The two main airlines that serve Canada’s North have announced a plan to merge into a single carrier based in Ottawa.
First Air and Canadian North have reached an agreement in principle to join forces, the two companies said late last week in a joint statement. Terms of the deal were not released.
The combined company will operate under the name Canadian North and will feature First Air’s branding and recently adopted Inuksuk logo. The new entity will be headquartered at First Air’s head office in Kanata.
The airlines said combining forces would result in more on-time service, improved aircraft maintenance and fewer flight interruptions and would help the companies better address pilot shortages thanks to a larger combined workforce.
“When you look at the size of the market, we certainly believe that a merged airline is something that will benefit all the communities and all the population,” First Air manager of marketing and communications Dan Valin told OBJ.
For example, he said, both airlines currently offer daily flights to Iqaluit from Ottawa departing at 9:15 a.m. The combined firm would have more planes, potentially paving the way to add an afternoon route from Ottawa to the Nunavut capital, Valin said.
“Instead of competing for the same customers, we can offer more options,” he said. “I think that’s the key element here.”
In a news release, the two companies also cited a report commissioned by the government of Nunavut that calls for more efficiency in the territory’s air transportation services. They said the proposed merger is the “only viable way to both meet and exceed these essential needs” for the region’s air travellers.
The airlines said customers will not see any changes to fares and scheduling, adding they hope to finalize the deal by the end of the year. The proposal requires the approval of the federal Competition Bureau.
Integration plans still undecided
This isn’t the first time the two Inuit-owned companies, which mainly serve customers in Nunavut and the Northwest Territories, have looked at a potential merger.
First Air and Canadian North began discussions about amalgamating in 2014, saying a merger would “improve the sustainability” of both organizations, but those talks fell through. The two carriers did eventually sign a codeshare agreement that ended last year.
First Air is a wholly owned subsidiary of Quebec’s Makivik Corp., while Calgary-based Canadian North’s parent company is the Inuvialuit Development Corporation, which is headquartered in the Northwest Territories. Valin credited the leadership of Makivik president Charlie Watt Sr. and Inuvialuit chair Duane Smith for bringing the latest round of talks to fruition.
“Timing in these kinds of transactions always needs to be right,” Valin said. “A lot of things need to align. I think we just came to the point where things finally did align. It’s not an easy transaction, especially in this industry.”
The airlines have about 800 employees each, with a combined fleet of 32 aircraft. First Air serves about 260,000 passengers a year in 35 destinations, including its partner carriers, while Canadian North offers flights to 18 destinations. Its passenger numbers were not immediately available.
Valin said no decisions have yet been made on how employees and management of the two firms will be integrated.
“We’ll look at every aspect of the business,” he said. “Obviously, we want to be able to keep as many people as we can, and that’s our goal.”
Industry experts said the deal could have a major impact on air travel in Canada’s North.
“It’s a big news story, unquestionably,” Rick Erickson, an airline analyst with RP Erickson & Associates in Calgary, told the Nunavut News. “You can never underestimate how important (the airline industry) is to the North, in every aspect you can think of: economic development, social welfare, health care, it just goes on and on.”
Erickson told the newspaper the airlines are aiming to boost their bottom line in the North’s high-cost environment.
“The key issue is the financial well-being of each of the carriers,” he said. “A merger could conceivably strengthen the role that aviation is able to play in the North.”