Government of Canada and Canadian North agree on new terms and conditions of airline merger

Press Release

From: Transport Canada

From travelling to appointments to helping deliver essential necessities such as food, medicine and other goods, strong, financially stable northern air transportation providers are vital to support vibrant and sustainable communities in the North.

In 2019, the Government of Canada approved the merger of First Air and Canadian North, subject to several terms and conditions meant to protect the public interest. Since then, the air transportation landscape 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 comply with the existing conditions, while also providing service to northern communities. During the pandemic, Canadian North was exempted from its scheduling obligations, and received $138 million in direct funding from the Government of Canada.

The Minister of Transport, the Honourable Omar Alghabra, today announced that the Government of Canada and Canadian North have agreed on new terms and conditions that will allow Canadian North to remain financially viable and sustainable, while continuing to provide required levels of service to rural and remote communities in Northern Canada.

The Government of Canada and Canadian North have agreed on a profit cap, which will allow them to adjust fares and routes to remain viable without cutting off communities or placing a significant financial burden on northern travellers.

Examples of the new terms and conditions include:

• Ensuring that all communities it currently serves continue to receive at least one scheduled flight a week. Further, should the passenger load factors exceed 85 percent on average on any given route for a period of six consecutive months, Canadian North will be expected to adjust its capacity/schedules to be reflective of the increased demand.
• Limiting average annual regional fare increases for both passenger and cargo transportation to 25 percent within a calendar year.
• Limiting yearly net profit margins to no more than 10 percent on its scheduled passenger and cargo network (excluding the Edmonton-Yellowknife and Montreal-Kuujjuaq routes), while also allowing the airline to recoup past losses over a 3-year period.
• Providing information for quarterly auditing by an independent monitor.

The new agreement also includes regular oversight for the Minister to ensure that the public interest is maintained.

Quotes

“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.”

The Honourable Omar Alghabra
Minister of Transport

Quick facts

• Canadian North is a 100% Inuit-owned airline.
• Canadian North services 25 communities within the Northwest Territories, Nunavik and Nunavut, as well as Ottawa, Montreal, Edmonton and Calgary.
• All Canadian North turboprop aircraft are gravel and ice strip equipped for landing in remote locations.

Contacts

Nadine Ramadan
Press Secretary
Office of the Honourable Omar Alghabra
Minister of Transport, Ottawa
[email protected]

Media Relations
Transport Canada, Ottawa
[email protected]
613-993-0055

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