Hello everyone, my name is Alex, and welcome to another aviation news video.
On Wednesday June 19th, the federal government approved the merger of Canadian North and
First Air, two northern airlines serving the Northwest Territories and Nunavut.
The merger itself was actually announced last year, but the two airlines have been waiting
for regulatory approval since then.
Both airlines stated that this merger was needed in order to provide the best possible
air services across the Arctic, and that...
The combined airline will keep the Canadian North name, but use the new First Air livery,
which was introduced in 2017.
The headquarters for the new airline will be moved to First Air’s existing headquarters
in Ottawa, with Canadian North moving from their current headquarters in Calgary.
However, both companies...
Charlie Watt Senior, president of Makivik Corporation, and Duane Smith, Chair and CEO
of Inuvialuit Regional Corporation, the parent companies of First Air and Canadian North,
respectively, released these statements.
The rationale behind the merger is that Canadian North and First Air both serve similar routes
to begin with, especially between major centers like Edmonton, Yellowknife, Iqaluit, and Ottawa.
It is worth mentioning that both airlines previously attempted to merge in 2014, but
negotiations stopped just a few months in.
That said, both companies have had a change in leadership since then.
Here’s the thing. In Canada’s North, air travel isn’t one of multiple transportation
options like it is in the south.
Yes, it is a long drive between most of our major cities, but at least there are alternatives
to flying.
In the far north, that’s simply not the case.
For many communities, it’s quite literally a lifeline, and the only way for important
goods to reach people living there, is by air.
So, with the possibility of the only two airlines serving the region combining into one, some
concerns were raised.
In February, Canada’s Competition Bureau released a report addressing some of these concerns.
In their report, the Bureau stated that:
“the Commissioner [of Competition] is of the view that the Proposed Transaction can
be characterized as a merger to monopoly in the vast majority of the Parties’ overlapping
origin and destination pairs and is likely to lead to significant and materially higher
prices and lower quality services for air passengers and cargo customers.
The Bureau did not find that business failure was probable or likely to impact the Commissioner’s
conclusions.”
Both airlines responded promptly to that report, with a lengthy statement acknowledging the
Bureau’s authority, but also stating that...
In their statement, First Air and Canadian North continued to outline various shortcomings
of the report, and detailed the economic realities forcing the companies to merge, including...
That being said, in Transport Canada’s statement approving the merger, they did outline some
terms and conditions for the combined airline.
- No price increases for both passenger travel and cargo delivery beyond those related to
operating costs;
- No reductions to the weekly schedule options on all routes of the airlines’ combined network;
- 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; and
- Several transparency and accountability measures, such as providing quarterly financial
updates and yearly financial statements to the Minister.
So what does the future hold for air travel in the North?
For the moment, we don’t fully know the details of how the merger will play out, but
according to the airlines, that information should be available in the next few weeks.
However, in the meantime, both companies will continue to operate as two separate entities.
I’m curious to hear what you think of this merger, especially any of my viewers living
in the Territories.
Let me know in the comments section down below.
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