Canadian North will be able to adjust some of its routes, as well as passenger and cargo fares, after Transport Canada announced new conditions to the airline’s 2019 merger with First Air.
The agreement between Canadian North and Ottawa includes a “profit cap” and an annual limit on fare increases, according to a Transport Canada news release.
“Canadian North provides an important service to the North, and is the only true full network air carrier in much of the region,” said federal Transport Minister Omar Alghabra in the news release.
“These new terms and conditions will ensure northern and remote communities have the access to the air services they need, while at the same time ensuring Canadian North remains a viable service provider.”
Under the new conditions, the airline is still required to operate at least one scheduled flight per week out of each of the 25 communities it serves.
If passenger load exceeds 85 per cent on any given route on average for six consecutive months, Canadian North will be expected to adjust capacity and scheduling to meet the higher demand.
Another condition: Transport Canada has limited Canadian North’s average annual regional fare increases to 25 per cent within a calendar year, for both passenger and cargo transportation.
Ottawa is also limiting the airline’s yearly net profit margins to no more than 10 per cent on its scheduled passenger and cargo network while also allowing the airline to recoup losses from the past three years of COVID-19-impacted operations. The Edmonton-Yellowknife and Montreal-Kuujjuaq routes are excluded from this condition.
The new agreement also requires the airline to provide information to an independent monitor for quarterly audits. The federal transport minister will provide regular oversight.
When the Canadian North and First Air merger was first approved by then-transport minister Marc Garneau in 2019, it came with several conditions, including a seven-year freeze on fare increases.
Pita Aatami, president of Makivvik Corp. which is a part-owner of Canadian North with the Inuvialuit Development Corp., and airline CEO Michael Rodyniuk expressed the desire to work with Ottawa to modify some of those terms and conditions.
Both cited the COVID-19 travel slump as a need to review conditions, as Canadian North continued its essential operations while other airlines temporarily suspended flights.
Speaking in February at the Northern Lights trade show in Ottawa, Aatami appeared to suggest Canadian North was losing money on its operations.
Rodyniuk, who was present during Aatami’s speech, didn’t say whether or not the company was losing money but said Canadian North was continuing to talk with Transport Canada to “eke out a profit.”
During the COVID-19 pandemic, Canadian North received $138 million in support from Ottawa.
Canadian North declined comment Monday on the new terms.
“Please see the news release by Transport Canada,” said Annie Thomlinson, the airline’s communications manager, in an email.
By Jeff Pelletier, Local Journalism Initiative Reporter
Original Published on Apr 26, 2023 at 05:10