

But not everyone thinks a single airline is such a bad idea.

Michael King, the vice president and general manager of Canadian North, says the merger could bring stability to the airline industry in the South.

“I think it’s a step in the right direction. Somebody is trying to address an inherent instability in the marketplace,” King said.

Both Air Canada and Canadian Airlines have been struggling with poor financial performance for the past 10 years, he said.

“Anything that would bring some stability to that and would try and bring some sensibility to the overall airline market in Canada is something we see as beneficial. I don’t believe the status quo is an option” he said.

“Whether or not the Onex proposal is the right one, that’s yet to be seen.”

However, King’s view of competition in the north is completely different. He says his company is not contemplating a merger with First Air.

“One of the motivating factors of our shareholders in Norterra was to retain and make sure there was a competitive air service in the North. You’ll find most people will agree a healthy, competitive environment is better than a monopoly,” King said.

But Davis said the Onex merger would give Canadian North an unregulated monopoly.

He said the federal government needs to establish some sort of process where regional airlines and consumers— particularly those in the North— could have a say in what happens to Air Canada and Canadian Airlines.

“The government must ensure there’s a fair, level playing field for sustainable competition in the North,” Davis said.

Davis said there is much at stake, not only for First air and the 1,000 people it employs, but for the northern economy. He said the airline spends about $38 million annually in the North and serves 26 communties. Some of those communities have no other scheduled air service, he said.

“While it’s under the guise of an industry restructuring, we really seem to be looking after the interests of Canadian Airlines here. We don’t want the problems of Canadian Airlines to affect the northern aviation industry, ” Davis said.