The Canadian Government has announced a new agreement with Inuit-owned Canadian North on its merger with First Air. The airline provides service to 25 communities in Northwest Territories, Nunavik, and Nunavut, as well as YOW, YUL, YEG, and YYC.
The merger was approved in 2019 and was subject to several conditions, but major changes in the industry as a result of the pandemic prevented Canadian North from meeting some of conditions. During the pandemic, Canadian North was exempted from scheduling obligations and received $138-million in direct funding from the federal government.
The Canadian government and Canadian North have agreed on new terms to allow the merger to move forward, including:
- A profit cap which will allow the airline to adjust fares and routes to remain viable without cutting off communities or placing a significant financial burden on northern travellers;
- Canadian North has committed to ensuring all communities it serves receive at least one scheduled flight a week and if passenger load factors exceed an average of 85 percent for six consecutive months, the airline will adjust its capacity to meet the demand;
- Annual regional fare increases for both passenger and cargo transportation will be limited to 25 per cent within a calendar year, and
- Net profit margins will be limited to no more than 10 per cent on its scheduled passenger and cargo network (excluding the YEG-YZF and YUL-YVP routes), while also allowing the airline to recoup past losses over a three-year period.
"Canadian North provides an important service to the North, and is the only true full network air carrier in much of the region. 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." said Transport Canada minister Omar Alghabra in a statement about the new agreement.
