Canadian North (5T, Yellowknife) and the Canadian government have agreed on new terms of its merger with First Air (Carp) involving a profit cap that will allow the unified 100% Inuit-owned airline to adjust its fares and routes to remain viable without depriving communities of service or imposing a significant financial burden on northern travellers.
In a statement, the government reiterated that strong and financially stable air carriers in the Canadian North were essential to supporting vibrant and sustainable communities.
In 2019, the federal government approved the merger of First Air and Canadian North, subject to conditions designed to protect the public interest. "Since then, the context of air transport has changed dramatically due to the sudden onset of the Covid-19 pandemic. This has had a lasting impact on Canadian North's ability to meet existing conditions while providing services to northern communities. During the pandemic, Canadian North was exempted from its flight planning obligations and received CAD138 million Canadian dollars (USD101 million) in direct funding from the Government of Canada," Ottawa said.
The new conditions are as follows:
- All communities currently served by Canadian North will continue to benefit from at least one scheduled flight per week;
- If load factors exceed 85% on a route for six consecutive months, Canadian North will have to adjust its capacity and schedules to take into account the increase in demand;
- Annual average regional fare increases for passenger and freight will be restricted to 25% in a calendar year;
- Annual net margins earned on scheduled passenger and cargo flights will be capped at 10% (excluding Edmonton International-Yellowknife and Montréal Trudeau-Kuujjuaq routes) while allowing the airline to recoup past losses over three years;
- The airline will be audited quarterly by an independent auditor.
The new agreement also provides for regular monitoring by Transport Minister Omar Alghabra to preserve the public interest.
As reported, the airlines launched a unified brand under Canadian North's flight schedule and reservations system in November 2019 and in 2021 started operating under a single Air Operator's Certificate (AOC).
Canadian North is wholly owned by Makivik Corporation and the Inuvialuit Development Corporation and provides essential passenger and goods deliveries throughout Canada's North. It operates to 24 destinations within the Northwest Territories, Nunavik and Nunavut, from its southern gateways of Ottawa International, Montreal and Edmonton, with a fleet of B737s and ATR42s.
According to the ch-aviation fleets module, these 36 aircraft include two ATR42-300s, five ATR42-300(QC)s, six ATR42-500s, two ATR72-500(F)s, one B737-200C, eight B737-300s, two B737-300(QC), one B737-400, two B737-400(C)s, one B737-400(F), four B737-700s, plus one ARJ85 and one DHC-6-300, both on wet-lease.
