Monopoly Air: Canadian North and First Air receive Cabinet clearance to merge

The federal cabinet has approved a controversial merger between Canada’s biggest Northern airlines, leaving much of the Arctic with only one option to fly.

In an Order in Council dated June 16th, the governor general officially approved the cabinet decision to allow Bradley Air Services (First Air) and Canadian North to merge; with 31 terms and conditions attached over a seven year period.

The conditions include a provision that airfares do not rise more than increases to operating costs, no changes to Inuit specific special fares or baggage allowances, service to communities the same number of days a week, minimum standards for cargo and more.

In February, the Competition Bureau of Canada recommended against the merger in a report to Transport Minister Marc Garneau.

They called the proposed merger a monopoly in the report saying, “The Commissioner is of the view that the Proposed Transaction can be characterized as a merger to monopoly…”

The report also states, “the proposed merger of First Air and Canadian North is likely to result in a substantial lessening of competition in the provision of passenger travel and cargo services.”

Both airlines are owned by the business arms of Inuit Land Claims organizations.

Canadian North is owned by the Inuvialuit Regional Corp and First Air by Makivik Corp.

The two airlines first announced their intention to merge in July 2018.

First Air operates routes to 32 northern communities, including the Northwest Territories (NWT), Nunavut and Nunavik.

Canadian North serves 16 communities in Nunavut and the NWT.

For Nunavut and Nunavik, air travel is essential, as most communities are only accessed by plane. Iqaluit to Ottawa return on First Air costs between $2,000 and $3,000.

Canadian North has nearly identical pricing.

More remote communities pay the most, a return trip for one from Resolute, NU to Ottawa is over $7,000.

When the Competition Bureau report was released in February, the two Inuit owned airlines released a joint statement evoking that Inuit heritage as a major reason the merger should be allowed to go through.

“Before Inuit can be meaningful participants in the national economy, they must be meaningful participants in the northern economy; an efficient Pan-Arctic airline is the only long-term viable answer that will provide immediate benefits.”

Fast forward to June, the two Inuit organizations that own the airlines – the NWT’s Inuvialuit Regional Corporation and Nunavik’s Makivik Corporation – were pleased at the announcement.

“Travellers can be confident that there will be no degradation in service during the merger process, nor following its completion,” a statement from both companies said.

“The parties are committed to ensuring that the merger creates a sustainable airline which provides exceptional customer experience at the best possible prices.”

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