Is Nutrition North to blame for codeshare airlines' drop in revenues, asks Nunavut premier

NunavutPremier Peter Taptuna says the presidents of Canadian North, First Air and Calm Air failed to provide an answer to MLAs' main question about their codeshare agreement when they appeared before a full caucus meeting in January.

"What we were trying to ascertain with your appearance at the Legislative Assembly, [was] why the codeshare, why now?" Taptunaasked ina letter that was sent to the territory'sthree biggest airlines and tabled at the legislative assembly last week.

"All we basically heard was that codeshare was good, give it time, you (Nunavut Consumer) don't worry, and monopolies are good, and the competition bad."

Taptuna wrote that, considering that the three airlines have successfully operated in the North for 158 years combined, "why over the past three or four years has suddenly this robust, innovative and competitive industry begun to lose substantial revenue and this in turn forced you to gravitate toward a monopoly and/or advocate for a codeshare agreement?"

"This is really the question that needs to be answered."

The premier's letter goeson to ask if it was a coincidencethat the airlines began to experience financial hardship at the time thatNutrition North Canada replacedthe old Food Mail program in 2011, given that the airlines told MLAsthatcargo makes up half of their Northern revenue.

"The subsidy through Canada Post that went to the airlines for flying food cargo now goes to ... the stores, not the air carriers."

He theorizes the "unintended consequence of NNC was to basically unhinge the northern airlines marketplace."

'Disappointed with the letter'

In response to Taptuna's letter,Gary Bell, president of Calm Air, saidthe timing of Nutrition North'srollout and the downturn in the airline business was in fact a coincidence.

"To be honest we were fairly disappointed with the letter from the premier," said Bell.

"We spent a lot of time both prior to the meeting and at the meeting explaining the economics of operating an airline in the North and clearly it is still lost upon the GN and the premier."

Bell said there aremany factors at play that jeopardizethe airlines' finances, including the high American dollar, costly repairs and preventative measures resulting from gravel runways and the use of new, expensive aircraft flying a busierschedule.

"If you are giving the customer what they ultimately want which isnumber one,the aircraft type and the safety features that come along with it, and number two,the frequency of service and you are doing that without doing price increases, then the thing that has to give is having multiple [airlines]," said Bell.

Bell said the single largest impact on Calm Air's bottom linewas the GN splitting its medical travel contract for the Kivalliqregionbetween Canadian North and First Airin 2011.Canadian North subcontracted its half of the contract to Calm Air.

Taptunamentioned the medical contract split in the Kivalliqin his letterand asked, now that Calm Air is essentially the only airline operating in the region, ifthe airline was still experiencing financial hardship.

Bell said that as of June last year, when First Air pulled out of the Kivalliq and Calm Air purchased itsremaining assets, Calm Air now has 100 per cent of the GN medical transport contracts in the region. He said thatmeans the company is once again making a profit.

When CBC contacted First Air for comment, the airline saidthatit had received Taptuna's letter and would respond in "due course."

Canadian North did not respond to a request for comment.