Ottawa gives green light to Arctic airline merger

“A strong, financially stable northern air carrier would best serve the North”

Transport Canada announced on June 19 that it has approved a long-anticipated merger between Canadian North and First Air. (File photo)

By Sarah Rogers

A rendering of the new Canadian North’s look, displayed at a Makivik Corp. executive meeting last year. The new airline will be Ottawa-based. (Photo courtesy of Makivik)

After years of negotiations and a short-lived codeshare arrangement, Canada’s two largest Arctic airlines will become one.

Transport Canada announced on June 19 that it has approved a merger between Canadian North and First Air.

The two airlines first announced their intention to merge in 2014, but those plans fell apart just months later. The following year, the airlines entered a codeshare agreement that lasted two years.

First Air’s owners, Makivik Corp., and Canadian North’s Inuvialuit Regional Corp. sat down to talk again last year, finally inking a deal in September.

That triggered a months-long review process by Transport Canada and the Competition Bureau.

The approval of the merger comes with a number of terms and conditions the federal department called “strict,” but necessary to protect the public interest.

Those conditions include:

• No price increases for both passenger travel and cargo delivery beyond those related to operating costs.

• No reductions in the weekly schedule options on all routes of the airlines’ combined network.

• Items such as nutritious food and essential medical supplies are prioritized for cargo transportation.

• Access to northern infrastructure (facilities and equipment) for new airlines entering the market.

• A commitment to increasing Inuit representation across the merged entity’s operations.

• Financial updates and yearly financial statements provided to the transport minister.

A confidential monitoring agreement, still to be signed between the parties, will ensure compliance with those conditions, transport officials said.

“We carefully examined the public interest, financial and competition aspects of the proposed merger,” said Transport Minister Marc Garneau in a June 19 release.

“The strict terms and conditions will keep costs low and ensure northern and remote communities have the access they deserve, while at the same time protecting northern jobs.”

Garneau added that “a strong, financially stable northern air carrier would best serve the North,” and lead to more reliable service and environmental sustainability.

But the merger has raised concerns about the impact of an airline monopoly on the regions it would serve.

A Competition Bureau report submitted to Transport Canada earlier this year found the merger was likely to hike airfares and create a “substantial lessening of competition” on many northern routes, including the Ottawa-Iqaluit and trans-Arctic routes, as well as most routes within Nunavut’s Baffin and Kitikmeot regions.

The newly merged airline has not released any information about its pricing or routes.

The new airline is set to operate under Canadian North’s name, while using First Air’s livery, and would be headquartered in Ottawa.

Canadian North’s new joint ownership said in a release that “travellers can be confident that there will be no degradation in service during the merger process, nor following its completion.”

“In 1990 we bought a troubled airline, First Air, and made it sustainable,” said Makivik Corp. president Charlie Watt in the release.

“At the time, we promised to create an airline owned by all of the Inuit of Canada and we are now much closer to making that a reality.”

Inuvialuit Regional Corp. chair Duane Smith said the merger was a major step towards “empowering Inuit to become meaningful participants in both the Northern and national economies.”

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(27) Comments:

  1. Posted by Arctic Traveller on

    Come on Savaq Air or Air Canada or WestJet. You are welcome to be the competition now with only one airline here.

  2. Posted by Northern Guy on

    Good news and bad news. The bad news is that costs will go up. The good news is that the door is now wide open for a national carrier to enter the market place and kick the new “Canadian North” to the curb.

    • Posted by Andy on

      No cost increases for at least 7 years as per applied restrictions. At least now we’ll see full planes which will result in a better efficiency.
      Damned if you do, damned if you don’t. Isn’t that right Northern Guy. There is not enough business for a second airline, as simple as this

      • Posted by Northern Guy on

        With only one airline now flying in the North there is always room for a competitor and now that the new “Canadian North” is legally required to provide infrastructure access to other airlines that is the wedge that will allow a WestJet or Air Canada (or other) to take a serious run at the North-South (Ottawa, Montreal, Winnipeg, Edmonton) and East-West (Iqaluit, Rankin Yellowknife) routes. I have never believed this garbage about there not being enough business to support a second airline.

        • Posted by Airline guy on

          It’s not that there isn’t enough business, it’s the expenses associated with flying in the north versus the income they can make.

          WestJet and AC would much rather fly to an international destination, with the same loads, and get cheap gas.

          • Posted by Airline Guy number 2 on

            1.44 for aviation fuel in Iqaluit. 1.74-2.69 for aviation fuel in Ottawa. thats not to say that airlines dont get a discount… that would be for me to go fuel. Operating cost is higher here but to what extent?

            • Posted by Airline Guy number 3 on

              Where did you get that Ottawa fuel price from! Try 90c/ltr

  3. Posted by Inuk from Ottawa on

    It is already expensive from Ottawa to Arctic Bay. First air website quote is: Trip Total

    7,817.33 CAD from June 24 to July 15. I wonder if the President of Makivik is aware of the high cost?

    • Posted by Flyer on

      He does not give hoot his only interest is the owner of the airline to make money and probably laughing at NTI and the GN because they are supporting Makiviks business.
      When is NTI going to wake up and invest their money so it can make money like Makivik is?

      • Posted by Northern Guy on

        NTI doesn’t invest in businesses that is up to the economic development arms of the 3 RIAs. I seem to remember that QIA once had a minority share in Canadian North but sold it.

  4. Posted by beneficiary on

    I’m sure the name I choose for the new co. name will be selected and i get to fly free for the rest of my life. The new merged name will be ‘North First’ and or ‘First North’. Their you go with our new Co. name.

    • Posted by Airline guy on

      They’ve already said they will continue to call it Canadian North. It’s right in the article

        • Posted by Israel MacArthur on

          Will keep First Air’s livery, but use Canadian North’s name.

  5. Posted by FrickenFlyer on

    The promise to keep prices the same is misleading. That’s the same as the regular full price ticket. Without competition there will be no need for this airline to offer discounts or seat sales anymore. So for the average person who already cannot afford to fly on anything but a seat sale or discounted ticket your prices have gone up. Business as usual for GN and Fed flyers and regular folks will never be able to afford it. Come on West Jet!!!!!

  6. Posted by Give-it-a-chance on

    Nunavut, Kitimmiuq and Inuvialuit folks, give it a chance. This will be your own airline. Ilaq fare will be your own and guaranteed discount each year. Not only that, having your reps on the board of Canadian North, you will have you voice. History has shown, reality in Nunavik. Give it a chance.

  7. Posted by Still dont understand on

    First Air 3hr flight from Iqaluit – Ottawa $1034.25

    Canadian North 3 hr flight From Iqaluit to Ottawa $1726

    Air Canada 8.5 Hour flight From Ottawa to Paris $1351

    ??????????????????????????????????????????????????????

    • Posted by Duh? on

      Let me help you understand:
      First Air and Canadian fly 737 300 or 400 series planes which are older (and less fuel efficient) than aircraft that fly transcontinental. Because they are combis, they haul about 80 passengers IF THEY SELL EVERY SEAT! When they land in Iqaluit, fuel costs about $1.50, about 70% more than in the south. The plane flies once each way per day, that’s it. Max 160 ppl moved in a day.
      That plane flying to Paris probably seats over 280 ppl and it will then it will turn around and do another flight or 2 in the same day.
      Any boob can look at the price and try to draw a parallel, but you might need to think a little more before you reach any conclusions…

      • Posted by Still dont make sense on

        International carriers also use 737 300 and 400 hundred planes. Not every plane that flies over sees is a state of the art airbus or Boeing. Also, once over seas, the use of the 737’s is even more common. A flight from London to Athen’s on a 373 400 is $219 return. So, Boob, riddle me that?

        • Posted by Duh? on

          They are all combis and half empty right? Oh, I didn’t think so…

        • Posted by come on on

          And how many people go between Athens and London daily?
          How often do they need de-icing, or runways plowed, or fuel that’s nearly twice the regular price.

          How about parts? Makes spare parts a lot easier to stock when you have multiple airlines and flights daily. You also don’t need to heat a warehouse in Iqaluit to store them.

          Supply and demand folks. If there was 600 people daily trying to go between YOW and YFB, you might see prices come down. Unfortunately it costs a ton of money to maintain the infrastructure for those two flights a day into YFB.

    • Posted by re-duh on

      In addition to what Duh? posted here is a bit more data:
      Paris population: 2.2M and greater Paris: 12,5M
      France population: 67M on 640,679 km2

      Iqaluit population: 7.7K
      Nunavut population: 38K on 2,093,190 km2

      Plus everything costs more in the North, airlines must get equipment for all the small stations and build housing for their employees, fly with low load factors and little to no Southbound cargo.

    • Posted by Hmmm, what? on

      Thanks for the helpful link which gives the prices in USD per GALLON. NU fuel prices for Jet fuel are significantly more than a carrier would pay in the south. You can’t simply google the answer to every question…

      • Posted by Dwayne Burke on

        You can change the currency to show Canadian dollars. Which is I did. Trying it, its amazing.

  8. Posted by Tommy on

    People of the north, your shackles just got a lot heavier.

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