First Air and Canadian North airline merger approved by Federal Government

June 19, 2019 177 Comments

Marc Garneau, Minister of Transport, announced Wednesday that the Government of Canada has approved a merger between First Air and Canadian North, the primary air carriers serving Canada’s North, subject to a series of strict terms and conditions.

In fall 2018, Makivik Corporation and the Inuvialuit Corporate Group announced an agreement to merge Ottawa-based First Air and Canadian North – based out of Calgary – and filed a merger notification with the Commissioner of Competition and the Minister of Transport.

The approval of the merger comes following a public interest assessment, which was led by the transportation minister and incorporated the findings of the Commissioner of Competition.

The government states that approving the merger with terms and conditions strikes a balance between any public interest considerations and the need to have a more efficient and financially sustainable northern air carrier.

The terms and conditions include:

  • No price increases for both passenger travel and cargo delivery beyond those related to operating costs;
  • No reductions to the weekly schedule options on all routes of the airlines’ combined network;
  • Access to northern infrastructure (facilities and equipment) for new airlines entering the market;
  • A commitment to increasing Inuit representation across the merged entity’s operations; and
  • Several transparency and accountability measures, such as providing quarterly financial updates and yearly financial statements to the Minister.

“The North, more than any other region in Canada, relies on air transportation to maintain quality of life. We carefully examined the public interest, financial and competition aspects of the proposed merger. A strong, financially stable northern air carrier, taking advantage of operating and network efficiencies of a merger, will best serve the North by leading to greater reliability of service as well as environmental sustainability, Garneau says. “The strict terms and conditions will keep costs low and ensure northern and remote communities have the access they deserve, while at the same time protecting northern jobs.”

The terms and conditions also ensure that items such as nutritious food and essential medical supplies are prioritized for cargo transportation in the North, according to the government.

It adds that a confidential Implementation and Monitoring Agreement to be signed between the Minister of Transport and the parent companies of the two merging airlines will ensure compliance with the terms and conditions.

 

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